Charting the Course for 2015 with Beef Industry Insights and Planning

by Rick Husted, MBA, Vice President, Strategic Planning and Market Research, National Cattlemen’s Beef Association, a contractor to the Beef Checkoff

Summary

The Beef Industry Scan was held on Jan. 6, 2015. The focus of the scan was to provide beef industry leadership with a comprehensive and current update on the key challenges and opportunities facing the industry. The intent was to provide industry leadership with data driven insights to support development of checkoff priorities for fiscal year 2015. Insights from the scan, detailed below, also supported modifications to the Beef Industry Long Range Plan.

Background

The Beef Industry Long Range Plan (LRP) sets the overall strategic direction for the industry. Developed in 2011 by a task force of industry leaders across a number of sectors, the LRP outlines six core strategies intended to provide the industry with a clear focus. The Beef Checkoff concentrates its efforts in four of these areas:

  • Improve Domestic Consumer Preference for Beef
  • Capitalize on Global Growth Opportunities
  • Strengthen the Image of Beef and the Beef Industry
  • Protect and Enhance Our Freedom to Operate

Because the LRP covers a five year span, and to ensure it remains relevant, an annual review, or scan, is conducted to provide new information that could potentially impact the LRP direction. The 2015 industry scan was presented to checkoff committee leadership in preparation for priority setting at annual convention in February. The LRP Advisory Group, comprised of five original task force members, was also in attendance to recommend potential revisions to the LRP. Scan insights and checkoff committee priorities will also inform beef checkoff contractors as they plan for fiscal year 2016.

Discussion

Industry Scan Overview

This year’s industry scan included a focused overview of areas deemed to have the greatest impact, positive or otherwise, on beef demand. The basis for much of this insight was a study commissioned by the Cattlemen’s Beef Board in 2013 titled, Beef Demand: Recent Determinants and Future Drivers. The focus of the study was to identify the best opportunities to positively influence beef demand. The most impactful beef demand determinants were summarized into seven broad categories:

  • Food Safety
  • Nutrition
  • Health
  • Product Quality and Form
  • Social Aspects
  • Sustainability
  • Price Value

In addition to the emphasis on these criteria, the scan also provided robust insight into the need for sound science, the importance of focusing on the right consumer target, and global opportunities for beef.

Key Insights from the Industry Scan

  • The Importance of Sound Science – Speculation is not good enough, and emphasis was placed on the importance of developing and maintaining a solid foundation of scientific evidence and understanding that the modern scientific process is more dynamic than ever, requiring ongoing diligence and focus. Rigorous application of standards is also required throughout the scientific research process -- from study design, to the number of studies ,to maintaining consistency across studies -- all of which help to ensure that the most accurate and comprehensive data is being captured and then considered by key decision makers.
    The Millennial Target – It should come as no surprise that the millennial generation -- those now between about 14 and 34 years old -- is the clear target for the checkoff’s beef messages, for a variety of reasons. Over the next few years, millennials will outnumber baby boomers and will impact the economy and food industry significantly as they continue to reach new life stages – such as getting their first jobs, getting married, buying their first homes and having children. Millennial parents are of particular importance as they will set the stage for the next generation of beef eaters.  These millennials have a great affinity for food and expect fast, simple solutions and beef can play a leading role in meeting these expectations.
    Embracing the Digital World – Research and experience with millennials tells us that we must reach them where they live – and millennials live on their mobile devices and social networks. In fact, almost 70 percent of millennials say they go to the internet first when they need information about anything -- including things related to beef – and their level of online activity related to food is considerable and increasing. Opportunities abound, from increased reach and engagement capabilities to becoming more top of mind when food related decisions are being made.
    Demand Drivers:  Safety – It is clear from the scan and other research that confidence in the safety of our product is paramount to consumers, and we need to remain vigilant in our research on pathogens like E. coli and Salmonella. Aside from being a cornerstone of our industry, beef safety is also crucial when we look at how quickly misinformation about our product can travel – particularly given the corresponding surge in use of social media.
    Demand Drivers:  Health and Nutrition – Health and nutrition are two related demand drivers of particular interest to millennials. Key components in these areas include the importance of nutritional content -- like protein, iron and zinc – in addition to an intense focus on health-related factors, such as fat content, cholesterol, carcinogens, calories, diabetes and obesity. Consumers want to eat healthy and stay healthy and are more focused than ever about what they put in their bodies and the need for protein, where beef excels, continues to be a trend.
    Demand Drivers:  Product Quality and Form – To consumers, product quality means a number of things including, taste, juiciness, consistency, package/portion size, color/appearance, ease of preparation and tenderness. All of these attributes combine to make up what consumers consider a quality product. Beef has varying levels of success hitting these marks, so it’s important that we maintain the positives and address those areas where we need to improve. It is also important for beef to respond to varying trends like the fact that restaurateurs are ratcheting down portions to help control costs.
    Demand Drivers:  Social Aspects – Social aspects include things like animal welfare, so-called “factory” farming, and use of antibiotics and growth promotants – all of which impact consumers’ perceptions of our product and how they can be misrepresented by anti-meat activists. Many companies and industries have come under fire for production practices that can be wrongly or unfairly represented and beef needs to remain diligent in its efforts to communicate the facts.
    Demand Drivers:  Sustainability – This is a broad and complex issue, but the bottom line for consumers is whether or not the food they consume is being raised in what they consider an environmentally sound manner. While the issue of beef’s sustainability has yet to become a top issue for the majority of consumers, we recognize – as do many food companies – the potential implications that sustainability represents and are keeping a close eye on these developments.
    Demand Drivers:  Price Value – Beef prices have risen steadily in recent years and, as of January 2014, were at an average price of more than $5 dollars per pound – almost two and a half times the price consumers are willing to pay for chicken. It’s important to keep in mind that strong prices for beef are a good thing; it means that consumers are getting their demands met with our product to the extent that they are willing to pay more for it when tight supplies combine with consumer satisfaction to drive those prices up.
    Global Growth – As global consumption of beef continues to grow, it is apparent that the opportunities abroad are considerable. We also know that the majority of the world’s population lives outside our domestic borders and that the rest of the world is slowly becoming middle class and better able to afford to put protein at the center of their plates.  Key to this is the fact that the U.S. owns the grain-fed beef market and demand is starting to outpace supply…timing is excellent.

Conclusion

Industry Scan Impact on the Long Range Plan

The theme of the 2015 industry scan was “refine and focus.” Here are those areas of recommended refinements:

  • Engage industry stakeholders to inspire innovation that creates consumer experiences that drive consumption of beef.
  • Increase access to export markets by emphasizing both production and processing technologies (e.g. carcass wash).
  • Proactively tell the story of U.S. beef production in foreign markets to highest opportunity customers (e.g. countries, companies, buyers).
  • Increase focus on effective communication of key research and science outcomes to consumers and industry stakeholders.
  • Place urgency on understanding and effectively communicating the antibiotic resistance issue.
  • Immediately coordinate industry-wide effort to address the threat of potential dietary guideline outcome.

Additional Resources

Tags: Beef Issues Quarterly, Spring 2015, Trends Analyses

March 27, 2015