Successful branded-beef programs, such as Certified Angus Beef and Nolan Ryan’s All-Natural Beef, are underscoring how quality and consistency pay, even in a soft economy.
Quality and consistency pay, even in a soft economy. Just ask those involved in the industry’s most successful branded beef program, Certified Angus Beef® (CAB). The program, which began in 1978, reported record sales for a sixth consecutive fiscal year (FY) that ended Sept. 30. Sales totaled 811 million lbs., beating 2011’s record by 4 million lbs. and were up 49% from six years earlier. Sales dollars were record-high, too, which contradicts the perception that consumers shy away from premium-priced beef.
CAB struggled in its early years and might have floundered but for the leadership of a few individuals. Now it has more than 16,000 licensed partners worldwide and its FY 2012 sales advanced to 9.6% of all federally inspected cattle, up from 5.6% in 2006, CAB reports. What’s more, the brand generated well over $4 billion in annual consumer sales worldwide.
Photo Tour: CAB® Education & Culinary Center Grand Opening
Even more interesting is how the wholesale value of a CAB carcass increased from 2011. Price reporting service Urner Barry calculates that CAB carcasses in FY 2012 were worth $1.62 billion. This involved $199.71/cwt. of carcass weight x the 811 million lbs sold. FY 2011 saw $180.99/cwt. of carcass weight x 807 million lbs. sold for a total of $1.46 billion.
The increase in pounds sold per carcass helped CAB achieve record sales despite lower cattle supplies. A total of 3.24 million cattle were accepted for CAB, down 320,000 head from 2011, but still the third largest number to qualify in any year. Carcass utilization increased 10% from 2011, CAB says.
CAB owes its continued success in part to the fact that consumers equate high quality beef with the word “Angus.” That’s why the program has spawned a myriad of other Angus programs. But CAB laid the groundwork for its success years ago by encouraging producers to aim for quality, and by partnering via licensing with packers, retailers, foodservice operators and others. A huge part of the brand’s global success lies with its 16,000 partners.
Another factor, which CAB notes, is the product’s consistent dining experience. Consistency at this level is arguably more important than at retail, where aggressive product pricing can help drive sales when needed. In fact, foodservice sales were 32% of total CAB business volume and grew more than any other area. International sales were the other growth area, with Canada and Mexico remaining CAB’s strongest foreign markets.
The emphasis on quality is just as important to small (compared to CAB) branded-beef programs like Nolan Ryan’s All-Natural Beef. An operation of Beefmaster Cattlemen, the brand will sell about $35 million worth of fresh beef to retail and foodservice customers in 2012. It has branched out at retail to include smoked beef sausage, fully cooked beef patties, hot dogs and a line of seasonings. Nolan Ryan All-Natural Beef is doing, in some capacity, all the things that fit with a fresh beef program, CEO Charlie Bradbury, told a recent meat industry conference.
Interestingly, Bradbury says CAB’s success created challenges for Beefmaster cattle producers in the 1990s because of a perception among consumers that non-CAB products would be tough. So tenderness became the focus.
Producers and researchers pushed development of a detection device that used color to identify leanness and tenderness by reflecting visible light on the ribeye of each carcass. A similar concept was later developed utilizing infrared light and Nolan Ryan still uses this technology.
As with CAB, Nolan Ryan focuses on providing beef that consistently eats well. As the iconic pitcher told Bradbury at their first meeting; “I can probably get consumers to pick up this product one time. But if you don’t do your job, they won’t be back.” Like his pitches, Ryan’s words hit exactly the right target.
Steve Kay is editor and publisher of Cattle Buyers Weekly. See his weekly cattle market roundup at beefmagazine.com every Friday afternoon.