Aug 17

Finding a way out of supply chain struggle-town

If you’re living on earth, and especially if you work in restaurants, you’ve probably noticed that all kinds of goods are suddenly out of stock, hard to find, or just have prices all over the shop. What you’re likely NOT getting are some straight answers about what’s going on, when it will get better and what to do about it! As the #1 imported supplier of lamb and grassfed beef into the US market, your mates at True Aussie Beef & Lamb are here to give you some answers.

Q: What’s going on with lamb and grassfed beef supply chains? Is it labor? Trucking? Shipping?

 

A: The short answer is yes. **Shipping is a major issue – containers have been hard to get, and there are delays at ports due to labor constraints here in the US. Ground logistics are an issue everywhere as well. Labor at Australian facilities haven’t been hit as hard, so when US ports improve, supply should improve as well.

 

Q: Go-to lamb cuts like racks are really hard to come by in foodservice. Is supply to the US tighter than usual?

 

A: The surprising answer here is no – Australian lamb shipments to the US are as strong as ever, and even headed for an uptick. Australia remains the top supply in the US market. The difference is in where it’s going. Cuts like racks that used to be primarily a foodservice item, are now getting sold into retail. Those accounts tend to be stable and operate on long-term contracts with importers so it’s likely that this trend may continue, especially considering consumers are continuing to purchase and enjoy lamb at home.

 

Q: So what’s an operator to do?

 

A: Our advice is that operators reach for alternative cuts — loin chops, leg, rump, ground, shoulder, shoulder chops.  A little culinary creativity with these more available value cuts can deliver a great return. Australian lamb still carries a premium, no matter the cut! And the increased familiarity and demand for lamb by US consumers just opens that opportunity further.

 

Q: Where’s the Grassfed beef?

 

A: Climate change is having an impact here – after years of drought Down Under, Australia is finally seeing some relief in the form of rainfall. This means farmers can rebuild their breeding herds instead of rushing them off to sale yards. Long term it’s good news, as a healthy herd means healthy supply of grassfed animals in the system…but it’s the beginning of a 2-year stock rebuilding cycle.

In the short-term, Australian grassfed beef supply to the US is down 43% overall (12 months ending July) because of low supply and higher prices especially impacting the frozen manufacturing beef (aka burger) market. Higher end chilled grassfed beef is only down 15% over the last 12 months with retail taking up a good bit of the slack from reduced foodservice demand in 2020.

 

 

Q: So what’s an operator to do?

 

A: The way forward is to take advantage of consumers’ willingness to pay more for grassfed. In 2020, there was a 45% increase in dollars and a 43% increase in pounds sold of grassfed beef at retail compared with 2019. At the same time the overall beef category (ie: US corn fed/conventional beef) saw 23.7% $$ growth and 12.7% volume growth… so in essence grassfed tripled the growth of conventional beef for volume and doubled it for sales. This is happening despite paying a premium at the market, a very real indicator that consumers see value in the attributes of grassfed. Whether it’s animal welfare, nutrition, the environment, or quality that’s driving them, consumers are putting their money where their mouths are on this one.

 

 

 

 

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