The BBQ Index: Beer, burgers and other Fourth of July staples

Rabobank has been tracking the cost of a 10-person Fourth of July BBQ, using the event as a barometer on inflation and cost-of-living pressures as well as an indication of consumer trends.

Inflation is a key concern in 2024 across most BBQ categories - but the beer category shows some surprising dynamics.

Warming up the grill

The first takeaway from the BBQ Index is that inflation has become very real for most consumers. And, furthermore, they're fed up.

Food inflation jumped 25% from 2019 to the end of 2023. But while the additional inflation in the first half of 2024 has been far more modest, it’s also been the tipping point.

Many consumers who stayed the course by continuing to spend in the face of 40-year highs in food prices are now pulling back and re-evaluating their budgets.

In 2024, hosting a 10-person BBQ on the Fourth of July will cost $99, the highest on record, calculates Rabobank. That compares to $97 last year and $73 in 2018.

That brings the inflation gain for a Fourth of July BBQ up to 32% since 2019.

And food pricing is unlikely to reverse course – ‘this might be the last time we’ll see a summer cookout for under $100,’ says the financial and market research giant.

Against this backdrop, families preparing for the time-honored tradition of a backyard barbecue this Fourth of July are on the hunt for bargains.

Breaking down the BBQ: Beer remains a core staple

The Rabobank Barbecue Index creates an average American BBQ situation—a mix of 10 family and friends—on Fourth of July weekend.

It assumes each person will consume one cheeseburger with lettuce and tomato, one chicken sandwich with lettuce, tomato and a slice of cheese, two handfuls of chips, two beers, a soda and a few scoops of ice cream.

This year, that total comes to $99 (or $9.89 per person). Beer, beef, soda and lettuce make up 64% of the cost.

It's no surprise to hear that beer remains a core part of the Fourth of July BBQ. It’s expected to take a 27% share of the total BBQ cost ($26.73), or $2.66 per person.

That’s by far the largest share of the BBQ costs: ahead of the cost of beef at $1.41 per person and lettuce at $1.07 per person.

As the only category bucking the trend of beer industry declines, expect import beers to be a popular choice. In 2023, mainstream US sales-to-retailers declined 6% for mainstream beers, down 4% for economy beers and down 5% for craft. In contrast, imports were up 5.5%.

That's mainly on the back of growth of Modelo (sales up around 15% in the last 52 weeks) and Corona (up 4%).

"These are two of the top six brands in the US, so if they are doing well, they will define category performance for all imports," Jim Watson, senior analyst, beverages at Rabobank told us.

"The fact that consumers are willing to trade up to these two brand families reflects a the impressive brand equity and momentum behind the brands - and consumers losing connection with other brands that have lead beer for last several decades."

But imports come in at the premium end of the beer spectrum. If consumers are all about battling inflation and trading down, why are they turning to the category?

"Inflation remains a significant pressure in the beer industry, and consumers are absolutely making price based decisions – but the growth of imports is the loud reminder to the entire industry that if you get the brand story right, the consumer pricing will follow," said Watson.

With a 31% rise in sales across non-alcoholic adult beverages in 2023, non-alcoholic beer can be expected to have a place at an increasing number of BBQs.

In the context of cost-of-living pressures, it's tempting to assume that they're rising in popularity because they're cheaper than alcoholic versions. But that's just not the case: non-alcoholic versions often retail at similar prices as their alcoholic counterparts.

The driver, here, is nothing to do with finances: it's about health and wellness.

"Non-alcoholic beer in the US is not really any cheaper than the rest of the beer category – in fact it might be more expensive on average.  Health and wellness is really the only driver here," said Watson. "It’s worth noting that most consumers are also regular beer drinkers – so this is about finding ways to moderate beer consumption over a longer drinking session or bring beer into an occasion where you might not normally drink."

Breaking down the costs of the rest of the BBQ

Soda is another key part of the BBQ. This is expected to contribute $1.21 of the per person BBQ cost: the fourth biggest cost after beer, beef and lettuce.

Beef is the second largest cost in the BBQ. The expectation of tighter US beef supplies is pushing up prices, with US producers facing drought and challenging business conditions.

Demand for chicken has improved as consumers seek lower-cost, higher value proteins: turning to chicken as an alternative to beef. Lower-cost thigh meat and legs are getting good traction.

Surprised to see lettuce as a top cost? California drought has sent lettuce prices to more than $100 a carton in 2023, well above the average range of $15 to $20 per carton. Fortunately, prices have since come down significantly, and consumers are stocking up on lettuce as a popular burger topping.

Tomato prices have moved higher in 2024 as dry weather in Mexico has curtailed production and overall affordability.

Bakery goods have felt the impact of price increases in 2023, resulting in lower sales volumes. That's not because Americans are eating fewer burgers: but they've become more aware of waste and opted for smaller packages.

Cheese consumption continues to grow: US dairy processors are opening up new capacity, with new cheese plants opening this year.