If you deliver the value that consumers want, they will come. And that’s the best way to drive profits in the beef industry.
“If we involve them (consumers) in the process in one form or another, we can find a way to move forward that is financially rewarding for production agriculture and deliver a product to consumers that they are willing to buy,” John Stika, president of Certified Angus Beef, told attendees at the recent Livestock Gentec conference.
Many sectors are having to change the way they operate in order to be more consumer focused. Doing that successfully means thinking like a consumer — and that shouldn’t be hard, said Stika.
“I often have to remind myself that to some industry, somewhere out there, I’m them — I’m that consumer who doesn’t understand,” he said. “I think that’s important to remember. When you talk about consumers, remember we are consumers.
“We have to look at the consumers from their point of view as opposed to ours. They’re going to tell us what they want and we have a choice to either respond to them or ignore them.”
Certified Angus Beef, founded in Ohio in 1978 by a group of ranchers, has been a phenomenal success story with sales of beef bearing its brand topping one billion pounds in its last fiscal year. To qualify for the program, beef must meet or exceed 10 standards for quality more selective than USDA Choice or Prime.
And it’s quality, not marketing, that consumers respond to, said Stika.
“If they value your product, they pay up for it. If they don’t, they choose something else. If we in the beef, pork or poultry business want to grow and prosper, the only source of new dollars from which to build the foundation of our business comes from one source — the consumer. If the consumer is willing to invest in our products by buying our products at retail and at restaurants and so forth, then we have a chance to grow our business from the ground up.”
Historically, the beef industry has focused on what was good for the sector, pushed it through the system, and recruited buyers. But that model isn’t as successful as it used to be.
“The model that works today, and what we see with branded programs, is to find out what the consumers want and then build a supply model that fits within reason, from a practical standpoint,” said Stika.
The goal should be to exceed the expectations of consumers, but instead the beef industry has struggled to connect with consumers and spends too much energy ‘educating them.’
“I know that when my wife tries to educate me, I respond a lot differently than when she wants to relate or connect with me on an issue,” he said. “Consumers are the same way. It really is about creating a dialogue and trying to engage with the consumer.”
Branded beef sales have grown even as beef prices have soared to record highs because consumers are willing to pay more for a branded product than commodity beef, he said. That’s because consumers respond to higher prices by becoming more discriminating and less willing to spend money on a product that might not offer the quality they want.
If beef is going to compete with pork or chicken, the industry has to be more effective in delivering value that consumers expect, said Stika.
“At Certified Angus Beef, delivering more comes back to one simple premise: Why do consumers choose beef over pork or poultry? It’s not because of price. It’s because beef is the protein of celebration. All great events in life happen around beef. Taste is a big part of that.”
As the North American cow herd decreased in size, the beef industry has used tools like management, genetics, and genomics to create more of what consumers want while simultaneously driving efficiencies.
“You want to talk about risk management, that might be the best risk management (tool) we have as an industry — taking that time with tight resources, making it through that time period without losing a lot of demand for high-quality beef,” he said.
And when starting a brand, remember, “they all start out small and are defined as niche.”
“If you’re successful, you’ll grow,” said Stika. “Large brands are just the ones that have had success.”
But also remember “the emotion around the dinner table is what really drives this business.”
“It’s about connecting with the consumers and having them be emotional that helps you be sustainable in what you do,” he said. “Get them passionate about understanding and supporting the way of life that we all value. We need to balance that scientific approach with the emotional need humans have to connect with what we do.
“Our future depends on how we choose to engage those consumers long term. This ultimately will drive home how profitable we are and how successful we are in sustaining our individual operations, whether that be in dairy, beef, swine or poultry.”