A trend towards eating out in the US, which saw sales at restaurants and bars overtake spending at grocery stores for the first time last month, bodes well for New Zealand farmers who produce beef for hamburger patties, an economist says.
The US is New Zealand's largest beef market, accounting for 51 percent of the nation's $2.65 billion of beef exports in the year through February, according to the latest trade data from Statistics NZ. Retail sales data released in the US yesterday showed younger Americans are more likely to eat out at fast-food restaurants, helping restaurant and bar sales overtake grocery for the first time since the data began in 1992, Bloomberg reported.
"Beef farmers will be rubbing their hands together with millennials overtaking baby boomers in dining out and driving quick-service restaurant sales activity," ANZ Bank New Zealand rural economist Con Williams said in a note. "This bodes well for beef burger consumption in New Zealand's largest market and when combined with a hopefully weaker NZD/USD should be good for returns."
The uptick in demand from food-service operators, some of which is reflecting an increase in more expensive 'gourmet' burger offerings. Rising demand is particularly positive for beef, as it accounts for nearly a third of overall meat protein sold by food-service establishments by volume, Williams said. Lagging behind beef is chicken with a 30 percent share, followed by pork at 20 percent and seafood at 11 percent.
A decline in the New Zealand dollar against the greenback will also help local farmers, he said.
The New Zealand dollar, which recently traded at 75.08 US cents, will fall to 70 cents by the end of the year, according to the median forecast of 21 currency traders, strategists and economists surveyed by BusinessDesk at the end of March, all of whom expected a decline. It dropped 3.7 percent in the first quarter of this year.