Beef Consumer An Elusive
But Most Important Target

By David Bowser

ARDMORE, Okla. — Cattlemen today need to differentiate between customers and consumers, says an Oklahoma meat scientist.

"If you are a cow-calf person, the feedyard is your customer," says Dr. Brad Morgan, a meat scientist with Oklahoma State University. "If you are a feedyard person, the packer is your customer."

They're not the ultimate consumer.

"You have to differentiate between the needs and wants of those, because if you own a feedyard or if you're putting cattle in there and you're retaining part of the ownership, just because we hit a certain grid doesn't necessarily mean that we are hitting consumers' expectations," Morgan says.

Mary Adolph with the National Cattlemen's Beef Association says consumers do not want the cattlemen's products and services. Consumers only want their needs and wants met.

"That's what we have to do," Morgan says. "Meet their wants and needs."

Morgan says on a recent trip to Australia, he noticed that the cattlemen's group he visited with would put an empty chair at the front of the room before their meetings started.

"I just thought they were trying to be hospitable," Morgan says, "but the reason they do this is any time they have a meeting, any time they're at a critical juncture, any time they've got to make a hard decision, they always remember that they are working in a consumer-driven industry and the person taking that chair is the consumer. They want to make decisions that would benefit the consumer."

Morgan says it keeps that idea before the Australian cattlemen.

"We are a consumer-driven industry," Morgan reiterates.

A generic advertising program for an inconsistent fresh beef program will not be enough to turn the demand picture around.

Morgan says the "Beef, it's what's for dinner" campaign has been very successful. It's a recognizable campaign to 65 to 70 percent of Americans.

"What we have to have is a product that backs this up," Morgan adds.

He says the industry's goal should be to see that domestic and international consumers receive bacteriologically and chemically safe, healthful, high quality and consistently palatable beef that is produced without compromising the environment or the animal's welfare.

"One of the things I think you will see is that we will have more and more programs that are process-verified," Morgan says. "What that means is that every order is tracked back to the source or the farm."

Eventually, he says, everything will be process controlled.

"Every phase of production is going to be monitored," he explains.

Each phase will be based in a quality control system to assure the consumer that beef is a safe, consistent, palatable product.

The pork and poultry people are already doing it. Premium Standard Farms is now advertising process-verified pork. Morgan says that in talking with pork producers, they say it has helped increase demand for their product.

Today's consumer, he notes, makes 2.2 trips a week to the grocery store. Two-thirds of all the supper serving decisions across the nation are made the same day the meal is served.

"Nobody knows what they want to eat until about 4:30 in the afternoon," Morgan says. "Nearly 80 percent of the consumers spend 45 minutes or less preparing that evening meal. That's today's consumer, the people we're supposed to cater to."

Sixty percent of consumers use ready-to-eat bagged salads now.

The number of meals purchased in a restaurant and eaten in a car is up 44 percent since 1984.

"You have a hamburger in one hand and a cell phone in another and you're driving through the Arbuckle Mountains with your knee," Morgan quips.

The problem with trying to satisfy the consumer, he says, is that the consumer is a moving target.

The beef industry has lost 13.7 percent market share to pork and poultry since 1980, Morgan points out. It has dropped from 53.9 percent to 40.2 percent.

"But one of the things you've got to realize," Morgan continues, "is that we're not merchandising the same product today as in 1980."

Today's product is boneless, closely-trimmed and ready-to-eat.

"Back in 1980, we had a lot of bone-in product that had a bunch of fat on it," he says. "That increases weight, so part of the decline is due to the fact of the kind of product we were merchandising back then, but I'm not saying we haven't lost a lot of market share."

A loss of almost 14 percent of market share translates into $250 less for every steer and heifer that comes out of the feedyard.

Morgan says beef industry predictions for the next century include more branded products, a value-based marketing system, and more alliances.

Today, Morgan says, about 30 beef alliances exist in the U.S. He expects 60 alliances to form in the next five years.

"It is projected that between four and 11 of those alliances will control the meat case in the United States," Morgan says.

Alliances will dictate animal husbandry practices in a process-verified program, and the 30 largest cattle feeders will generate 50 percent of all the finished product in the marketplace. Cattle feeders will align cow-calf producers, packers, retailers and food service operators to produce branded, source-verified products.

"There are 24 branded products that are monitored by the USDA," Morgan says. "Twenty of these have the name of a breed involved, like Certified Angus Beef."

Fifteen of the 24 have to meet certain descriptions, such as being 51 percent black, he says. Seventeen use muscling scores in their programs, and 17 of the 24 also have maximum humpy hybrid limitations.

The most successful product right now from a brand standpoint, he says, is Certified Angus Beef.

"This is a very good branded beef program, and it has some brand loyalty," he says.

According to marketing experts, loyal customers who buy based on brands are an important market segment.

"A family of four, two adults, two children, if they're loyal customers, on average, will spend about $4800 a year at Safeway," Morgan says. "That's the importance of creating a brand. We have to create brand loyalty, and we're starting to do that."

While it's easy to create a brand, Morgan says, building loyalty to that brand is a different matter.

"You have to have a product to back up the brand for repeat sales, but brand loyalty is something we're going to have to have in this business," he says. "I think the demand picture in the beef industry is really starting to go on the upswing. It's looking very promising. One of the things that cow-calf producers can look at is U.S. Premium Beef."

They have 725 producer members and 25 states in a program. They own a piece of the packing industry, and they have a brand.

"This is small compared to the big picture," Morgan says, "but it is a place to start, in my opinion.

Steve Hunt with U.S. Premium Beef says one of the things needed for an alliance to be successful is that producers must have ownership of value-added products.

"You're not just selling a raw commodity," Morgan says. "You have ownership of products that are leaving that alliance."

Packers are already moving into marketing their own brands. IBP has gotten in the case-ready meat program. Excel is starting to market case-ready, cooked product.

"Harris Ranch Beef was one of the first to start this," Morgan says. "They do a very good job due to the fact that they slaughter about 1000 head a day. They own their own feedyard. They own their own retail stores. They have a tremendous export business. They were able to do some things that large packers were not able to do simply because of size."

Morgan says the new generation of beef products looks good and smells good. They're reasonably priced, and they taste good.

Research shows that taste is the number one reason people buy beef.

"Taste always comes up number one," Morgan says. "They buy it because they like it."

But while taste ranks number one in why consumers buy beef, food safety, or more correctly, the perception of food safety, can be the reason they don't buy beef.

"One thing you have to remember is that any time there is a disease outbreak, it's a safety concern," Morgan says. "Food safety will go to the top of the list. It's not a concern with most consumers until there's an outbreak, then it goes to the top of the list. We have an image problem from a health standpoint."

A Washington Post newspaper article recently ran a story headlined "Hamburger Hazards." The story was on E. Coli, but the article says that of more than 200 outbreaks of E. Coli 015787, about 68 percent came from alfalfa sprouts. Seven percent came from ground beef.

"We have to do some things from a marketing standpoint and image standpoint," Morgan says.

But consumers also play a part in food safety, he insists.

"We can talk until we're blue in the face about consumers, but I still say they have a part in food safety."

He just finished a project with NCBA and Colorado State University handing out cards in retail stores in Oklahoma City, Tulsa, Denver and Fort Collins, Colorado.

"Any time people would pick up beef out of the meat case, we'd give them a card they could mail back," he says.

The object of the study was to find out how long consumers carried that meat around before they put it in the refrigerator or freezer.

"We had 2500 respondents in this project," Morgan says. "One out of every 11 people surveyed kept the meat in transit for three or more hours. That's why I say consumers have a part to play in meat safety."

There are other concerns, he says, but the pendulum seems to be swinging in favor of beef now.

The medical community is finally admitting the importance of beef in the diet.

"You're starting to see the medical field now suggest a meat-based diet for six-month-old babies in order to stimulate some brain function," Morgan says.

New marketing strategies including prepared meats and HEB supermarket's efforts at showing consumers how to cook beef appear to be paying off.

"We do a lot of things correctly," Morgan says. "I'd say 75 percent of the cattle that are produced that go through the system, that go to the packing plant, are good enough to add some value to. It's that other 25 percent we've got to work on."