Beefsteak pop-up in New York City

by Miranda Reiman

When springtime hits the rural regions, folks hunt for mushroom delicacies that pop up this time of year. People crave these, seek them out and guard their secret places, but they know it is for a limited time only.

This year, amongst the traffic and concrete of New York City, the emerging season brought about a different springtime arrival. Just like those searching the pastures and woodlots for the tasty, fleeting morels and beefsteak mushrooms, urbanites sought out the James Beard Foundation’s “pop-up store” for its unique and limited-time flavors.

The JBF LTD, as it was called, operated in New York City’s trendy Chelsea Market for just 27 days, April 12 to May 14, and featured the work of the world’s finest chefs.

The Certified Angus Beef^® (CAB^®) brand partnered with the organization, not only to ensure diners the best beef available, but also to add a healthy dose of farm and ranch education.

“We looked at this as an opportunity to showcase not only our product but our ranch connections to a ‘foodie’ audience,” said Melissa Brewer, CAB assistant director of public relations.

The pop-up was designed as a kind of educational restaurant, café, retail shop and performance space. Limited lunch menus and special, ticketed dinners by visiting chefs featured CAB brand product.

A “Cowboys and Cleavers” program brought Texas ranchers Steve and Ginger Olson together with renowned New York butcher Marc Sarrazin of DeBragga & Spitler and CAB Chef Scott Popovic.

“They talked about the entire beef production process from the ranch to the plate,” Brewer said. “It was a good chance to show how our brand is involved every step of the way. People seemed to enjoy meeting real, working cattlemen, too.”

And diners had the chance all month long to learn from the people who produce their food.

“Cowboy Fridays” brought Angus seedstock producers to the Big Apple to share their passion for raising cattle and how it’s done. Cattlemen and women traveled from Montana, Oklahoma, California, New York and South Carolina.

“We love meeting new people and telling our story,” said Abbie Nelson, of Five Star Land & Livestock, Wilton, Calf. “I want people to be comfortable knowing the utmost care is taken to raise beef from gate to plate.”

The Nelson family, including Abbie’s husband, daughter and granddaughter, is used to a non-farm audience because much of the land around their ranch has been developed.

“People are curious about what we do,” she said.

Similarly, Debbie Lyons-Blythe of White City, Kan., has been “agvocating” for a while, so her and husband Duane’s trip to New York a couple weeks later was just an extension of that.

“Duane and I have a commitment to advocate for the beef industry,” she said. “I write a blog and we connect with consumers whenever possible, but this was an excellent opportunity to connect with folks we have no other way of meeting.”

The owner-manager of Blythe Angus hoped to “show people the face of a rancher” who supports the CAB brand.

“We found New Yorkers to be interested in what we had to say and they asked great questions about what we do,” she said. “There were so many accents and it was exciting to think we may have had an impact on international consumers as well.”

The pop-up store also included a “steak of the day,” where consumers could purchase fresh cuts. CAB Prime tenderloins, T-bones, bone-in CAB Natural cowboy steaks and strip steaks stocked the meat case on alternate days, and every 21st purchaser received their beef for free.

To learn more, visit the JBF LTD website at popup.jamesbeard.org or search “James Beard” on the Black Ink Blog (www.blackinkwithcab.com)

Certified Angus Beef Celebrates 45th Year with Strong Sales

by CAB Cattle Crew | Oct 18, 2023

It has been 45 years since Certified Angus Beef’s first customer purchased a strip steak at Renzetti’s IGA grocery store. Since then, consumer demand for high-quality beef has grown, ultimately driving demand for premium Angus genetics.

High-Quality Beef and Experiences Promised with Summer Internship

by Kylee Kohls Sellnow | Oct 9, 2023

Internships help students take skills learned in the classroom and apply it before graduation or entering the workforce. Last summer’s interns described their experiences with CAB as engaging, fun, empowering valuable and challenging. Read more about these internship opportunities!

Quality Wins, Again

by Morgan Boecker | Oct 9, 2023

Sara Scott, Vice President of Foodservice for Certified Angus Beef, emphasizes the importance of taste over price in the beef market during the Feeding Quality Forum. As consumer demand for high-quality beef grows, Scott highlights the need for increased supply and encourages communication with packer partners to meet the demand for Prime beef.

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CAB: local connections far reaching

May 5, 2011

Education is part of beef promotion and sales. That’s as true within the beef industry as it is in selling beef to consumers.

Any of the 37 meat technical and sales professionals from Buckhead Beef Atlanta who came to Kensington Cattle Company, near Woodbury, Ga., for a ranch field day this spring would surely agree.

Kara Wilson, marketing specialist with the Certified Angus Beef^® (CAB^®) brand, who helped organize the visit, summarizes: “The Buckhead team had an eye-opening experience, seeing the time, resources and financial commitment it takes to put out high-quality cattle.”

There were several demonstrations, but conversations took information exchange to a new level. The Angus farm’s managing partner, Roland Starnes, and customer service specialist, James Stice, talked openly about how the production world works.

To learn about the science and experienced judgment that goes into selecting high-quality animals for a registered purebred operation, the group had the opportunity to evaluate a pen of Angus cattle.

“We discussed genetic selection—how we balance carcass traits with ideal maternal traits, and how a good disposition relates back to high-quality beef and efficiency in the industry,” Starnes explains. Other topics came up in turn, from stewardship and natural resource management to such issues as hormones, Midwestern finishing on corn rations, antibiotics and locally grown.”

The group from Buckhead Beef, a top-ranked CAB distributor for more than 15 years, learned about the role grain finishing plays in developing the flavor in beef, but also came to understand how proper nutrition at each stage of life is essential to keeping up the potential for highest quality.

Amanda Wydner, CAB executive account manager for the Atlantic region, notes some chefs and restaurateurs are asking for “local products.”

“We must equip our distributors with an understanding of how it supports local farmers and ranchers when they offer the Certified Angus Beef brand,” she says. “Across the U.S., our brand has a positive impact on agriculture and sustaining family farms. We must take a proactive role in educating customers about how we connect with the grassroots of the beef industry.”

To close the day, the Buckhead Beef professionals learned ways to apply the knowledge they gained as selling points on the street.

Starnes appreciates all they do, too. “We are all in this together,” he observes. “This is a little something that we can give back to our industry as we help them help us sell more Certified Angus Beef.”

Kensington Cattle Co., a relatively new operation set up in 2008, works on building relationships from every angle.

“As we get our feet wet in this industry, we try to line up prospective buyers for our customers’ calves,” Starnes explains. To that end, he and Stice aim to help customers target the CAB brand and keep up with all American Angus Association programs.

“Basically it is a 365-day-a-year promotion and education process,” he says with a grin. “From our customers to these folks selling our beef, we want to help them play the game or to be cheerleaders for our industry.”

Certified Angus Beef Celebrates 45th Year with Strong Sales

by CAB Cattle Crew | Oct 18, 2023

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by Kylee Kohls Sellnow | Oct 9, 2023

Quality Wins, Again

by Morgan Boecker | Oct 9, 2023

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Steak prices show strength of CAB brand vs. Choice

April 15, 2011

As cash cattle prices shot up to record highs in March and the futures markets showed incredible strength, consumers were asked to pay record prices for beef. Shaking off worries about the economy, they responded positively.

Ground beef and cuts from the chuck and round led the increase, but middle-meat steaks moved higher, too. Faced with record high prices for the most expensive cuts, more consumers opted to ensure the eating experience by turning to the Certified Angus Beef^® (CAB^®) brand.

“As middle meat prices rose, the CAB/Choice spreads widened,” said industry analyst Julian Leopold, of Leopold Foods. He has written the monthly “CAB Market Watch” column for licensees since January 2010, making note of relative prices for USDA Choice and CAB cuts.

Comparing year to year, CAB rib eyes rose 3.2%, from $5.58 per pound (/lb.) in March 2010 to $5.76 this March, while the Choice rib eye managed only a 2-cent increase. That amounted to a 40% increase in the CAB/Choice ribeye spread to $.56/lb., Leopold noted

He saw a similar pattern in the price relationships for CAB vs. Choice short loins and tenderloins. “The 16.1% increase in CAB tender prices, at $8.95 vs. $7.71 in March 2010, beat the 15.2% increase in Choice tenders,” Leopold said. “More importantly, the 52-cent CAB/Choice spread for tenderloins was even wider at 33.3%.”

The Iowa-based consultant made news in 2009 with an analysis of the relative wholesale prices for 15 CAB vs. Choice beef cuts, showing demand for CAB outstripped that for Choice for a five-year period that included the recession.

What do the spring 2011 prices mean? “Even in this higher-price environment—with record high cutout prices, abundant grading and weekly increases in beef production—it looks like we’re seeing improved high-end beef demand,” Leopold said. “Can this continue with high-priced gasoline, several global economic uncertainties and widespread unrest in the Middle East? Only time will tell.”

Certified Angus Beef Celebrates 45th Year with Strong Sales

by CAB Cattle Crew | Oct 18, 2023

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by Kylee Kohls Sellnow | Oct 9, 2023

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Protein pricing urges beef quality

March 17, 2011

While those of us in the cattle industry would like consumers to go to the meat case with only one protein purchase in mind, the reality is consumers do have choices and have to make decisions where they spend those hard earned dollars. Of course, taste preferences play a big part but no doubt price does as well. What is quite interesting is to look at the average retail prices of beef, pork, and chicken over the past 13 years. And more important than the actual average price is the dollar per pound difference between the options.

Continue reading “Protein pricing urges beef quality”

Ready for the world?

Beef producers must set the stage for Asian beef trade boom

by Laura Nelson

Producers can’t wait for profit to knock on the door; they must seek it out, and according to one economist, that means now.

“It’s time,” Dan Basse says. “It’s time that the beef producer think globally and sell his very-high-quality product overseas.” The president of AgResource Company, Chicago, says failing to act in the near term will literally cost a fortune.

“Producers need to be acutely aware of the export opportunities and the real economic might those carry,” he says, projecting an 8% boost in trade volume would raise cattle prices by $9 to $13 per hundredweight (cwt.).

Basse says beef consumption in the U.S. is at its lowest level in 12 years, but demand around the world is increasing with population and wealth, from India to China. Until 1998, the average Chinese person made less than $1,000 a year. Today, it’s $3,900 and rising.

“When you go from dirt poor to a little better than just poor, you want more diet diversity,” notes Alex Avery, director of research at the Hudson Institute. “That means grain diversity, fried foods, then meat, milk and eggs. Dietary improvement is a consistent relationship with rising affluence.”

The two trade analysts were speakers at the November Feeding Quality Forums, co-sponsored by Certified Angus Beef LLC (CAB), Pfizer Animal Health, Land O’ Lakes Purina Feed LLC and Feedlot magazine at Garden City, Kan., and South Sioux City, Neb.

CAB international director Geof Bednar shares that optimism while noting several obstacles. “Global trade is probably the biggest opportunity for the beef industry,” he says. “But the really difficult part of that equation is gaining the access we need to get into those markets.”

Although China’s borders are currently closed to U.S. meat, Bednar says it’s an important border for producers and beef marketers to watch along with other Asian trade doors.

“As soon as China opens up, it will be a very significant market for the beef industry and for CAB,” he says.

The world’s largest branded beef company has found its way into other Asian markets. South Korean sales set a record in 2009 at 6 million pounds, and although sales to Japan are slowly rebounding from the 2003 trade disruptions, CAB didn’t waste time finding other markets to fill the gaps. By expanding efforts in Taiwan, Vietnam and Hong Kong, the brand has reached countries that are open and hungry for high-quality beef.

“Our brand is able to withstand more turmoil from an economic standpoint verses commodity beef,” Bednar says. “That’s because of the relationships we build through licensing and the way we go to the market, let alone the quality level.”

CAB-licensed distributors sell product in more than 60 countries, through a growing network of licensed partners in foodservice and retail. New licensee Wilson International is a leading meat distributor in Hong Kong, which, although part of China for more than a decade, has remained a free trade zone.

“Hong Kong has been gaining considerable momentum in our markets,” Bednar says. “But a key fact there is that Wilson International also has five business units in five major other Chinese cities. So that’s positioning us well, ready if China’s markets ever open up, too.”

Meat demand in Hong Kong has risen more quickly than in other Chinese districts, Avery says.

“Hong Kong is very wealthy in comparison to the whole of China,” he points out. “Compared to their mainland contemporaries, the average Hong Kong person eats twice as much pork, four times as much poultry and four times as much beef.”

Demand is about more than numbers, of course.

“As we think about global marketing, we also have to start thinking about the customers and their position in being from a country that is not a ‘net food producer.’ That makes them much more interested in where food comes,” Bednar says.

Asian consumers in particular are more interested in a “story” behind their food, something that Bednar says the Certified Angus Beef^® (CAB^®) brand provides. “Japan and Korea imagine the U.S. beef industry as a factory industry. They just can’t image the rancher back in Iowa or wherever it might be,” he says. “To get the most out of these markets, we have to tell our production story. That’s an advantage we have over commodity.”

Basse says it will take a focus on opening the doors, followed by intense consumer marketing campaigns to fully realize the economic potential of international trade.

“We must have people thinking globally and talking about the advantages we have relative to other countries that are trying to sell beef,” he says. “We have to tell the world’s consumers about the safety and quality of U.S. beef.”

Premium beef brand shatters sales records

Certified Angus Beef^® brand finds opportunities for growth

by Jennifer Schertz

Records are made to be broken. That’s the prevailing sentiment at Certified Angus Beef LLC, (CAB) which, despite a challenging global economy in fiscal 2009, achieved record sales for the third consecutive year. The Certified Angus Beef^® brand logged several divisional and monthly records along the way.

Product sales from Oct. 1, 2008 to Sept. 30, 2009 topped 663 million pounds. That eclipsed the previous fiscal 2008 record of 634 million pounds by 4.6%, and the fiscal 2007 record of 584 million pounds.

Just as significantly, monthly sales figures reached new heights – 62 million pounds in August 2009. May, June, July and September 2009 also finished among the top 10 months in the brand’s 31-year history. Strong demand during grilling season buoyed monthly sales beyond the 60-million pound mark for the first time in July, August and September.

Consumers still prefer quality products in challenging times, becoming even more aware of the ratio of price to value, explained John Stika, CAB president.

“Arguably, this advanced our brand’s position,” Stika said. “The premium quality pays even greater dividends when consumers apply a higher level of discretion to where they spend their dollars.”

Retailers achieve unprecedented success

Representing more than half of CAB sales, the retail division had its best year ever with 343.5 million pounds sold. September was the division’s best sales month, surpassing 33 million pounds, and representing the fifth consecutive month that its many retail partners contributed to sales of more than 30 million pounds.

Retailers benefitted from consumers shifting their dining patterns to include more meals at home. Al Kober, CAB director of retail, said much of the division’s growth – a 7% increase over the previous year – came from existing retail accounts rather than the addition of new partners.

Expanded offerings meet consumer needs

Some retailers also expanded their premium beef offerings and boosted sales by introducing the brand’s extensions – Prime and Natural. Reasor’s, a 15-store chain in Oklahoma, was the first retailer to introduce Certified Angus Beef^® brand Prime Natural, an elite option in the natural category.

“Consumers are looking for more restaurant-quality items in stores,” explained Kober. The CAB Prime line, historically more popular in foodservice channels, found new success with retailers this year as more product was available to them. Sales of Prime increased 7.5% overall.

Foodservice division poised for growth

Foodservice partners recognized that the best strategy in an uncertain economy was to build their own brand on quality, said Mark Polzer, CAB vice president of business development. With restaurants seeing fewer customers, it’s even more important for them to provide memorable experiences to ensure repeat business, he said.

The foodservice division’s 200 million pounds represented more than 30% of the brand’s sales. In spite of industry-wide declines in dining out, CAB gained a stronger market share in the last year, and is positioned for growth as restaurant traffic rebounds.

Global partners drive brand sales

International sales grew to 69 million pounds, a 4% increase over the previous year and more than 10% of the company total. That level of sales, not seen since 2003, was attributed to the brand’s partners in Canada, Mexico and South Korea.

Canadian sales were up 11% to nearly 27 million pounds, a record particularly noteworthy in a year when total U.S. beef exports to Canada declined 12%. Mexico remained the No. 2 global market, despite economic challenges, devaluation of the peso and concerns over the emergence of H1N1 influenza. South Korea capitalized on the brand’s high-quality end cuts to drive a 46.5% increase in sales. It was a banner year for CAB across Asia, with 26% growth for the continent.

Increasing demand for Angus cattle

In 2009, the brand commanded consumer and breeder awareness around the world. More than 60% of U.S. cattle were black-hided, and Angus bulls were selling at healthy premiums. Approximately 14.1 million head were identified for evaluation and nearly 2.8 million were certified, an increase of 8% over the previous year. Acceptance rates climbed to 19.8%, continuing a four-year trend.

“I believe our best days are yet ahead,” said Stika.

The Certified Angus Beef^® brand is a cut above USDA Prime, Choice and Select. It has offered consumers quality, consistency and integrity since the first pound was sold in 1978. Only 8% of all beef can achieve the benchmark standards, now offered through more than 15,000 partner businesses in the United States and 45 other countries. For more information, visit www.certifiedangusbeef.com.

Exports key to beef demand

Feeders focus on the high-quality beef that leads to a brighter future

by Steve Suther

Opportunities hide within every challenge, but beef producers can find them through analysis and planning. That was part of the take-home message at the Feeding Quality Forums, Nov. 10 in South Sioux City, Neb., and Nov. 12 in Garden City, Kan.

“While domestic demand struggles, tremendous economic growth in Asia points to market potential for high-quality U.S. beef,” said Dan Basse, president of the Chicago-based AgResource Company, who reprised his 2007 role as lead speaker.

The fourth annual sessions were sponsored by Pfizer Animal Health, Certified Angus Beef LLC (CAB), Feedlot magazine and Land O’ Lakes Purina Feed LLC. More than 150 cattle feeders and allied professionals attended.

Beef exports represent just 7% of production, compared to pork and poultry each around 19%, Basse told them. “If U.S. beef could get that export share up to 14%, it could add $9 to $13 per hundredweight (cwt.) to cattle prices.”

He suggested devoting some beef checkoff funds to building global demand. “You will need to broaden your base to generate more income and finance feed purchases in the volatile grain markets,” Basse said. In the short term, demand from a recovering ethanol industry will help support an upward trend in corn prices, he added.

Mark McCully, CAB assistant vice president for supply, pointed out reasons for the recent increase in beef quality grades and highlighted the greater demand for Certified Angus Beef^® brand product that makes it a more rewarding and stable target than simply USDA Choice.

One measure of that demand can be seen in CAB international sales. At 10% of the company’s 663 million pounds in 2009, the ratio outpaces exports of all U.S. beef.

McCully agreed that global markets hold a key to the future and noted there are few obstacles to greater supply.

“We keep finding more areas where the high-quality beef target coincides with making a profit,” he said. “Producers just have to understand their own cost-value relationships that govern the purchase of feeder calves, use of technology and marketing strategies.”

Genomics, or DNA marker-assisted selection of cattle, holds greater promise to adding more quality and profit potential, according to Mark Allan and Kent Andersen of Pfizer Animal Genetics.

The charted markers for various traits have increased from just seven in 2004 to 54,000 today. That lets seedstock producers make decisions earlier to focus on promising lines, and plans for “marker-assisted management” will open this world to commercial cow-calf, stocker and feedlot operators, Allan and Andersen said.

Making the most of genetic potential requires focused nutrition, said Ron Scott, director of beef research for Purina Mills. He reviewed data on health and weather factors relating to performance and grade before settling into a discussion of feeding strategies.

The ideal balance of grains, vitamins and minerals optimizes beef quality and producer profitability. Scott presented details on industry research into distillers’ byproducts and the most effective feeding levels, generally from 12% to 25%.

However, finishing diets mainly just fill the marbling cells determined much earlier in life. Recent research has concluded that nutritional marbling starts with fetal programming, especially in the third trimester, Scott said.

“It’s based on the concept of epigenics, that the environment can cause genes to behave differently,” he explained. “Studies of Holocaust survivors and their offspring prove such changes are permanent and can be passed on to future generations.”

Beef cows are “the most nutritionally challenged” of livestock, seemingly by design. “We plan for them to lose weight during the winter,” Scott noted, countering, “What if we cared for the cowherd like we do pregnant women?”

In a closing presentation Alex Avery, director of research for the Hudson Institute, suggested “the tide is about to turn” in both the real and figurative “Food Wars.”

Fear of hunger has fueled war for centuries, but Avery focused on the war of ideas about how food should be produced, considering that demand for it will more than double in the next 40 years. It could triple if living standards keep trending higher.

All that added demand won’t come just from the growth in population, which should peak at 8.25 billion in 2050, but mainly from growth in disposable income in Asia, he said.

Echoing comments from Basse, Avery said the beef industry should not look to U.S. demand for its future base, because domestic demand for meat has stagnated to the point of “social debates that elevate myth over science.”

Among the myths he works to dispel are global warming, organic utopia and the supposed unsustainable nature of large-scale farming.

“Corn-fed beef and dairy are the most planet-friendly products we can have,” Avery said. “Unfortunately, some research is ignored by mainstream media and even government organizations. Pandering to perceptions justifies their budgets.”

Author of “The Truth About Organic Foods,” Avery challenged producers to engage the media by adding “planet-friendly” claims to all packaged fresh beef. “That will force them to face facts, even though it’s a debate they don’t want to have,” he said.

The event was covered by BeefCast, and audio versions of the presentations are available at http://www.beefcast.com/2009-certified-angus-beef-feeding-quality-forum. Email info@certifiedangusbeef.com for print or other details.

Consumers want high-quality, branded beef

University survey reveals perceptions of meat and entire industry

by Miranda Reiman

Beef reigns supreme in consumers’ protein choices, according to research released earlier this year from West Texas A&M University. Nearly half of consumers surveyed put beef as their No. 1 protein choice, and 97% indicated they ate beef between one and 12 times each week.

The study, “Consumers’ perceptions and preferences of meat and the meat industry,” was the result of doctoral research conducted by Lindsay Chichester, Canyon, Texas. She looked at the whole range of popular opinion on meat.

“We were trying to gauge consumer preferences, what their concerns were, and what they’re not concerned with,” Chichester says. “I think as an industry that’s where we need to go – our consumers are obviously the ones who support us and keep us in business.”

Digging into details, 65% of consumers preferred some type of branded beef. Among them, the largest breakout group, 28%, preferred their steaks branded as Angus beef. Chichester’s academic advisor, animal scientist Ty Lawrence, says that proves the power of marketing. “A lot of that is obviously going to tie back to the recognition of a brand like Certified Angus Beef,” he says.

The term “Angus” outweighed any other branding term, including Prime, tender, organic and grass-fed in consumers’ perception, but branding with words is not enough. Consumers are looking for quality behind those terms, Lawrence points out.

“The data also indicated customers say they want a higher quality cut of meat,” Lawrence says. When asked to visually identify the desirable amount of marbling in a steak, 49% selected Modest or Moderate marbling – the same level required for Certified Angus Beef^® (CAB^®) brand acceptance.

“CAB’s marbling criteria overall was the largest sector of what consumers indicated they wanted – average Choice or better,” Chichester says. Another 20% of the population indicated a desire for Slightly Abundant or Moderately Abundant marbling, fitting into the Prime and CAB Prime category.

These results outline a clear challenge to cattle producers, Lawrence says. “Twenty percent preferred Prime-level marbling, while the beef population is at 2.5% Prime, maybe 3% on a good day. So we’re 17% short of the Prime population our consumers say they want.” With nearly 70% of the population indicating they preferred upper Choice or higher, he says, “It’s phenomenal what consumers say they would prefer in comparison to what we actually have to offer them.”

Most consumers, 83%, make those purchases at a supermarket, where competition rules the meat case. They are most concerned with price, color of the meat, the amount of edible product and marbling. “So we’re still looking at price, color, yield and quality,” Lawrence says. “The customers want their best combination of quality and cutability at a price they deem reasonable – and that’s different for everybody.”

Results did indicate 56% of consumers were willing to pay a premium for all-natural products like CAB brand Natural. However, it also indicated consumers were unsure of the true meaning behind a “natural” label, Chichester pointed out. “Producers should know they have a market for natural products,” she says. But it comes with a need for producers to better define and educate consumers about what those labels mean, Lawrence says.

The survey also pointed out a need to correct misperceptions. One-third of consumers thought eating meat from animals treated with antibiotics would make them “resistant to antibiotics.” Another 57% said they were concerned that animal mistreatment is widespread in the industry.

“We have some education to do,” Lawrence says. “And we have a long way to go in showing our consumer base that animal husbandry is alive and well in production.”

Demand for CAB outstrips Choice

By Steve Suther

When times are lean, sales of luxury items are typically the first to fall off. However, when it comes to beef, it appears that consumer demand for the higher quality and pricier Certified Angus Beef^® (CAB^®) brand held up better than that for USDA Choice or lower grade beef.

What has been called an “economic collapse” in fall 2008 led many observers to speculate that the demand for premium brands would give way to lower-quality alternatives. Industry analysts Julian Leopold and Daniel Bluntzer, of Leopold Foods and Frontier Risk Management, respectively, dug deeper. They set out to explore the short- and long-term value and demand dynamics of the CAB brand versus Choice beef that would quantify the branding value of CAB.

To gather information, the two looked at pricing and volume data based on sales of the 15 highest-volume CAB cuts, not including ground chuck and round, and accounting for nearly 75% of total brand sales. The USDA “National Weekly Boxed Beef Report” provided data on Choice, while CAB pricing came from the Urner-Barry Yellow Sheet and volume from brand records.

Results were strongly supportive of premium brand value in this case. Overall, they showed that in four years (2005 to 2008), demand for the CAB brand brought in $367 million dollars more at the wholesale level than it would have if sold as Choice product.

Expressed as a percentage, the combination of CAB price and volume showed a 26.9% advantage over Choice grade beef in those four years. Conventional wisdom would suggest that could not hold up after the economic recession hit, but that would be wrong.

In fact, the CAB advantage over Choice more than doubled, to 56.1% when the sales and pricing data include the first half of 2009 vs. 2005, on a 22.4% increase in volume.

“The findings clearly show that CAB pricing, volume and revenues held up far better during tough economic times, compared to USDA Choice,” Leopold said. Granted, CAB pricing declined 10.3% for the first half of ’09 versus a year earlier, but Choice pricing fell harder, by 12.3%. Moreover, CAB sales volume rose 4.6% in that time period, on top of a 4.5% increase the previous year.

Even with lower prices, the market placed an extra $56.7 million value on these 15 representative CAB products, compared to their value if sold as generic Choice, a 21.1% increase from the same period a year earlier. “With overall revenues falling in the beef industry, this is precisely what we would hope to see in an established premium brand,” he said.

While many observers from academic to producers tend to worry about a narrower Choice/Select spread, Leopold said that misses the point by not including volume. “During a time of sluggish beef demand, total revenues for Choice beef still managed to increase 5.6% from 2005 to ’09 – but CAB licensees have been able to garner 8.9% more by selling as a premium brand,” he explained.

“It is fair to say that the consumer continued to support the CAB brand during the recession, paying more for it, perhaps as a reward for a special meal at home,” Leopold concluded.

Note: Additional charts and information available at www.cabcattle.com/about/research/