High beef prices, allied to a slowdown in high street spending because of the credit crunch, are putting independent butchers in a tricky situation, reports Keren Sall
The past few months have proved difficult for independent butchers. The price of cattle has rocketed at a time when consumers are starting to tighten their belts as the credit crunch takes its toll.
Despite some reports of cattle prices falling, independent butchers are adamant that prices are higher than they have been in the past. Everyone is looking for ways to claw back some of the extra costs without losing sales.
“We cannot raise our prices any more if we want to maintain our beef sales,” says Jim Whitelock manager of Andrew Gillespie Butchers in Glasgow. “Sales of silverside and sirloin have taken a tumble in the past couple of months. However, we have seen a big increase in steak mince and shoulder joint sales, which has balanced things a little bit.”
The business has increased its beef prices to cushion some of the impact, but believes it cannot raise them any more as it has always been a bit more expensive than an average butcher’s. “This positioning has helped us to hold our prices and I am grateful that we are not a small shop in a side street,” says Jim. The shop, which also houses a delicatessen, employs eight staff.
Like many butchers, Andrew is hearing from his customers that money is tight, which is why he is directing them to cheaper cuts that can be used to make a stew or casserole.
He is also pleased that the European Commission agreed earlier this year that bone-in beef from cattle over 24 months can be sold again freely to consumers. “People want their T-bone steaks and there is nothing better than a good red roast on the bone. It is good that the trade is getting to normal.”
Andrew Paxton, owner of Laidlaw Butchers, expresses similar sentiments on the price of cattle and the credit crunch. He says the price of fillet steak has gone up 21% since the beginning of the year. “It was £19 a kilo in January and now it is £24 a kilo.”
Andrew says all cuts have increased in price. “Top of beef, bone-in, has gone up by 15%, strip loins by 16% and rumps by 34%.” He admits he is not sure whether it is the fact he has put up his prices that is scaring people or the fact that they haven’t got the money. “It is hard to differentiate,” he says.
He reveals that he did initially meet some resistance from customers to price increases. “People were going away and trying meat from the supermarket and finding the quality wasn’t there, so it was a false economy,” he says.
He firmly believes that if people have money in their pocket, they will spend on the best they can afford. “If you put two pieces of meat in the window – one for £5.99 and another for £9.99, I can tell you they will always go for the latter, as they presume it is better.”
Andrew maintains that this is not hoodwinking people. “What we are saying is these are top-quality cuts of beef and we are charging the right price for them.” His beef is hung for 10 days before it arrives in his shop and then he bones it and matures in vacuum packs for a further 10 days.
He does not buy the cattle himself personally from markets or auctions, as he would have to pay slaughtering charges, choosing instead to purchase it from Scotch Premier or a farmer who supplied his father for 34 years. But he is aware that the shortage of beef is resulting in ‘over-30-month’ cattle coming in at the same price as younger beef. “Before, younger beef was more expensive, but now there is no differentiation in the price.”
NO COME DOWN
As to beef prices, Andrew cannot see them coming down, because he believes wholesalers have taken such “a hammering” in the past six months, they are going to have to claw something back. “They won’t drop prices. Farmers were complaining 18 months ago that they weren’t getting a fair price for their cattle. But now prices are going through the roof. They are picking up their subsidies, but what’s in it for us? We are at the other end of the scale and no better off.”
Mike Whittemore, retail project manager for EBLEX, concurs with Andrew and Jim. “There has been a hiatus [in price rises], but the nub of it is that, while beef prices may have fallen, they are still relatively high compared to where they were before,” he says. “While processors are saying beef prices are too high, the farmers are saying they are not high enough.” The general feeling from the trade, he adds, is that they are going to go even higher.
Figures being bandied around point to a 40-50% increase on average, but data from the former Meat & Livestock Commission, published in March this year, showed an average rise of 28%. “The higher prices are for beef from particular breeds, which has been aged,” says Whittemore.
However, he admits that independent butchers, who have focused on the premium end of the beef market and made a good living in the past three to four years, are fearful of passing on price increases and pricing themselves out of a market. “Everyone can stand it, if it’s a 5p or 10p/kg price increase, but when it shoots up from £8 to £10, then people do notice that.”
He says one way butchers can push up beef sales is by joining the EBLEX Quality Standard Marks (QSM) scheme, which has some 1,800 independent retailers signed up to date. To become a QSM-approved member, butchers have to be audited by EBLEX and to buy their meat from a QSM-approved abattoir/processor. QSM butchers receive promotional material and consumer kits four to five times a year from EBLEX, as well as QSM livery.
Those who do not want to be part of the QSM scheme can still benefit by contacting EBLEX, but they will get a lesser package which gives them two promotional activities a year.
The meat levy boards have done their best to encourage butchers to promote cheaper cuts, as they look at how retailers can manage the looming beef shortage. While catering butchers, dealing with foodservice contracts, have had some success with this approach, many independent butchers have been reluctant to try them out with customers. But the success of Knightsbridge butcher Jack O’Shea should encourage them.
Jack, who sells Irish beef, has worked closely with Dawn Meats’ Midleton plant in County Cork to supply Continental-style cuts. These include ‘bavette’ and ‘onglet’. The latter is a trim between the ribs on the lower belly. Dark brown in colour with a wide grain, it has a delicate flavour and just one of these can suffice for two people quite generously. The bavette isa flat abdominal muscle, shaped like a stingray, which is butchered into strips that can then be cut into individual steaks. A 300g cut will serve two at an economical £4.
As cattle prices continue to spiral, while herd numbers decline, independent butchers may have no choice but to be imaginative when it comes to product innovation. They can surely give Jack O’Shea – the new kid on the block – a run for his money.
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