Federal budget shadow impacts on consumer mood for retail trade

Jon Condon, 25/06/2014

The gloomy consumer mood that became evident immediately after last month’s Federal budget came a few days too late to be captured in the latest Nielsen Homescan survey of retail beef trends.

AMIC National Retail Council president, Ray Kelso

AMIC National Retail Council president, Ray Kelso

The monthly survey, covering the rolling quarter for the period ended May 17, fell to close to the May 13 Federal budget announcements to provide any real insight into the budget’s impact on consumer sentiment. But anecdotally, the impact on consumer confidence has been both deep, and prolonged.

National Retail Council president with the Australian Meat Industry Council, Brisbane butcher Ray Kelso, said retailers generally – not just butchers – had reported a big check in trade after the severe budget cutbacks were announced.

“For many butchers, trade just stopped dead,” Mr Kelso said.

“Consumers became very reluctant to spend, following all the doom and gloom in discussion  about tax changes, cutbacks and other budget decisions. There was nothing else happening around that time, economy-wise, that would explain it.”

Mr Kelso said there had not yet been any real sign of recovery in consumer confidence, in the month or so since. “Consumer spend is definitely still down,” he said.

Asked how the winter demand for secondary cuts was going, post MLA’s recent launch of its winter domestic marketing campaign (click here to view Beef Central’s earlier story), Mr Kelso said it had been a slow start this year.

“The big factor has been the weather. There’s been little sign of cold winter conditions in many areas until a week or two ago. You need that first blast of really cold weather to really stimulate consumers to pull out the slow-cooker,” he said.

“It’s starting to change slowly now, but it’s much later than normal. People are wanting to buy secondary cuts for casseroles and stews, but it has not produced yet the momentum that we would normally see in mid-June.”

As a result, supply of slow-cook cuts like shanks (osso bucco) and chuck were abundant.

“But once winter really hits, it could clear-out pretty quickly,” Mr Kelso said. “Sometimes it only takes one really busy, cold weekend, and suddenly you look in the coldroom and stocks are low again.”

Conversely, because of the mild weather, demand for steak and grilling cuts had held-on a lot longer into winter this year.

“Steak cuts are still travelling reasonably well for many retail butchers, because it’s still mild enough outside to fire-up the barbecue,” he said.


Survey too late to capture trend

As mentioned briefly above, the timing of the budget announcements last month came too late to have any significant impact on the results seen in the latest Nielsen Homescan* monthly survey of retail expenditure on beef.

The latest survey period ended just four days after the budget was handed down, but it will be worth watching the next Nielsen survey release around mid-July for a clearer picture of consumer spending patterns, post budget.

For the rolling quarter ended May 17, Nielsen recorded the value of fresh meat sales (beef, chicken, lamb, pork, seafood) up 2.8 percent compared with the same quarter last year. This was mainly driven by a rise in spend per visit (+1.4pc), plus an increase in spend per buyer (+1.3pc).

Beef’s value-share over the quarter rose by 0.12pc year-on-year, due to an increase in spend and consumption per buyer. That happened despite a slight increase in price (+0.6pc).

Among competing proteins, there was a year-on-year decline in lamb’s value share, down almost one percent due to a significant decrease in spend and consumption per buyer, with lamb’s price rising by 11pc year-on-year in the May quarter.

Although chicken has lost value share (-0.02pc), it has registered value growth of 2.7pc this year, while pork’s share in the May rolling quarter rose by 0.92pc year-on-year, with a reported increase in spend per buyer up by 10.3pc.


Independent butchers lift share, relative to supermarkets

In other outcomes from the latest Nielsen Homescan survey, independent butchers recorded a rare increase in value share of retail beef sales last month, while both their major supermarket competitors lost ground. It’s way too early yet to call it a sign of a recovery for independent butchers, but the result is encouraging, nonetheless, after a gradual decline in share over the past 18 months, relative to the ‘Big Two’ supermarket groups.

For reasons that are still difficult to explain, independent butchers picked up 0.3pc retail share for the rolling quarter ended May 17, finishing at 21.6pc of total beef retail sales. The figure is still back 0.5pc on the same period last year, when butchers’ share was in the middle of a slow, but pronounced decline. But it’s a rise, nonetheless.

Both Woolworths and Coles recorded declines in beef market share last month.

Woolworths was worst hit, declining from 34.1pc to 33.6pc of all national retail beef sales, by value. Coles’ loss was less severe, declining by 0.1pc to 24.3pc. Woolworths had logged five consecutive months of retail beef value share growth prior to the latest result, while its biggest rivals both lost ground over the same period.

Smaller supermarket groups, together with independent butchers, were the beneficiaries of the losses by Woolies and Coles last month.

The independently-owned IGA group logged a 9.3pc share for the May rolling quarter, up 0.3pc from the previous month, and the best result since late last year, when the company was marketing itself heavily via consumer advertising.

Another smaller retailer, Aldi, continues a strong recent growth performance, recording a 7.5pc market share in the May quarter, lifting from 6.7pc since the start of the year. The ‘other’ supermarkets grouping, including the likes of Costco, independent supermarkets and others, eased marginally to 3.7pc.

Readers should note that the Nielsen assessment is based on rolling quarterly figures, not single monthly registrations, because they are considered to be a more accurate reflection of longer-term trends.


Overall beef value share rises

For the rolling quarter ended May 17, beef’s value share of overall expenditure on fresh meat protein increased by 0.6pc from the previous month, reaching 36.8pc of all meat protein sales.

Value share for most other proteins fell, with lamb declining from 13.1pc to 12.6pc, chicken declining from 27.1pc to 26.9pc, and seafood easing to 9.3pc. Pork increased marginally to 10.9pc.

Average price for beef at retail last month was $10.00/kg, up marginally from this time last year. Chicken price was $8.17/kg, down about 8c/kg on a year ago, while lamb, at $12.08/kg, was $1.18c/kg higher than this time last year. Pork was 72c/kg higher, at $11.08/kg.

It’s important to note, however, that the prices reported by Nielsen are measured as the average $/kg value of the items in the surveyed consumers’ shopping baskets. It does not attempt to represent the overall average value of beef and other proteins being sold in the retail marketplace.


* What is Nielsen Homescan?

  • A consumer panel of 10,000 households
  • Demographically and geographically representative of all Australian households
  • Electronically record their household purchases of all grocery foods (fresh and packaged)

How are panel participants recruited?

  • Households are recruited on-line via a random sampling method
  • The Homescan panel is stratified by life stage, region and household size
  • Households are screened to assess suitability and to ensure they do not work in marketing, market research or FMCG.




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