What Are We Doing For Our Customers?

John F. Grimes, OSU Extension Beef Coordinator (originally published in The Ohio Cattleman)

“Today’s consumer appears to be more willing than ever to pay for quality.”

Few enterprises are as productive as American agriculture. The American farmer is very good at their specialization: efficient food production. Farmers and ranchers are at their best when it comes to using recommended practices and modern technologies to achieve profitable yields from their available resources. However, one area that the typical producer is not as comfortable with is the subject of marketing.

For any business to achieve long-term success, they must strive to satisfy the wants and desires of their customers. The beef industry is no exception to this concept. Our competition for the consumer’s protein purchasing dollars is a fierce battle with the pork and poultry industries. This battle takes place domestically and across the globe. How is the beef industry working to meet the needs of our customers?

Today’s consumer is more demanding about the product we are providing them and we cannot take their expectations for granted. They want to know more about how we feed and care for our animals. They want a safe and wholesome product and they expect us to produce it in a sustainable fashion that protects the environment.

One very visible change that the beef industry has made in recent years is the fact that we are providing more branded products than ever that suit the specific needs of the consumer. The meat case at your local grocer may offer choices such as all-natural, hormone-free, grass-fed, and other brands to meet a wide variety of tastes. Today’s consumer appears to be more willing than ever to pay for quality. In 2017, a greater percentage of cattle were harvested for higher quality grades (mid-Choice and higher) than were for the Select grade of beef. This increase in the production of higher quality beef has allowed brands such as Certified Angus Beef to achieve record sales.

Global customers for U.S. beef have shown a strong preference for our product. U.S. beef exports for the first half of 2018 were up 15 percent in volume and up 20 percent in value compared to the same period a year earlier. The top export markets for U.S. beef thus far in 2018 (in order) are Japan, South Korea, Mexico, Hong Kong, Canada, and Taiwan. The potential for growth in China and other countries is significant but the U.S. beef industry will have to adjust to their traceability requirements and restrictions on hormones and beta agonists to fully capitalize on these markets.

Beef marketers are using innovative ideas to put beef on consumers’ plates. With online purchases, consumers are quickly changing how they are going to obtain food for their families. Meal kits deliver food ingredients directly to consumers in individually packaged proportions. These kits come with step-by-step recipes and allow the consumer to efficiently cook meals at home. While meal kits may be more expensive for consumers, they may eliminate the need for some to go grocery shopping. Beef is a popular component in the meal kit segment.

Retail grocers are looking at using technology to attract customers. Increasing numbers of consumers are purchasing groceries online across the country. Groceries can then be picked up curbside at the store or in some locations actually delivered directly to the consumer’s home. Beef sales should benefit from increased convenience for the consumer. While this concept is relatively new, it would be premature to dismiss the long-term potential of this use of technology by the consumer.

How important is the voice of the consumer? Their concerns have resulted in Tyson Foods, who harvest and process 25% of the U.S. beef market share, and also Wendy’s, now the second largest fast food hamburger chain in the U.S., both announcing that beginning in 2019 they will be sourcing beef from producers who are Beef Quality Assurance certified. The consumer’s voice is being heard and it is influencing how we implement our management practices at the farm level.

A growing middle class around the world is increasing the global demand for protein. There is also an increasing consumer desire for foods that have been produced in a sustainable manner. For beef, that means a supply chain that is socially responsible, environmentally sound and economically viable. Today’s cattlemen must be responsive to the public’s demand for more transparency about how we produce beef. If we ignore our customer’s requests for more sustainable production of beef, we will lose their trust and ultimately hurt demand for our product.

I am sure most of you are familiar with the phrase “The customer is always right.” This phrase may be more meaningful than ever for the beef industry.