Whether its Gordon Brown telling us not to waste food, a general belt tightening in an effort to pay the bills, or more questioning of the value of what we buy, there is a definite change in consumer buying habits.
A well publicised example of the shift to thrift comes in the shape of Tesco's decision to reduce the price of many organic lines. Their press release quotes TNS saying that demand for organic produce across all retailers has dropped by 8.1% in the last three months. Tesco says that many people would like to buy organic but won't pay the premium. So it has cut the price of new potatoes and carrots by 20%, broccoli and asparagus by 25%,avocados by 13%, mixed peppers by 12%, leeks by 11% and courgettes by 5%.
Next, red meat. In the 12 weeks to June 15th, according to TNS figures published by the British Pig Executive, volume sales of beef, lamb and pork dropped by 4.7% in volume compared with last year. What seems to be happening is that fewer people are buying red meat on a regular basis, and those that do buy are buying smaller amounts. Worst hit is lamb, down 12%, followed by beef down 4% and pork down 1%. Lamb of course is the most expensive red meat, and pork the cheapest on a per kilo basis. Sausages are the only red meat product showing any growth, and then by only 1%. The shift to thrift is clear in the type of cuts bought, with a marked trend to minced and stewing beef and lamb, pork belly, and pork shoulder. On the other hand, sales of roasting joints are well down, and even convenient cuts like chops and steaks are selling less than last year.
The shift is happening in even the smartest places. Waitrose have reported a 55% increase in sales of free range chicken legs and thighs, compared with 10% for significantly dearer chicken breasts.
On dairy, the figures are less startling. DairyCo data for the year to July 2008 shows that liquid milk sales have started to fall back gradually, and are now at their lowest since September 2007. Its unlikely that people are using less milk, rather that they are being careful on date codes and throwing less away. All growth has gone from organic milk, possibly as consumers question the premium paid, and sales are now drifting slowly down.
On a brighter note, total cheese sales are up by 1%, but odd things are happening. The super-premium cheddar cheeses are forging ahead. At the other end of the scale, supermarkets' value cheddars are also growing. There is a trend to buying brands rather than own label cheeses, probably because the price difference between the two is now an average of 14p per kilo when a year ago it was 29p.
Some of the changes in what consumers buy are predictable, the drop in some organic sales for example, and the switch to brands when there is not much price difference with own label, and the move to buying cheaper cuts of meat.
But a nearly 5% decline in total red meat sales is alarming, and is the direct result of major price hikes in shops.
The next few months will be tricky for livestock. Consumer demand is falling, we are heading into a period of heavy supply, and seemingly the euro is weakening which could dampen export sales. As ever, supermarkets will be forcing the pace. The red meat market is important for them, and they will be evaluating their strategies carefully. Will they lower prices in their stores to boost sales, or keep prices up? Tesco's milk price reduction today probably shows the way. Prices will come down. But who will ultimately fund the fall? Hopefully the number crunchers at the NFU, DEFRA, EBLEX, BPEX and the livestock associations are keeping close tabs on the percentage of retail price going into farmgate prices. And will complain long and loudly if farmers are getting a worse deal.
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