Significantly less meat is sold in the supermarkets. This is evident from figures from the analysis agency IRI, which were published by ABN Amro on Thursday. In the first nine months of this year, 7 percent less meat was sold.
According to market experts at ABN Amro, this is primarily a ‘correction’ to last year’s supermarket run. Due to the corona pandemic, in 2021 much more was bought in supermarkets and less via food service channels and the catering industry. Another factor is the high prices of food at the moment, while consumers have less to spend. It may also be because some consumers want to eat meat less often, the researchers believe.
It is not yet known how the total consumption of meat will be this year. The figures for consumption via catering and food services such as company restaurants are not yet known. It is clear that more meat was consumed there compared to last year. But according to the researchers, there is more than just a channel change. “Sales of meat via supermarkets were in the first half of 2022 below the level in the first half of 2019,” writes sector economist Agrarisch and Food Nadia Menkveld from ABN Amro in a message from the bank. “With this, the sale of meat via supermarkets does not seem to simply return to pre-corona levels.”
Chicken falls down less hard
Sales of chicken in supermarkets fell less than the average for all types of meat. Research from Statistics Netherlands (CBS) shows that a large group of consumers would like to eat meat less often. On the other hand, the decrease in meat sales can also be a price effect. According to ABN Amro, the pressure on consumer spending will continue in the coming year. ‘This not only puts pressure on sales in the supermarket, but also on sales via the out-of-home channels,’ says Menkveld.
Consumers are not the only ones facing higher prices. This also applies to livestock farmers and processing companies. Procurement costs for energy and labor increased for processors. Procurement costs also increased due to the higher prices received by livestock farmers. For example, the price of poultry meat was 40 percent higher in September and the price of pork 50 percent higher than last year’s level. ‘The higher prices that farmers received were necessary to compensate for the higher costs that they in turn suffer,’ says ABN Amro. ‘Livestock farmers are also struggling with higher energy and labor costs, while animal feed costs have also increased.’
At their own expense
The bank sees that the entire chain accounts for part of the price increase. As a result, the prices of meat in the supermarket are rising less quickly than the price increases that the processors have had to deal with. This puts pressure on the margins.
The ABN Amro researchers believe that many consumers will base their choice on price in the coming year. ‘This can mean that you eat less meat by consuming smaller portions or choose cheaper varieties such as minced meat or chicken and therefore also less organic meat.’
According to ABN Amro, it is also important to keep an eye on the development of livestock in the Netherlands. “After all, most of the meat that is processed comes from Dutch farmers. In the poultry sector, the biggest wave of bird flu ever raged last year, with negative consequences for poultry farmers’ production. The fact that bird flu continued in the summer means that the risks for next year have increased, the European Food Safety Authority believes.’
The poultry population will probably shrink further because the supermarkets switch to meat with at least 1 star of the Beter Leven quality label. This requires producers to pay more attention to animal welfare and sustainability, but ABN Amro expects this to put further pressure on the poultry meat stock due to the limited available barn space in the Netherlands and the difficult licensing process. The bank estimates that the number of broilers will fall by 15 to 25 percent up to and including 2025. This will already lead to a reduction in the poultry meat stock of around 5 percent in 2023.
For pig farming, ABN AMRO expects the number of animals to decrease by around 10 to 20 percent over the next ten years. This decline already starts next year, when the number of breeding sows is expected to fall more sharply. It will probably not lead to a lower number of slaughters in the Netherlands, but it will lead to lower exports to countries such as Germany. Production in the Netherlands is expected to fall by around 3 percent next year.
The bank talks about a challenging situation for livestock farmers and meat processing companies. Purchase costs for feed, energy and raw materials are expected to remain at a high level. In addition, labor costs increase due to an increase in the minimum wage. All in all, many costs will remain at a high level. In addition, the call for sustainability and animal-friendliness continues to be loud, at the same time that consumers are hit hard in the wallet by the higher energy costs and rising food prices,’ writes Menkveld.