The beef industry has long understood that from a demand standpoint, the mission is quite simple. We need to increase the number of customers, the average value of a typical transaction and the frequency of beef purchases. But do we have the tools and the dedication to make them happen?
- Increase the number of customers
Population growth has helped us by default, and regaining access to foreign markets has and will continue to be a priority. All one has to hear is the word “China” to get excited about the export prospects for beef demand.
In other areas, the industry, while maybe not increasing the number of customers within various demographic groups, has done a very good job of stopping the erosion. Aging baby boomers, a younger generation that has grown up with a preference to chicken, changing ethnic mixes and a whole host of other factors have made this task a key priority.
In addition to new beef cuts, new products and new marketing outlets, the growth of branded products and the revolution in the hotel, restaurant and institutional (HRI) sector have resulted in far more differentiation in our product offerings. This allows us to better target specific groups with the aim of ultimately increasing market penetration within various segments. There remains tremendous opportunity in this area.
For more on this charge, read “Target Market,” on page 34 of this issue.
- Increasing the average value of a typical transaction
Convenience and nutrition advances, coupled with brand equity and product differentiation, have helped in moving the industry forward in this regard. The new value-added cuts developed with beef-checkoff funds, as well as various other efforts to increase the value of the round and chuck, have been quite successful.
And this has become increasingly important. With rising input costs, increasing transaction value is needed just to keep pace with inflation. Management and genetics have come a long way in improving both the quality and consistency of the eating experience we deliver, but the opportunities in this area remain large.
In fact, in “Where's The (Quality) Beef” (April BEEF, page 46), Larry Corah, Certified Angus Beef® vice president, said that if the tonnage is available, CAB can hit 750 million lbs. of annual volume. Today, CAB currently sells more than 500 million lbs. of CAB products annually via its 14,000 licensees worldwide.
- Increase the frequency of beef purchases
This number is easily measured by evaluating per-capita beef consumption. Rising beef prices and falling disposable income is expected to drive this number significantly lower. It is this number that will indicate whether we are in for a couple of years of tougher times, or whether we can actually expand the size of our industry.
Compared to other industries, our segmented approach and the number of margin operators in between the fixed-cost producers (cow-calf) and the consumer have made it difficult to address these concerns. The beef checkoff allowed the industry to address this and reverse 25 years of falling beef demand, but inflation has taken its toll on the effectiveness of the checkoff program.
There is no shortage of plans or tactics to drive realization of the goals listed above. The sad fact is that there's simply a shortage of dollars to implement them. If the industry is serious about realizing the potential and prosperity that awaits it, it is high time for us to increase the funding for the demand-building activities that will make it happen.
Troy Marshall is a Colorado-based cattleman, editor of Seedstock Digest and a weekly contributor to BEEF Cow-Calf Weekly, a free weekly newsletter delivered by email every Friday afternoon. To subscribe to BEEF Cow-Calf Weekly, which provides timely news, opinion and analysis of events and trends of particular importance to the cow-calf production segment, visit www.beefmagazine.com.
The deadline for Ag Census forms has been extended to June 1. Responding to the census, which is conducted every five years, is required by law. Any producer with questions regarding the survey can contact USDA's National Agriculture Statistics Service toll-free at 888-424-7828. The census form also can be submitted online at www.agcensus.usda.gov.