Shoppers snap up beef and lamb as retail prices fall

Significant declines in livestock prices for cattle and sheep have begun to make their impact at retail level at last.

This corresponds with historic data that shows it the reduction in average retail price for red meat lags behind saleyard prices by approximately eight months.

In the 12 week period leading up to August 13, retail prices for beef and lamb have declined significantly.

When it comes to sales volume and overall value, both Australian lamb and beef have been performing well in the domestic market.

When comparing the last quarter with the same period last year, value growth for beef is 1.8 per cent and for lamb is 4.2 per cent.

Data from NielsenIQ HomeScan shows a 7.3pc reduction in the price consumers are paying for lamb compared to a year ago, which is supporting a 12.4pc increase in volume of lamb bought at the checkout.

General manager of marketing and insights at MLA Nathan Low said lamb has seen a boom in purchases in recent months, as consumers jump on the opportunity to purchase a high quality and nutritious protein at a lower price.

"The price reduction is translating to increased purchasing frequency for several cuts," Mr Low said.

"This is especially the case for the most popular cuts like lamb legs and chops, which are up 20% compared to one year ago."

"Consumers see these price reductions and purchase more as a result.

"As this happens, retailers are looking to bring in customers with competitive pricing through catalogue promotions, and increased stock on the shelf.

For beef, NielsenIQ is reporting 7.1pc growth in volume in the last quarter, compared to the same period last year, with an average retail price decrease of 4.9pc. Frequency of purchase and volume per purchase are both up in the latest quarter as well.

"Consumer perception of beef and lamb is strong," Mr Low said.

"Tracking by Kantar, commissioned by MLA on behalf of industry, said that consumers see both beef and lamb as increasingly worth paying more for due to their high quality and taste."

According to Mr Low, there are a variety of factors that drive pricing in the retail market, as well as additional supply chain pressures occurring currently.

"Livestock prices are only one component of retail meat prices," he said.

"Producing retail meat requires investment in energy costs, transport and freight costs, labour costs, packaging and disposal costs, retailer margins, processor margins, PPE and hygiene, all of which have increased in price over the last year, along with almost everything else."

"This is important to remember when considering when livestock prices increased as they did to historical highs last year.

When saleyard prices were at those highs a year ago, retail prices increased but not at the same rate."

"What we are seeing now is that same trend, just in the opposite direction.

"Consumers need a degree of certainty for their shopping basket and retailers smooth the retail pricing impact over the longer term, rather than sharply increase or decrease the price of meat in accordance with livestock prices."