CONSUMER REPORT

The National Cattlemen’s Beef Association (NCBA), as a contractor to the Beef Checkoff, is continually tracking trends, monitoring issues, and surveying the general landscape that has the potential to impact the food industry. NCBA does this through a variety of tools, most notably by conducting consumer and market analysis, funded by the Beef Checkoff, while also scanning secondary research resources. Across the food landscape we continue to see some pandemic dynamics that existed in 2020 continue to play out, while also seeing signs of other behaviors reverting back to some degree to prepandemic norms. This article will touch on a variety of topics including the current state of consumers and beef, e-commerce, meat substitutes and sustainability. The Current State of Consumers and Beef

52% 53%

Consumer Comfort

55% 54% Apr-21

43% Jul-21

41% 38% 39% 43%

38%

Sitting Inside at a restaurant Attending/Hosting gathering (under 10 people)

Source: Summer Grilling and Comfort, Dynata Platform, April 2021

Attending/Hosting gathering (10+ people) Attending events (sports, etc.)

Traveling by airplane

Before diving into specifics, it is important to understand the current consumer mindset. For many, there is still apprehension when it comes to comfort level engaging in activities out of the household. Most notably, less than half of the population is comfortable participating in larger gatherings, events and travel. While this has improved since the onset of the pandemic, it is going to take time for many consumers to get back to “normal” behaviors. It is hard to pinpoint an exact timeframe when this will happen; however, consumers who are not comfortable claim it will be at least six, if not 12 months before they plan to engage in several activities, most notably travel and larger gatherings/events.1 The retail and foodservice industries are beginning to show signs of moving back in the direction they were in prior to the pandemic, although there are still substantial gaps between what is traditionally seen. A typical year for fresh beef results in about 39 percent of volume being sold at retail, and 61 percent of volume at foodservice, whereas in 2020 this shifted to 45 percent and 55 percent respectively. When we look at the data through mid-July of this year, results are coming closer to 2019 than 2020, with 41 percent of fresh beef volume going to retail. Even with signs of shifting back, fresh beef at retail continues to show strong growth compared to 2019, particularly in dollars sold (+20 percent).2

One of the main reasons behind the continued elevated retail sales is that consumers, during this last year and a half, adapted to eating at-home more often. In fact, 74 percent of consumer meals are still being cooked at home1. This has decreased compared to 2020, but still provides evidence for the potential of retail to hang on to some of the share it gained over the last year, at least through the rest of 2021. E-Commerce Online Grocery Ordering

63%

actively ordering groceries online 41% are ordering fresh beef +18% compared to May 2020

An area that continues to see tremendous opportunity and 3 growth in the marketplace is e-commerce. Online retail sales increased in the second quarter of this year by more than $19 billion year over year and continue to be above the prepandemic levels.3 Asking consumers directly, 63 percent said they are actively ordering groceries online, with almost half stating this behavior will remain one of their shopping tools into the future.

Source: State of Consumer Survey, Dynata Platform, July 2021

Continued on page 80

Beef is a big part of the success in this area, with 41 percent of consumers including beef in their online carts. This is up 18 percent since May 2020. Not only are consumers ordering beef more often, but they are also happy with the experience they are getting. In fact, only 8 percent of people said they were dissatisfied with the beef they ordered1. Similar dynamics can be seen in the digital foodservice space. There was a boom with the onset of the pandemic, with digital volume increasing by more than 1 billion transactions.

As a share to all traffic to restaurants, digital makes up about 16 percent of total traffic, which is up 9 percent since before the pandemic.4 The second quarter of 2021 did see some slowing, primarily in full-service restaurants, but digital foodservice traffic continues to be a mainstay in the industry. Meat Substitutes The protein landscape, including meat substitutes, is continually monitored at NCBA. As of June 2021, meat substitutes represent less than 1 percent of both the entire protein market and the beef market specifically (meat substitutes with a product form description such as ground, chub and patties are used to calculate the beef substitute market).5

Most consumers choosing to eat meat substitutes are not doing it to replace meat entirely but to add variety to their diet. According to NCBA’s Consumer Beef Tracker, people who consume meat substitutes on a weekly-or-more basis also consume beef and other proteins as much as the average consumer. Additionally, over the last year, product launches supporting meat substitutes have subsided compared to years past, particularly as it relates to burgers6. On top of seeking to add variety to a diet, health perceptions of traditional proteins and meat substitutes continue to be the leading factor in terms of rationale behind consuming these products.7

Sustainability and Beef Sustainability is another hot topic sweeping the nation in a variety of media outlets and consumer groups. NCBA, on behalf of the Beef Checkoff, sought to better understand this topic with consumers throughout spring. The research included focus groups across the country, concept and messaging evaluation, and a 2,000-person quantitative assessment that would help explore the topic.

When it comes to defining sustainability, without aiding the conversation in any way, most consumers talk about the idea of ensuring resources last for future generations, followed by environmental concerns. Only 3 percent of consumers bring up

Animal welfare Environmental aspects Sustain Economic aspects Social aspects Product information Production process Don't know

7% 6% 5% 2%

How would you define sustainability when it comes to raising cattle or beef for food? Please be specific.

14% 24%

27%

the topic of food without it being brought to their attention. Once it is, consumers still struggle to define sustainability and food, particularly with beef. Those who are to expound on the topic of beef and sustainability focus on animal welfare first and foremost, followed by the environment.8

Animal welfare continues to be the top concern in the mind of consumers; they have concerns around the treatment and living conditions in which cattle are raised. Much of this is driven by the lack of knowledge consumers have regarding how the cattle industry operates. Only 30 percent of consumers claim to be familiar with how cattle are raised for food.7 The lack of familiarity is an important point NCBA is always considering when developing consumer content, to ensure the content will help address this need for increased consumer education.

Sticking with animal welfare, even when it comes to sustainability, consumers felt it was the most important topic for the beef industry to address. Secondarily, the messages consumers felt were most impactful had to do with discussing the benefits that beef and cattle provide the land. Most notable in those messages was the idea of upcycling, such as turning plant leftovers or grazing land into high-quality proteins. One thing to caution in messaging is getting too complex or confusing; consumers are looking for simple, easy-to-digest points about sustainability. Any time clear, concise and relatable examples can be leveraged, messaging will be more successful with consumers.8

This research is continuously being leveraged by several program areas at NCBA as we look at continued efforts through 2021 and beyond to address sustainability. This is one example, regardless of topic, of how NCBA leverages a multitude of research to help guide its Checkoff programming, which assures us that we are keeping up with the trends and concerns of the consumer.

1. State of the Consumer Survey, Dynata Platforms, analyzed and summarized by NCBA, on behalf of the Beef Checkoff., July 2021 2. Source: Nielsen, Answers on Demand, Yearly Volume Data Ending Dec 2020 and Half-Year Beef Volume Sales, Data Ending June 2021, Processed 8/24/2021. 3. NPD, Category Sizing, Data Ending June 2021, Processed August 2021 4. U.S. Census Bureau, Quarterly U.S. Retail E-Commerce Sales (released on May 18, 2020), shared via Nielsen Consumer LLC. 5. Digital Online Ordering Foodservice Traffic Data, the NPD Group/CREST, July 2021. 6. NielsenIQ, Answers on Demand, 2021 Half-Year Meat Volume Sales Ending June; Foodservice - NPD, Category Sizing, Half-Year 2021 (Jan-June) Beef Substitute Forms:

Brisket, Chubs, Ground, Meatball, Meatloaf, Patties, and Steaks 7. Food and Drink Platform for Global New Products Database, Mintel, August 2021 8. Consumer Beef Tracker; Directions Research, analyzed and summarized by NCBA, on behalf of the Beef Checkoff, July 2021 9. Sustainability Exploration, Dynata and Directions Research, analyzed and summarized by NCBA, on behalf of the Beef Checkoff, Jan-April 2021

CONSUMER REPORT

“We manage forage to provide the protein and energy cattle need to be successful.”

DR. NANCY JACKSON, DVM

SOUTHERN CROSS FARM, MISSISSIPPI

Keep weeds from holding back your herd with new DuraCor® herbicide. Powered by the first new active ingredient for range and pasture broadleaf weed control in over a decade, DuraCor provides extended control of 140+ weeds while maintaining grass safety. That allows nutritious grasses to thrive and opens the way for more productivity from every acre. See the full story at DuraCorHerbicide.com.

Label precautions apply to forage treated with DuraCor and to manure and urine from animals that have consumed treated forage. Consult the label for full details. ™ ® Trademarks of Corteva Agriscience and its affiliated companies. DuraCor is not registered for sale or use in all states. Contact your state pesticide regulatory agency to determine if a product is registered for sale or use in your state. Always read and follow label directions. © 2021 Corteva. CR38-640-022 (01/21) BR CARP0RANG088