While we’re amid the summer grilling season, reports show the annual barbeque cost is $99, and likely the last one to cost under $100.
Consumers have spoken. They are tired of such high food prices.
Lots of factors during the last five years have contributed to the historically high food prices including geopolitical crisis with the pandemic, severe drought, higher restaurant overhead and wages, rising interest rates and higher inflation throughout the supply chain.
Food inflation jumped 27% from 2019 to the end of 2023 with additional inflation in the first half of 2024 putting us to the tipping point. Many consumers who stayed the course by continuing to spend in the face of 40-year highs in food prices are now pulling back and reevaluating their budgets.
“The consumer is waving the white flag on food inflation,” said Tom Bailey, senior consumer foods analyst at Rabobank. “With an added 2% in price hikes in 2024 coupled with the cost disparity between dining out and cooking at home at its widest margin in history, we’re seeing heightened fatigue and frugality.”
Family preparing for backyard barbeques are bargain hunting. In the first half of 2024, many consumers have been reducing the size of their purchases, taking advantage of promotions or delaying big-ticket purchases such as cars and appliances. This trend proved consistent across age groups but was more pronounced among Gen Z and millennials, according to a Mckinsey & Company consumer insights survey. Fifty-six percent of Gen Z and millennial shoppers polled—compared with 45% of older generations—said their primary strategy was to reduce the quantity or package size of the items on their grocery list.
Still, millennials remain prone to giving in to their urge to splurge. Their well-documented willingness to travel and attend pricey concerts reflect this reality even as they have become more selective under the prevailing financial constraints. A reported 78% of Gen Y respondents polled said they would rather spend money on an experience than material goods. Perhaps the prospect of student loan forgiveness, the pending wealth transfer from the Baby Boomer generation and a “you only live once” mentality may be boosting their penchant for “experiences over things.”
Let’s Make a Deal
With many consumers forced to exercise more discipline, savvy shopping will come in handy before firing up the grill. “To find bargains in beef this grilling season, look for featured promotions at your local supermarket or club store ,” said Lance Zimmerman, senior beef analyst at Rabobank. “Beef prices may be at historical highs but many store owners are willing to take a loss by putting various cuts of meat on sale knowing shoppers will fill their carts with other menu items—beer, burgers, hot dogs, sides and salads. They want to boost foot traffic and win loyal customers.”
Fortunately for consumers, despite suffering from fatigue from the inflation marathon, they can find attractive deals on quality meats and drinks this summer. Recreating a restaurant experience at home is now more palpable as the food industry has made strides in enhancing taste, efficiency and safety.
“The quality of beef available to the consumer has never been better,” Zimmerman says. “In the past 20 years, we’ve seen the availability of USDA prime and choice meat increase 60% as improved cattle management has created more marbling. Those fatty flecks pack a lot of tenderness and flavor while making it easier to grill. Even if you overcook quality meats a little, they won’t turn into shoe leather.”
Where’s the Beef?
With the expectation of tighter U.S. beef supplies due to drought and challenging business conditions, the market continues to trend. Consumer prices could possibly hit new record highs throughout summer grilling season. Higher U.S. prices have caused beef exports to shrink but domestic beef demand has held up well. Trading down to different cuts and grades of beef—like switching from steaks to burgers—can offset the pinch consumers are feeling from inflation and economic hardship.
