Will rising prices mince British meat? Meat & poultry category report 2023

Being hungry enough to eat a horse used to be a saying. Something you would only ever consider in times of desperation.

Now, it could become a delicacy. Yes, 10 years after the Horsegate scandal rocked the food industry, horsemeat has returned to UK menus. The difference is, this time shoppers know what they’re getting – courtesy of Kezie, the UK’s top ‘exotic meat brand’.

It’s offering a range of horse striploin steaks and burgers as part of a lineup that includes zebra, ostrich, camel and elk.

Costing just £1.12 per quarter pounder and £4.86 for 500g of mince, horsemeat could be an affordable source of protein for squeezed households, Kezie MD Walter Murray told the Metro earlier this month. He reported “strong demand” in recent months.

It’s unlikely to be for everyone, but Murray and his customers have a point. Soaring production costs have made meat & poultry increasingly costly in supermarkets – leading many to reassess their choices and switch to cheaper options.

So how are rising shelf prices affecting shopper behaviour? Could the pressure lead retailers to renege on British sourcing commitments? And what other options does the industry have to get sales of conventional meat back up?

Price rises have been significant across the board. On average, the price of primary and processed meat & poultry on supermarket shelves increased by 7.1% – or 44p per kilo – in the year to 27 November 2022 [Kantar].

For some cuts, that figure was far higher. Fresh lamb chops jumped by 14.3% (£1.61), while chicken legs are up 15% (40p) and beef steaks are up 12.3% (£1.70). In fact, 14 out of 25 fresh meat & poultry types saw average prices rise by a tenth or more.

Processed meat has also seen huge hikes. Fresh chicken burger prices are up 9.6% (77p), beefburgers up 9.4% (61p) and fresh processed chicken is some 11.5% (84p) dearer.

Those increases seem to have deterred shoppers. Volumes are down 8.9% on the previous year. This has translated into a £338m (2.3%) drop in value.

It speaks to the fact “people are now feeling a lot worse off”, as AHDB retail insight manager Rebecca Gladman notes – especially after a tough 2022.

That doesn’t mean shoppers are cutting out meat altogether. Many shoppers are buying less meat or moving into cheaper cuts and types, Gladman says. Switching to plant-based alternatives has been muted because “per kilo, those types of products are still more expensive”.

There are signs of this recessionary behaviour becoming ingrained, Gladman adds. “Shoppers are getting used to the situation and have adjusted and recalibrated [their purchasing habits] for this year,” she says, citing data from AHDB and YouGov’s Consumer Tracker for November 2022.

One example of this is that “one in four consumers claim to be eating less red meat recently”, Gladman notes. ADHB has previously found more than half (54%) of shoppers are cutting back due to price, rather than factors such as health or the environment.

Against the current economic backdrop, Gladman warns there is little chance meat & poultry sales will pick up much in 2023.

International sourcing

Retailers have little power to address consumer concerns over meat prices. One option is to source cheaper meat from abroad, but it’s a controversial strategy.

The approach was previously used by the likes of Asda and Sainsbury’s during the UK’s first lockdown in spring 2020. Working through their red meat supplier ABP, the retailers tapped Poland to meet soaring demand for beef mince.

But the move caused ructions within the farming sector, which highlighted post-Horsegate commitments by most of the UK’s major supermarkets to source only British and Irish fresh beef.

Further criticism was directed at Asda in January 2022, when it backtracked on a commitment to switch to 100% British beef. Citing a steep rise in British prices, the retailer reverted to a mix of Irish and British beef and promised to work to “keep prices as low as possible for our customers”.

National Sheep Association CEO Phil Stocker reports supermarkets, on the whole, stepped up their commitments to UK sourcing in recent years – particularly through the Brexit process, as it suited them in such a volatile market.

But in the wake of international trade deals, the situation has changed somewhat. Stocker points to an increase in lamb from New Zealand – and in some cases, Australia – on supermarket shelves.

“Processors and retailers have been struggling to cover their costs with British lamb, so they would probably take any opportunity to bring in lower-cost product,” he says. Stocker stresses any rise in foreign volumes will make it harder for struggling British producers.

Such concerns are shared by the NFU. Confidence in the post-Christmas market “remains a concern as consumers continue to adopt recessionary buying by switching to cheaper proteins and from fresh to frozen, where country of origin is less important”, says chief livestock adviser John Royle.

He points to recent HMRC data showing year-on-year imports of New Zealand lamb are up 35% in value and 10% in volume. “The New Zealand import quota is sitting at 43% usage, so they could send more,” Royle adds.

The trend goes well beyond lamb, if Danish Crown is anything to go by. The ability to import meat was mooted as one reason behind its £100m investment in a British factory in November.

Once the 30,500 sq m facility opens in Rochdale later this year, it will allow the company to import more Danish bacon and gammon into the UK. It’s a development that follows the 2019 sale of Danish Crown’s main British business Tulip to Pilgrim’s Pride.

Danish Crown said the move would “increase local production capacities to meet UK demand and fill the shortfall of British bacon, in turn helping improve UK food security and ensure customers’ supply”.

Local supply

But the shift to foreign meat could be less radical than such investments suggest.

Considering markets are tight in Europe, “there is probably a bit more talk than there is action” when it comes to increasing imported meat, says Rabobank’s global strategist for animal protein Justin Sherrard.

“People will always be looking around, but with meat supply chains it’s not a matter of saying: ‘I’ll just go buy a whole container load’,” he says.

“We don’t have them just sitting around and actually don’t have a lot of storage capacity within animal protein supply chains.”

British Meat Processors Association CEO Nick Allen agrees. “On the whole, UK retailers are staying pretty loyal to British suppliers as long as the supply is there, and we suspect that will continue,” he says.

Indeed, Tesco, Sainsbury’s, Asda, Morrisons and Waitrose all stress they have remained true to their sourcing commitments.

Tesco says all its beef and poultry remains British and Irish. It is also increasing its sourcing of British pork, having made all its own-label sausages 100% British. Plus, it is sourcing more home-grown lamb: all Finest and counter lamb is now British.

Sainsbury’s says it is “committed to sourcing British as much as possible”. This is echoed by Asda, which says its chilled beef is British and Irish sourced and its fresh poultry is all British. However, like most of its rivals, its policy on frozen is less clear.

Meanwhile, Morrisons uses its vertically integrated supply chain to source its fresh lamb, beef and pork from 100% British supply. Fresh poultry is also 100% British.

Waitrose extends its 100% British commitment to its fresh and frozen meat. And Lidl and Aldi – which did not respond to requests for comment – also have extensive British sourcing commitments for meat & poultry.

A greater switch may occur in foodservice, which is more influenced by price and “less likely to be loyal”, Allen says.

But prepared grocery products are also at risk. The NSA’s Stocker reckons more meat imports could end up in pies and ready meals. It’s “a reason why improved country of origin labelling would be a good thing”, he says.

The situation could worsen if struggling livestock farmers make large-scale production cuts over the coming year due to a continuation of the crippling input cost inflation. This would make it “an increasing challenge to hold on to the shelf space for British product”, Allen warns.

Meaty promotions

For now, though, supermarkets are keen to tempt shoppers to buy more British meat. To that end, they are reintroducing more promotional mechanics on some meat & poultry products.

In this category, The Grocer analysis of Assosia data shows a potential reversal of the long-term move towards everyday low pricing. The number of meat & poultry promos across the big four Lidl, Aldi and Waitrose was 9.4% higher this year – a total of 490 on 23 January – than on the same date in 2022.

The Christmas period served to highlight the impact of promotional activity, suggests AHDB’s Gladman. Promotions helped grow year-on-year sales of lamb roasting joints 10%, after a lacklustre 2022, she points out. “So we know we can get people back into the category with the right promotions.”

These tactics may prove especially important as the mults face fresh competition from variety discounters such as Poundland. The retailer launched a range of fresh meat and fish called Cookit, supplied by Nottingham-based DTS Food, in September to provide quality, low-cost meals and an “alternative to supermarkets”.

Collaborative efforts

Ultimately, the entire supply chain needs to work together to ensure shoppers keep returning to the meat & poultry aisles, argues Pilgrim’s UK insight director Kelly Eastwood.

“We continue to work with our customers and supply chain partners to mitigate cost increases [and] meet consumer demand,” she says. The supplier has introduced new pricing models with its retail partners to improve returns to producers, rather than following the market price for pigs.

“While the current climate is challenging, there’s a fantastic opportunity to promote pork and pork products as an affordable and tasty alternative to poultry and red meat on supermarket shelves,” Eastwood adds.

That’s also the theme of AHDB’s recently launched ‘Mix up Midweek with Pork’ marketing push, which champions pork “as a healthy, tasty and versatile meal choice”.

The campaign, and associated support from retailers, reflects how “everyone having one hymn sheet to sing from can reassure customers”, says Gladman.

AHDB is certainly doing a lot of singing. It has mounted its first big push targeting gen Z shoppers by joining forces with food media platform Mob Kitchen, which aims to inspire young people “to cook healthy and delicious pork meals and highlight the nutritional benefits, such as vitamin B12”. Content will be pushed on TikTok and Instagram.

Meanwhile, AHDB’s wider meat and dairy-focused We Eat Balanced ad push, which returned in January, is another example of industry collaboration.

It offers a “compelling reason for shoppers to add more meat to their basket”, Gladman adds, during the current economic difficulties and beyond.

Nonetheless, it’s an acknowledgement meat & poultry will have to work harder to maintain its appeal as long-faced Brits endure more economic uncertainty. Suddenly horsemeat doesn’t look so unappealing.