Mainstream beef producers traditionally have looked at natural and organic beef as relatives no one wants to claim — the black sheep with strange sounding names that cause consumers to rethink their purchasing decisions.

But it's time to revisit this position. These former “outsiders” could be doing the industry a favor by broadening beef's appeal, and bringing in big numbers of underserved consumers willing to pay more for beef qualities they consider important. Those qualities include no, or limited use of, hormones and antibiotics, and documented animal-welfare practices.

The debate began almost three decades ago when a Colorado cattleman went with an “innate feeling” and launched a company to give consumers variety, innovation and choice in beef. The firm, Coleman Natural Meats, became the first natural-beef label.

Today, USDA's “natural” definition refers to beef that undergoes minimal processing. Those procedures can vary from company to company. For instance, while Coleman bans all use of hormones and antibiotics, other natural-beef companies allow them up to 100 days pre-harvest.

Each company's label must explain how their product qualifies for the natural definition. The label becomes a marketing tool directed to consumers willing to pay higher prices for that information. Because commodity beef doesn't offer similar information, some producers have suggested there's guilt by omission.

“When my father (Mel Coleman, Sr.) first started promoting natural beef in the 1980s, cattlemen said, ‘If you're out here selling your natural beef, are you saying my beef's bad?’” remembers the company's chairman, Mel Coleman, Jr.

He wasn't. Nor did the elder Coleman suggest a high percentage of commodity beef couldn't fit the same claims as natural beef. He was just among the first to use a natural label to document his production practices concerning hormones, antibiotics and animal welfare.

Today, many other companies sell natural beef, including Nolan Ryan Guaranteed Tender Meats, B3R Country Meats, Laura's Lean Beef, Harris Ranch and Maverick Ranch. In addition, National Beef recently launched a natural beef product, and Tyson Foods this year also introduced two lines of natural beef, one in cooperation with Certified Angus Beef.

Defining “organic”

While USDA defines “natural” as minimal processing, “organic” beef requires more stringently monitored production practices. Organic beef producers must document USDA rules for certification, including absence of hormones and antibiotics, and the feeding only of certified organic grain from organic growers. Mesquite Organic Foods, Dakota Beef Company, and Davis Mountains Organic Beef are among the prominent organic beef companies.

In this decade, a growing number of consumers are turning to the natural and organic category because it answers this question: “What have you done for me lately as far as innovation, variety and choice?”

Commodity beef in this decade has filled two-thirds of those requirements. In fact, new product development offering variety and innovation has been a key focus of the checkoff program in recent years, with more than 2,000 new beef products entering the market between 1996 and 2005.

Adding more value

However, natural and organic labels have gone a step further by bundling those convenience and taste characteristics with info on production practices and animal-welfare claims. This bundle provides a discrete segment of consumers with the complete shopping experience they seek.

The Coleman model is an example of this bundle. Variety comes from offering the entire product line in a single location in the meat case, so consumers save time by shopping for beef, pork and poultry with one stop of the cart. Innovation comes from expanding the company's fresh-beef product line with value-added, natural-beef products and deli meats. And choice comes from providing consumers with a natural label detailing the production info they require.

This latter characteristic, which commodity beef doesn't document on a per-package basis, stands out as the most important driver of new customer interest to the natural and organic category. A May 2006 natural-meats survey by Whole Foods, the global leader in retailing natural and organic food, showed:

  • 65% of Americans want a guarantee that all meat and poultry products are free of added growth hormones and antibiotics, and animals are humanely raised;

  • 61% say it's important to read labels stating meat and poultry products comply with these standards; and

  • 59% say they'd buy more natural beef if guaranteed it's from a trusted source and is raised naturally without growth hormones or antibiotics.

The question is whether those tendencies relate to increased natural and organic beef purchases. The beef checkoff program's data from the third quarter 2005 demonstrate they are. The figures show natural and organic beef dollar and volume sales grew at a much faster rate than total retail beef sales, and at prices 45% higher than commodity beef.

In the meat case

Randy Irion, director of retail marketing for the National Cattlemen's Beef Association (NCBA), the checkoff's primary contractor, puts this growth in perspective by pointing to Freshlook Data research. It indicates the category's share is only 1.6% of total beef sales and 1.1% of total beef volume.

“Natural and organic products are getting more attention than their sales level alone indicates,” Irion says. “They're looked at as new and different. Because of that publicity, supermarkets believe they should take advantage of what has the potential to be a growth trend.”

He explains the meat case is a destination category that draws consumers into the store. Meat-market managers eye natural and organic products because they comprise a rapidly growing category. Managers also understand natural and organic products have production requirements that may restrict them from reshaping the meat case. Irion singles out organic as a product line with particularly high barriers to growth.

“The category will never go away, but there may be limitations because of the strict guidelines and standards organic products must meet,” Irion says.

But no one doubts additional growth for natural and organic. Datamonitor, the world's leading provider of online data, analytic and forecasting platforms, estimates the natural and organic meat market (beef, pork and poultry) will expand from $2.3 billion in 2004 to $5.5 billion in 2009. That's a 19% compounded annual growth rate (CAGR).

By comparison, the much larger commodity-meat industry will experience a CAGR of just 3.2%, as it expands from a $92.2 billion- to a $107.7-billion market through 2008.

“That's astounding growth for natural/organic,” says Robyn Nick, Coleman's director of communications and cause marketing. She says Coleman's own 2005 research supports those growth projections. It shows a third of Coleman natural meat retail customers came into the market last year.

Consumer profile

Who is this customer? According to Irion, checkoff research identifies the natural/organic customer as a light consumer of beef, who's a little older and has a higher income. He contends the checkoff's successful “Beef. It's What's for Dinner” (BIWFD) campaign reaches this individual because it promotes all types of beef to consumers across the board.

Irion adds the checkoff welcomes the opportunity to increase consumption frequency among light to moderate beef consumers. He also contends the BIWFD campaign has a variety of programs that reach out to all consumer types, including nutrition and enjoyment campaigns.

But none of the checkoff's programs provide information on each package's documented production qualities. Because the natural and organic category does, it offers opportunities for underserved consumers to eat beef more frequently. And although consumer numbers aren't huge by commodity beef's standards, they nonetheless augment beef's market reach in the race against competing proteins.

By taking advantage of this need, Coleman has spurred demand for its products. Coleman's consumer profile describes a highly educated consumer of natural beef who stays informed about world events. Whenever global headlines mention BSE or pathogens, Coleman contends natural-meat consumers seek more information about production practices of their favorite foods. And they don't hesitate to pay premium prices for natural and organic labels to get this information.

“We're reaching baby boomers who want to eat better than in the past; young mothers who want more nutritious food for their kids; and younger, highly educated couples whose beliefs are generated by their knowledge,” Coleman says. “These groups want organic produce and natural beef.”

If the natural/organic category brings in customers underserved by the checkoff's ad campaign, no one doubts the benefits to the beef industry as a whole.

“Anytime something makes consumers aware there are options out there for beef, it's good news,” Irion said. “Anything that broadens the appeal of beef to a larger audience is a good thing.”

Coleman doesn't see this as a zero-sum game between commodity beef and natural and organic beef. He knows commodity beef will never go away, and he's making sure his product is a perennial winner, too. That's why his firm's vision no longer is to convince consumers to consider natural beef, but to continue to satisfy them through constant innovation, choice and variety.

“People ask us about this natural niche, and where it's going,” Coleman said. “We say it's not a niche anymore. This is who we are.”

Doug Perkins, president of TriTech Ventures LLC, Austin, TX, is a former vice president of the Texas Beef Council.