Niche Beef Marketing: Current Status. Allen R. Williams, Ph.D., PAS The Jacob Alliance, LLC

Transcription

1 Niche Beef Marketing: Current Status Allen R. Williams, Ph.D., PAS The Jacob Alliance, LLC

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3 Niche Beef Products

4 Market Interest

5 What is a Niche Market Product? A product that fills a unique sector of the overall market. A differentiated product. Never underestimate consumer desires nor under price your product. Remember Lettuce, Starbucks, Ben & Jerry s.

6 Current Statistics Americans spend 46.4% of food dollar away from home. Expected to increase to 53% by Sales of organic meat, poultry, and seafood grew by 139% from 2003 to Consumers typically pay 30% more for natural meats and % more for organic meats.

7 Interesting Trends Average annual growth rate in organic product sales has been 20-24%. 24%. The current market for natural and organic beef products is approximately $350 million annually. Anticipated to increase with next five years to $1 billion. In 5 years, the average consumer will purchase 80% of their beef from brand selections.

8 Interesting Trends Story Beef is the wave of the future Gary Smith, Ph.D., CSU The hottest new food trend is the Wellness Consumer Laurie McDermott, Hartman Group. Two biggest concerns with meat products: Antibiotics Artificial hormones Research indicates consumers want: Stronger Flavor, More Variety, Health Benefits, Guaranteed Tenderness

9 Interesting Trends CSU research indicates that the most important consumer motivations for purchasing Natural beef are: Artificial Hormone Free Ranch Name Antibiotic Free No fed Animal By-Products Animal Care Environmental Stewardship

10 Grass Fed Beef

11 Demand for GrassFed Beef CSU Taste Panel found that 16-22% prefer taste of grassfed beef. Auburn University found that 25-33% preferred taste of grassfed beef. DDB found that 27-33% prefer grassfed beef. Kemker and Associates found that 25-31% prefer grassfed beef. Most important 50-55% 55% do not have preference.

12 Current Grass Fed Market Statistics >1200 Beef Producers head of harvested cattle $50,400,000 in retail sales

13 Value of Grassfed Beef Producers typically paid $1.75/HCWT for Natural and $2.00/HCWT for Organic. Avg wholesale price for lip on ribeye is $ Avg wholesale price for hamburger is $3.99. Avg UCOP for Natural - $1.20-$1.25/Hcwt $1.25/Hcwt Avg UCOP for Organic - $1.50-$1.60/Hcwt $1.60/Hcwt

14 Market Interest in Grass Finished Beef Products Several Major Chain retailers. Many small chain upscale retailers. Major Distributors. Major E-Commerce E sites. White tablecloth Restaurants University Dining and other foodservice. Sports & Fitness/Wellness Centers.

15 Natural Byproduct Markets Pet Food Pet Promise and others Utilizes Offal 36% live animal weight $Avg value - $ $0.40/lb Ethnic Carneceria Programs Edible Offal 2% cold carcass weight Growing rapidly

16 Keys to Success in Natural Foods Be Authentic Walk the Walk Link to something greater than selling cases of product. Meet or beat in taste and quality. Interact with the trade early and often at all levels National, regional, local. Never abandon natural foods channel.

17 Keys to Success in Natural Foods Become the trusted knowledge leader. In marketing, tell the story for consumers. Communicate personal and health benefits first, environmental benefits second.

18 Branded Programs Thousand Hills Cattle Company Tallgrass Beef Company Burt s s Beef Western Grasslands US Wellness Meats High Sierra

19 Branded Programs TBC and THCC Currently seeking cattle for pipeline. Paying $1.75/HCWT Forward Contracted Must meet Tallgrass Protocols No synthetic hormones, fed antibiotics, animal byproducts No grain Ultrasound criteria

20 THREE TIERED APPROACH Genetic Selection Custom Finishing Live Animal Carcass Ultrasound

21 Genetic Selection Select for Adaptability, Fertility, Balance. Cattle must work on Farm/Ranch and in End Product. Use proven sire genetics.

22 What Are Your Selection Criteria?

23 ULTRASOUND Carcass Traits Identification at an Early Age Include Tenderness

24 RE Shape % IMF Stress BF BIA Ultrasound Tenderness REA/CWT REA Chuteside Capabilities of BIA Automated Software

25 Measuring Ribeye Area

26 Ribeye Image

27 Bovine Ribeye Diagram Spinalis dorsi Acorn Fat Backfat Thickness Ribeye L. Costarum Spinous Process Intercostal Muscle Boundaries Intercostal Break Quadratus lumborum

28 Capturing %IMF Scan

29 Intramuscular Fat Image

30 Backfat Layer Spinalis Hair and Hide Layer Longissimus Muscle % IMF Box (Used to calculate % IMF) Muscle Striations (Used in Tenderness Determination) Intercostals 11 th Rib 12 th Rib 13 th Rib Longitudinal Image of Bovine Longissimus Muscle

31 Relation of % IMF to USDA Quality Grade % IMF USDA QG Standard Select Choice- Choice+ Prime Marbling Prac.. Devoid Slight Small Modest/Mod. Abundant

32 Trait Codes RES Ribeye Shape Score 0.0 to 1.0. Must score at harvest. TEND Tenderness Score Ranges from Must score 2.5 or less. Stress Stress Score Ranges from Must score 1.5 or less at harvest.

33 Tallgrass Ultrasound Criteria At Harvest: REA 10 + sq.in. RES BF 0.30 in + IMF 3.5% + TEND - <=2.5 Stress - <=1.5 HCWT lbs

34 Comparison Of Grass Fed and Grain Fed Beef Overall Average Fatty Acid Myristic Stearic Linoleic Linolenic CLA Grass Fed Beef Grain Fed Beef

35 Comparison of Grass Fed and Grain Fed Beef Omega- 3:Omega-6 6 Ratio PUFA Omega-3 Omega-6 O3:O6 Ratio Atherogenicity Grass Fed Beef Grain Fed Beef

36 Comparison of Grass Fed and Grain Fed Beef Effect of Season Fatty Acid Myristic GF Winter* 2.97 GF Spring 2.28 GF Summer 2.80 Grain Fed 4.38 Stearic Linoleic Linolenic CLA * These animals received 0.5% body wt/day supplementation of SHP and Citrus Pulp (50/50 ration).

37 Comparison of Grass Fed and Grain Fed Beef Effect of Season GF GF GF Grain Winter Spring Summer Fed PUFA Omega Omega O3:O Athero

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39 MS State Steer Project Tenderness Scores BREED Barzona Polled Hereford Red Angus Crossbred South Poll WB Shear Force, kg Ultrasound Tenderness Very Tender: 3.8 kg and below. Tender: 3.9 to 4.5 kg. Tough: 4.5 kg and greater..

40 Correlation Between Ultrasound Tenderness and WB Shear Force Number Head 56 Harvest Group 1 Correlation Coefficient

41 Cow Efficiency Why Worry About Efficiency? Impacts overall profitability. Includes fertility, growth, fleshing ability off of forage. Impacts spreading of fixed costs of production on a carrying capacity per acre basis, based on mature cow weight.

42 Impact of Cow Mature Size on Efficiency: Nutrition No. Cows a Cow Mature Weight Calf WWt Pounds Feed/Day b Tons/Hd Hd/Yr (Dry Matter) a Based on 4 acres Fescue/cow on a year-round basis (400 acres). Cost/Cow ($0.015/lb) $135 $150 $165 $177 $192 $204 $69.00 b Based on 2.5% body wt. Consumption on a daily basis. Includes forage, hay, and feed consumption (Dry Matter Basis).

43 Impact of Cow Mature Size on Efficiency: IRM Valuation No. Cows IRM Projected % Calf Crop a No. Calves Weaned Cow Mature Weight IRM Projected Calf WWT a WWt/Cow Exposed b a Based on Southeastern IRM data (Integrated Resources Management). b Average weaning weight divided by no. of cows exposed for breeding. cbased on Southeast avg sale barn value (August 2002). $/CWT c $82.50 $82.00 $81.00 $80.00 $80.00 $80.00 Total Value $36,605 $33,464 $33,356 $29,280 $27,328 $25,376 $11,229

44 Impact of Cow Mature Size on Efficiency: IRM Valuation No. Cows IRM Projected % Calf Crop a No. Calves Weaned Cow Mature Weight IRM Projecte d Calf WWT a WWt/Cow Exposed b a Based on Southeastern IRM data (Integrated Resources Management). b Average weaning weight divided by no. of cows exposed for breeding. cbased on Southeast avg sale barn value (Dec. 2003) $/CWT c $102 $101 $99 $97 $95 $95 Total Value $45,257 $41,218 $40,768 $35,502 $32,452 $30,134 $15,123

45 Impact of Incremental Increase in % Calf Crop: IRM Valuation Total Weaned Value No. Cows IRM Projected % Calf Crop a % Increase Over Base Cow Mature Weight IRM Projected Calf WWT a WWt/Cow Exposed b $/CWT c Total Value a Based on Southeastern IRM data (Integrated Resources Management). $102 $102 $102 $102 $102 $102 $45,257 $45,778 $46,298 $46,818 $47,338 $47,858 $2,601 b Average weaning weight divided by no. of cows exposed for breeding. cbased on Southeast avg sale barn value (Dec. 2003)

46 Impact of Cow Mature Size on Efficiency: Individual Calf Total Cost Birth to Finish No. Cows Cow Mature Weight No. Weaned Calf Wean Value a Calf PWDTF b PW Cost c Total Cost Birth To Finish d $ $502 $ $ $522 $ $ $552 $ $ $582 $ $ $622 $ $ $672 $1251 a Based on Dec Southeastern Price averages. $ 229 b Post-Weaning Days to Finish ( Based on actual Branded Program Data for Forage Finishing). C Post-Weaning Cost (Based on $2.00/hd/day). d Calf Wean Value + PW Cost.

47 Impact of Cow Mature Size on Efficiency: Fed Steer Valuation No. Cows Cow Mature Weight No. Calves Weaned Projected Steer End Weight Individual Fed Steer Value ($80/CWT) Total Value (Entire Calf Crop) $840 $73, $920 $70, $960 $68, $1020 $62, $1072 $60, $1108 $57,616 $15,464.00

48 Impact of Cow Mature Size on Efficiency: Grass Finished Valuation No. Cows 100 Cow Mature Weight 1000 No. Calves Weaned 87 Projected Steer End Weight 1050 Retail Yield (lbs) a 357 Individual Steer Retail Value b $1749 Total Retail Value (Calf Crop) $152, $1915 $147, $1999 $141, $2122 $129, $2234 $125, $2308 $120,016 a Based on 34% Retail Yield Average deviated from Live Weight. b Based on Grass Finished Branded Beef Program average retail value of $4.90/lb. Commodity Retail Value average currently $3.93. $32,147.00

49 Senepol Cow B4

50 Red Angus Cow 6212

51 Barzona Cow

52 Polled Hereford Cow 307 & M171

53 South Poll Cow 8407

54 Producer 1 Feedyard Averages N=103 DTF FWT CWT ADG FM BF Pen Pen Pen Pen Range

55 Producer 2 Feedyard Averages N=89 DTF FWT CWT ADG FM BF Pen Pen Range

56 Producer 3 Feedyard Averages N=86 DTF FWT CWT ADG FM BF Pen Pen Pen Pen Range

57 USDA Quality Grade Distribution Farm 1 Choice (%) 57 Upper 2/3 (%) 14 Select (%) 43 NR (%)

58 RES and REA/CWT Distribution Farm 1 RES <0.5 (%) 7.9 RES >0.7 (%) 16.3 REA/CWT <1.1 (%)