beef instore

The amount of money Canadians are spending on beef appears to be holding steady, despite rising prices at the meat counter, says a senior market analyst with the George Morris Centre.

Cattle producers have been seeing record high prices in recent months due to very tight cattle supplies across North America.

The impact of the strong farmgate prices is being noticed in grocery stores, says Kevin Grier.

"Consumers are going to see these prices and either decide to purchase less, or decide they still want the product and pay more," he says. "That's the decision they're making right now and the decision that determines the course the industry takes for the rest of the year."

Retailers themselves are shying away from promoting beef because of the higher prices, he says.

"In the first few months of 2014, the share of beef on the front page of fliers is down dramatically. Instead of being on the front three-quarters of the time, it's down to a third or a half," explains Grier. "They're saying 'we can't work with this and do something attractive to consumers' and so they're not featuring it, or they're putting it on the front page at prices that consumers are not familiar with."

That being said, early numbers for 2014 indicate there hasn't been any major drop in how much Canadians are spending on beef, says Grier.

"In the first quarter, we bought less but overall demand held up. In other words, our overall dollar expenditure was steady or higher," he explains. "In the United States though, it looks like they backed away more than we did, and demand looks weaker."

Along with higher prices, poor barbecuing weather across much of Canada and the eastern seaboard of the US has also contributed to softer demand, he says.

"We're confused whether consumers are not buying because of the price or because the weather hasn't been cooperating," says Grier. "We're thinking there might be an explosion in interest when the weather does get good and consumers decide it's time to start grilling."

He says the full impact of record cattle prices has yet to be felt in grocery stores.

"You could almost say the worst is yet to come. It hasn't been fully passed on to consumers yet, in terms of what's been happening at the farmgate and processing level," says Grier.

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