000336 U.S. Meat Consumption Ends Slump

Chicago - At E&M Foods in the Chicago suburb of Skokie, customers are drawn like magnets to the best and most expensive beef: porterhouse, T-bone, strip steaks, filet mignon.

“There was a low-fat craze that came and went. The veggie craze came and went. But beef -- that's part of us,” owner Ed Figlewicz said. “Americans have always liked beef.”

Indeed, the line spills out into the street some Saturdays at the Paulina Market on the city's North Side, where steaks are the prized item in a butcher shop bursting with beef.

Upscale steakhouses buzz with big dinner crowds in the downtown Loop and along Rush Street, a hub of Chicago nightlife, similar to scenes in other cities from Boston to Seattle.

After a decade of flat sales, beef is back.

For much of the '90s, a nation long known for its love of burgers and steaks seemed to have had its fill of red meat amid concerns it might not be so healthy.

But now no one's asking where the beef is. U.S. beef consumption rose 2% in 1999 to 66.2 pounds per person, the highest since the 1980s, according to the U.S. Department of Agriculture.

Factoring in higher prices, consumer spending on beef shot up 5% to $49.2 billion, according to Chicago-based marketing firm Technomic Inc.

“It has come back,” says Ray Lekan, co-owner of the 51-year-old Paulina Market, which had one of its best years ever in 1999 thanks to beef. “It's slowly becoming more popular again.

“It's shaken off the cholesterol onus, the gray cloud that's been over it for so many years,” he says.

Beef's glory days may not last. Production is forecast to fall 3% this year, driving prices still higher, due to the liquidation of breeding herds during down years. And marketing research shows chicken will surpass beef as Americans' meat of choice by 2005.

But last year's modest jump brought huge relief to an industry that has been standing still while chicken and turkey fly up from behind.

“For the first time in 20 years, we're seeing beef demand stabilize,” says Chuck Schroeder, chief executive officer of the National Cattlemen's Beef Association.

“It isn't a skyrocketing increase, but it says consumers have renewed interest and enthusiasm for beef.”

Several factors explain the latest beefing up of America. Among them:

-- With the U.S. economy soaring, people are eating out more than ever and high-cost items such as steaks and other choice cuts of beef are more popular.

-- The nationwide craze for the low-carbohydrate, high-protein diet has made beef a diet staple for many.

-- Taking a page from the poultry industry's cookbook, the beef industry has been stressing convenience and speed. From rotisserie-style roasts to fully cooked ground beef and microwaveable pot roasts and stews, it has been flooding supermarkets since late 1998 with heat-and-serve products that can be prepared in 10 minutes.

“The industry got the message” says Chuck Levitt, meats analyst for Alaron Trading Corp. in Chicago. “It knew it needed to prepare more quick-preparation products.”

-- A $30 million yearlong marketing campaign launched last fall promotes beef's nutritional value, focusing on nutrients such as zinc, iron, protein and several B-vitamins. The beef industry even claims lean red meat can be part of a cholesterol-lowering diet.

The resurgence of beef has made the livestock industry a rare bright spot among U.S. farmers, many of whom are in the doldrums over low prices for agricultural commodities.

Recovering from hard times that ended in about mid-1998, ranchers enjoyed the best prices for calves in December since 1994. Feedlots have been profitable since early last summer.

Besides U.S. consumption, they also have benefited from strong U.S. exports to Asia and elsewhere.

Among the beef industry's biggest fears is an economic downturn.

“There are two places people 'steal' from when their money gets tight: their food budget and their insurance company,” says Dave Maher, a meat industry analyst for Securities Corp. of Iowa. “That means they might eat out less, and they might cut back on the expensive cuts.”

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