COVID’s second wave is distorting domestic meat market in previously unseen ways

Jon Condon, 07/08/2020

THE second wave of COVID-related consumer demand being seen for red meat this week – most evident in Victoria and NSW, but gradually extending into other states – is pushing wholesale buying patterns in some unusual and even unique directions.

As it did back in April, domestic red meat trade is again shifting sharply back towards retail, at the expense of food service channels.

Reports of panic retail buying have again been seen in Victoria and other states this week, fuelled in part by concerns over food shortages on the back of the one-third reduction in Victorian processing operations from midnight tonight.

Woolworths has again enforced consumer buying limits in some states and chief executive Brad Banducci told ABC last night that the COVID uncertainty over the past couple of weeks had led to an elevated level of demand, particularly in red meat. He said the trend was not yet at the level it was in March and April, however.

Even in Queensland, where COVID is well under control, consumer buying of red meat, toilet paper and other ‘essentials’ is again rising sharply

Meat wholesalers are again seeing wild swings in customer demand, and in some cases are already shipping product into Victoria from Queensland, NSW and South Australia to cater for local pressure.

The result is some unusual and even unprecedented trends in the wholesale market, Beef Central was told.

While the food service sector showed some signs of recovery after earlier April/May closures, it is clear that a second major shift towards retail meat sales through supermarkets and independent butchers is occurring.

Food service wholesale customers remained ‘incredibly cautious’ about purchasing any volume of product, major meat wholesalers said.

“Nobody with a food outlet wants to get caught with large stocks of meat, if there is another wave of restaurant, hotel and café closures,” one large multi-state operator said yesterday.

Portioning rooms, which specialise in taking whole primals and dividing them into ready-to-cook steak serve portions for restaurants, hotels and other food service operators, either remain closed or are operating at only a fraction of their normal throughput.

At the other end of the beef market, supermarkets and independent butchers are again experiencing a wave of demand for product, especially mince, steak cuts and easy-to-serve items, as consumers again start stockpiling food supplies.

A large Sydney retail butchery chain told Beef Central that with the second wave of COVID emerging, takings were again on the rise, and in fact had maintained a level above pre-COVID trading since the big spike in April.

One large multi-state wholesaler said trade this week was up 25pc from the previous seven days – being heavily driven by retail demand.

While food service demand remained very flat, the high level of meat trade into retail suggested that overall, domestic Australian beef consumption was rising.

“Everybody in retail is busy, from national supermarkets to independent butchers,” he said.

“Declining Australian beef production is certainly being reflected in lower exports, but arguably not at all in the domestic trade. If anything, domestic consumption has gone up in the past few months, due to COVID. I wouldn’t be surprised if domestic trade is currently accounting for well over 30 percent of all Australian beef production at present. That’s a level we haven’t seen in years,” he said.

Unusual winter barbecue cuts demand

A trend being seen in the wholesale market this year – for the first time ever, in one stakeholder’s  opinion – was that the traditional mid-winter ‘sag’ in demand for grilling cuts, in favour of blades, knuckles and briskets used for slow cooking, had not occurred.

“For the first time in my career (more than 40 years) in wholesaling, we’ve seen cube rolls go up in price, in the middle of winter,” he said.

“Sweet cuts like cube roll and striploin have actually gone up in price over the past couple of months, whereas normally it is the cold weather cuts in highest demand. That’s because people are working from home, and have the time on their hands to barbecue more often – even in winter.”

He thought overall domestic red meat consumption at present was particularly high, because of the ‘stay-at-home’ factor, and the interest in cooking that had been generated as family members asked each other, “What’s for dinner.”

“Consumers continue to experiment, because they’re at home and have time on their hands. Brisket demand at present is very high, because the customer can throw a brisket in the smoker early in the work-day, look after it, and serve it for dinner that night. Normally brisk is only a Saturday or Sunday cut.”

Even some national supermarket outlets were for the first time stocking whole (rather than sliced) cube-rolls, tenderloins and briskets in their chilled cabinets, to service the rapid changes in demand seen recently.

“The big retail chains can’t pick their production up quickly enough to keep up with these spikes that have been seen – so offering whole primals is an easy solution,” the wholesaler said.

Cuts being re-valued

Another COVID market impact caused by the dramatic decline in food service demand has been in price recognition for particular cuts.

Tenderloins, for example – which are historically a favourite option in restaurants, hotels, conventions and catering – are for the first time in history being priced no higher than cube rolls on the domestic wholesale market, a large wholesale contact said.

“I’ve never seen it before – cube rolls and tenderloins of the same quality are level pegging in price at the moment, because of that lack of demand for tenders out of food service, and the shift back towards retail,” he said.

Tenderloins at wholesale this week were making anywhere from $15/kg for cow tenders to $30 for 100-day grainfed steer examples, while good grainfed cube rolls were making the same, or very similar prices.

“As a result of the flatness in food service, we’re selling more tenderloins back into retail than we have ever seen before,” the wholesaler said.







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