TOKYO — Prices of Japan’s prime quality wagyu beef are on a downward trend as consumers tighten their purse strings following the country’s consumption tax rate hike in October.

Domestic demand has shifted to more affordable beef from crossbred cows while wagyu prices have been at record highs over recent years. But for now, wholesale prices are likely to remain low as wagyu shipments increase.

In December, the average wholesale price of a benchmark grade A4 steer carcass was 2,319 yen ($21.17) per kilogram, down 13.8% from a year earlier and 4% from November.

The December 2019 prices marked an annual low, in stark contrast with 2017 and 2018, when the highest average wholesale price was reached in December. In mid-January the price stood at around 2,280 yen, about 9% lower than one year before.

“Wagyu is not selling even at reduced prices,” said a meat manager at a Tokyo supermarket. One cattle raiser also said it is very unusual for wagyu beef prices to fall in December.

In Japan, wagyu beef prices tend to remain high in the month of December, when many people tend to eat sukiyaki — a braised beef, vegetables and raw egg dish — with their families during the year-end and New Year holidays.

The record-high wholesale prices of wagyu beef seen in recent years were driven by increasing demand from the growing number of foreign visitors to Japan, as well as exports. As a result, the retail price jumped 15% in about five years, making the products unaffordable for many Japanese consumers.

But as consumers have turned away from wagyu, beef from crossbred wagyu and dairy cattle has been gaining popularity. Leaner and cheaper than wagyu beef, the average wholesale price of a grade B3 crossbred steer carcass was 1,683 yen per kilogram in December, marking its highest point of the year.

“Now that consumers have varying demands for cuts and grades of beef, marbled and expensive A5- and A4-grade wagyu beef may become less popular,” said a spokesperson for a supermarket in Tokyo. The supermarket is considering reducing its selling space for wagyu beef due to slow sales.

Japanese households spent an average 7,743 yen on beef between April and September 2019, down about 4% from a year earlier. Wagyu beef shipments, on the other hand, have been expanding. According to forecasts by the Agriculture and Livestock Industries Corporation, an industry body based in Tokyo, exports in December 2019 were 10% above the December 2018 level.

Encouraged by high prices in the past, farmers have been inclined to rear more cattle to produce wagyu beef. But the increase in wagyu production, coupled with less enthusiastic consumer appetite, has caused prices to decline.

This year, some observers expect the prices to receive a boost from the resumption of beef exports to China and an expected uplift in domestic consumption linked to the Tokyo Olympic and Paralympic Games. However, some voice concerns over the knock-on effects of the recent international outbreak of coronavirus, which causes potentially fatal respiratory sickness, that originated in Wuhan, China.

In Japan’s domestic market, consumers are becoming less particular about choosing pure wagyu beef, and more are opting for meat from crossbred cows as its quality has improved. While overall wagyu beef consumption remains stable, the possibility of further price declines remains if more stores reduce their orders.

Going against such consumer sentiments, the ratio of top-ranked grade A5 wagyu beef produced is increasing.

According to the Japan Meat Grading Association in Tokyo, A5 wagyu beef made up 46% of all wagyu beef shipments between January and November 2019, up 5 percentage points from 2018 and 19 points from five years ago. The percentage of second-best grade A4 beef declined by 2 points over the same period to 36%.

The ratio of grade A5 beef has continued to climb year after year on the basis that the more it is traded, the more income farmers will receive. However, some in the agriculture industry and distribution channels are skeptical of such expectations.

“Grade A5 beef is not a rare gem anymore. More ‘marbling’ (the visible fat distributed inside the meat) no longer equals higher sales,” one pointed out. “It doesn’t mean it tastes good just because it is grade A5 beef,” another said.