Beef consumption declines sharply as prices rise
Atria result plummets
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The ban on imports of Brazilian beef into the European Union has helped push the price of beef up to the pain threshold for many consumers. Finns are turning away from beef, in favour of cheaper chicken and pork. Consumer behaviour does not indicate any shift toward cheaper cuts of pork.
Ilkka Alarotu, selection manager of the retail chain SOK, does not believe that demand for beef would have declined permanently.
“It’s all about price. Demand will revive if the price comes down”, he says.
Alarotu says that the trend in Finnish meat consumption is toward various semi-processed meats. He also expects foods marketed for their health benefits to become more popular.
In the present barbecue season the trend has been away from cheaper sausages to higher grades of sausage and cuts of whole meat.
The trend has been noted by Juha Gröhn, CEO of the meat packer Atria. Gröhn does not believe that rising inflation and slower economic growth would lead to changes in this trend. Such a change did take place during the recession of the 1990s, when prime cuts did not sell well. “Sausage did sell well, as well as the grades of ground meat with a higher fat content”, he says.
Consumption trends are a major consideration for Gröhn; Atria’s result for the first half of the year was weak, with a three per cent reduction in turnover to EUR 335 million. Its business profit was EUR 10.6 million, just 3.2 per cent of turnover.
The company expects its business profit this year to fall significantly below last year’s figures. The news led to a 6.5 per cent decline in Atria shares on Friday.
The decline in the result was primarily attributed to the rising price of meat. Wholesale prices rose in the early part of the year by about six per cent, but it was not enough to offset the impact of rising costs.
Prices paid to pork producers rose by EUR 1.48 per kilo, representing a rise of about 8.5 per cent over the average price for last year.
“There was long a surplus of pork in Europe, and consequently, its price did not go up very much. Now the rising prices of feed and energy have forced a reduction of capacity in Europe. We are currently seeing the impact of this”, Gröhn says.
Jukka Rantala, an animal husbandry expert at the Central Union of Agricultural Producers and Forest Owners (MTK) does not see much hope for an improvement in the near future.
“When the Germans take out their grills, there is no going back. The producer price of pork in Germany is EUR 1.80 per kilo”, Rantala says.
Helsingin Sanomat
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| 4.8.2008 - TODAY |
 Beef consumption declines sharply as prices rise |
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