Retailers to Appease Grillers with Value-Oriented Meat Features this Season

By Brian Earnest

April 25, 2023

In the years since COVID impacted consumers’ spending, the where, what and why of their decision-making process has been through a massive shift. For Americans, the product scarcity of the first and second quarters of 2020 proved paramount in what they put into their grocery carts. At the same time, pandemic shut-downs resulted in a huge decline in food service spending and an equally large increase in grocery spending. While product shortages and COVID lockdowns are now in the past, in its place inflation has emerged as the major decision-making influencer. 

Up until very recently, while inflation has impacted other areas of the economy, expenditures on food away from home had been less affected. Whether it was “revenge spending” or pent up demand, consumer spending on food away from home rose 9% YoY during 2022 (constant dollars controlled for inflation), and was 13% higher than pre-pandemic levels at $456 billion. But while inflation-adjusted food-away-from home expenditures rose at a historic rate through 2022, there are signs that the past two years of anemic real wage growth will dampen spending in the meat department this summer. 

Wholesale Market Performance is Mixed

To pinpoint what is likely to gain shoppers’ interest this grilling season, it is important to review what opportunities were available in wholesale markets during the planning stages. While nearly all categories are priced higher relative to the five-year average during the first quarter, some items such as ground beef, pork loins and chicken breast have been in a deflationary period for wholesale buyers including food service chains, food manufacturers and grocers. 

For inflation-weary home chefs, beef brisket and pork ribs — two items that attracted backyard grillers in recent years — should show good value at reasonable price points this summer. Wholesale values for both were at significant discount relative to a year earlier. An ample supply of pork ribs is assured with cold storage inventories up 9% YoY, levels not achieved since early 2020. However, a common expectation throughout the industry is that beef supplies will fall short of market needs. And this is already showing itself in more ways than one. 

Retailers to Rely on Feature Activity Rather Than Lower Prices

While retailers have had ample opportunity to reduce prices on certain items at certain times over the past year, we have not seen it happen on a consistent basis. When wholesale prices declined (beef in early 2022, chicken in late 2022, and pork in early 2023) retailers were able to maintain the now larger price spreads. As such, we don’t anticipate this behavior to change any time soon. Grocers are indeed now facing higher labor, energy and transportation costs, but that only strengthens the argument that retail meat and poultry prices will be slow to come down.   

As an alternative to retail price reductions, grocers are more likely to lean on feature (ad) activity and take a more aggressive approach to promoting price awareness of “value options.” The three-week rolling average for feature activity shows both chicken and pork surged YoY at the beginning of 2023, after laying low through much of 2022. However, there has been little-to-no change in beef feature activity yet.    

Fewer Cattle Tempering Prime Beef Supply

With improved genetics and feeding regimens, beef grading has been nothing short of phenomenal in recent years. However, dwindling cattle supplies, harsh winter weather and higher feed costs are all playing a role in limiting expectations for not only beef supplies in general, but for higher-quality beef grades/cuts in particular. 

After peaking in March, the percentage of beef that is grading choice is declining seasonally. It is sitting around 74% currently, which is about even with a year earlier, and up from 2021 levels. However, prime beef, which was around 12% of graded beef during the first quarter of 2021 and near 11% in 2022, is down to 10% today. Given the emphasis on value options, the shrinking supply of higher graded beef cuts may find consumer resistance to the higher prices, which in turn should support elevated spreads from select-to-choice and choice-to-prime.


We expect another successful grilling season for the animal protein space during 2023. And while it remains uncertain how much savings retailers will pass along to consumers this year to help offset inflation, shoppers should see an increase in feature activity at a time when they are looking for deals. At the moment, beef brisket, pork ribs and chicken leg quarters are relative bargains, but retailers and shoppers alike will be searching for the best values in meat cuts on a weekly basis. 


Disclaimer: The information provided in this report is not intended to be investment, tax, or legal advice and should not be relied upon by recipients for such purposes. The information contained in this report has been compiled from what CoBank regards as reliable sources. However, CoBank does not make any representation or warranty regarding the content, and disclaims any responsibility for the information, materials, third-party opinions, and data included in this report. In no event will CoBank be liable for any decision made or actions taken by any person or persons relying on the information contained in this report.


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