Beef market outlook

July 2021

  • 4% fall in beef and veal production expected in 2021, due to tighter cattle availability
  • Domestic consumption forecast to fall by 2% overall in 2021, driven by easing retail sales
  • Imports expected to fall slightly in 2021 (-0.4%), due to lower Q1 volumes, but increasing foodservice in the second half of 2021
  • Exports expected to fall by 8% in 2021, due to lower Q1 volumes, and lower domestic production

Hannah Clarke

Analyst - Livestock

Overview

UK beef production is expected to fall in 2021, largely due to tighter domestic cattle supplies. Domestic consumption is also forecast to ease from 2020, as lower retail sales are expected to outweigh some recovery in the foodservice sector. Despite the recovery in foodservice, we expect trade to be lower in 2021 for both imports and exports. Lower trade figures recorded during the first quarter of the year are the main contributor to lower volumes for the year overall.

UK production

Prime cattle and cull cow slaughter are both expected to fall by 4% in 2021, largely driven by tighter cattle supplies. For the first six months of 2021, prime and cow kill are down by 3% and 4% year-on-year, respectively. Marginally lower carcase weights, plus lower cattle kill are expected to contribute to a year-on-year reduction in beef production of 4%. Looking ahead, higher numbers of younger animals are expected to contribute to production growth in 2022.

UK beef trade

UK imports of beef are expected to fall slightly (-0.4%) year-on-year in 2021. Volumes recorded for the first quarter of the year were much lower than anticipated, which is expected to reduce volumes for the year overall. Imports are expected to show some recovery in the second half of the year, as the foodservice sector reopens. However, foodservice activity is forecast to remain well below that of pre-pandemic levels. In addition, lower supply forecasts in Ireland are also expected to limit volumes somewhat. Future changes to import requirements later in the year could also affect volumes, but potentially more so into 2022.

UK beef exports are expected to fall by 8% in 2021. As with imports, trade during the first three months of the year was much lower than forecast, which we expect will contribute to lower volumes for the year overall. Lower domestic production could restrict volumes somewhat, as will continued administrative and logistical challenges from Brexit. We do anticipate that exports will show some recovery during the second half of the year, as foodservice demand increases in Europe, but not by enough to outweigh losses earlier in the year. Furthermore, if increased interest by UK retailers in stocking home-grown product continues, this may also limit supplies available for export.

Price outlook

GB cattle prices have remained elevated through 2021 so far, supported by lower cattle numbers and increased retail demand for domestic beef. However, several factors could have a bearing on prices going forward. Data pointing to continued tightness in finished cattle numbers in both the UK and Ireland could offer price support. In addition, any continued strength in domestic retail demand will also be positive for prices. On the other hand, easing COVID-19 restrictions and a rising population of vaccinated consumers are expected to lead to more demand from foodservice. However, activity in the eating out market is expected to remain considerably lower than pre-pandemic levels. Imported beef tends to do well in the foodservice market, so any increase in demand for imported beef in this sector may lessen support for domestic cattle. It will be important for domestic prices that out-of-home outlets back British beef.

Input prices will of course be another key watch point for producers, and they can be as influential on margins as finished prices. We take a closer look at key farm inputs elsewhere in our Agri-Market Outlook, which you can find here.

Beef consumption trends

Beef proved to be a staple for consumers in-home at the start of COVID, seeing the fastest volume increase in retail of all the meat proteins in the 52 w/e 14 June 2020. As the pandemic progressed, retail volumes remained positive up until March 2021. However, as beef sales data started to be compared against the significant sales seen at the start of the pandemic, monthly volumes have gone into decline year-on-year. Volumes however remain significantly up versus two years ago. Therefore, volumes in the 52 w/e 13 June 2021 are positive at +2.8% but beef is now the slowest growing meat protein, with lamb being the fastest.

Mince, a popular cut during COVID panic buying due to its versatility, in the past year has seen volume declines of -1.8%. Although, the cut is still up +8.0% compared to two years ago. Also driving retail losses in the past year are beef ready meals and pastry based products. Compensating for these year-on-year losses is continued momentum for steaks, roasting, burgers and added value as consumers are barbecuing and treating more at home.  

The difficult foodservice conditions continued into 2021, with lockdowns only easing gradually during the first half of the year. We estimate the eating-out market for beef in 52 w/e 13 June 2021 saw volume declines of -57% year-on-year, with steak being the worst hit dish. Deliveries and takeaways offered a lifeline for the foodservice market, and we estimate that beef volumes in this market rose by +90% in the same time period. The biggest contributors to this were burgers and beef-based Chinese dishes (AHDB estimates based on Kantar Out-of-Home, 52 w/e 13 June 2021). We believe that the volume gains in retail and delivery/takeaway just balance out the eating-out and public sector losses in the 52 w/e 13 June 2021.

What next?

As lockdowns gradually ease, consumers have showed signs of getting back to some normality. ‘Freedom day’ during July means we anticipate more of a return to eating out in the second half of 2021. However, the market will not fully recover to pre-COVID levels due to business closures, the economic backdrop, and still some level of uncertainty.

Beef is not predicted to maintain high retail growth in 2021, but we do expect it to track significantly above 2019 levels. In-home occasions are expected to gradually move back to out-of-home over the coming months but we do see some working from home continuing as a legacy behaviour. This trend is not isolated to beef, but smaller reductions are predicted in the outlook scenario vs 2020 for pig meat and lamb.

Beef in the eating-out market will start to see a recovery this year but volumes will still be approximately half of that seen in 2019. Beef deliveries and takeaways will however remain buoyant.

Overall beef volumes for the full year 2021 are expected to be down -2% year-on-year. However when we compare back to 2019, being a more typical year, volumes are expected to be up 2%.

For 2022 we predict these trends will continue as we see retail and foodservice continue on its path back to normality. Eating-out will not return to pre-COVID levels this year and retail sales of red meat may start to suffer again as media noise around the industry accelerates. Overall beef volumes for the full year 2022 are expected to be down -2% versus 2021, and flat versus 2019.

To maintain momentum:

  • Encourage consumers back out-of-home. Opportunities in the eating-out market include personalisation, indulgence, quality cues and pushing reputational factors such as health, sustainability and backing British.
  • Encourage shopper’s in-store by improving the experience of the meat aisle. AHDB has commissioned a research project on the opportunities here with the report due to be published in September.
  • BBQ inspiration is key during the summer months and then as we head into winter inspire warming stews/casseroles, playing on affordability and health.
  • Address health concerns by communicating the health benefits of beef
  • In the longer term, look to maintain and build consumer trust, demonstrating where farming values (animal welfare, environmental stewardship and expertise) are shared with consumers. Click here for more information on consumer views on the environment

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Read the full UK beef outlook

Here you'll find more detail on production, trade and demand.

Beef market outlook

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