“The prosperity of this entire industry lies with the consumer.”
Ag economist Ted Schroeder made that statement during the recent Beef Improvement Federation meetings in Manhattan, KS, June 15-17, but it summed up the theme of the opening session.
Schroeder and fellow Kansas State University ag economist Glynn Tonsor kicked off the conference, talking about beef demand in the next two decades.
Tonsor pointed out four competitive advantages the U.S. and Canada have over trading partners:
- Trust that the product is safe and correctly identified
- A grain-finishing system that supports high-quality production
- Solid infrastructure, including transportation and research expertise
- Property rights and business practices that encourage investment
“We are not a low-cost producer,” Tonsor said, and we have fierce competition. Countries like Australia and Brazil are “not standing still waiting for us to get our act together,” he continued, suggesting that market opportunities will “pass us by if we don’t improve on communication, coordination, signaling.”
Not only will the demographics of our domestic consumers change in the next few decades, to include more Hispanics and other backgrounds, but beef’s core customer base will increasingly rely more on exports.
“Global is where our major growth potential rests,” Schroeder said. It’s more important than ever to focus on trade negotiations and overcoming trade barriers.
“The goal is to create value for everyone,” said John Stika, president of Certified Angus Beef LLC, He addressed the crowd on “The Consumer-driven Food Business.”
That’s the only way beef-eaters will buy more at a higher price. Something they’ve proven they will do if the perceived value, in the “price-value relationship,” is solid. Sika shared Certified Angus Beef ® (CAB®) brand demand as a case study. It’s increased 98.1 percent since 2009, at the same time USDA Choice demand decreased.
The price side of the equation was steep when compared to other proteins, but “taste-driven consumers” still chose beef, he said.
“During the worst economy and a tighter cowherd, premium products continued to grow,” Stika said.
In 2015, beef prices were 57 percent higher than pork and 207 percent higher than chicken (see chart).
“If we expect consumers to buy our product, we have to up our game,” he said. That includes continuing to engage consumers, not just with a good story, but also by verifying that story.
Brad Morgan, Performance Food Group, said building relationships is key for his company.
“Our customers really and truly want to know, ‘Do you have our back?” he said.
Among the most powerful groups to have an impact on beef are moms, millennials, and meat lovers.
Moms control $20 trillion in buying power while meat lovers understand beef and are squarely focused on quality, Morgan said.
“They will open their wallets to pay for the best,” his slide noted.
“Millennials, whether you appreciate them or not, they like beef. They just want to know more about it,” Morgan said.
In addition to a story, the product must live up to it, and Keith Belk, Colorado State University meat scientist, talked about traits cattlemen should focus on to be sure it does.
His presentation noted tenderness as the most important measure in eating satisfaction, but “several studies have shown that when tenderness reaches an acceptable level, flavor becomes the most important driver.”
The No. 1 thing producers have done in response to the call for improved quality is “turn the cattle black,” Belk said, asking the beef community to do even more.
He suggested looking into the microbiome, or the animal and the bacteria that naturally live on it, to develop future tools.
“We need to learn to take advantage and capitalize on that,” Belk said.
Beef quality has improved, and we are “in the most consumer-centric times we’ve seen,” Stika said. It comes down to this advice he shared: “We need to change our perspective from, ‘I’m in the cow business,’ to ‘I’m in the food business.’”