Quality Genetics, Quality Eating Experience

The beef industry turned itself into a success story by focusing on quality.

KANSAS CITY, Mo. (Nov. 5, 2014) — The beef industry has a great story. It recognized its issues and turned disadvantages into advantages, explained Nevil Speer, vice president of U.S. operations for AgriClear. He spoke to attendees of Angus University, which was part of the Angus Means Business National Convention & Trade Show in Kansas City, Mo., Nov. 4-6, 2014.

The 1980s and 1990s were a rough time for the beef industry. Beef was rapidly losing market share at an 11:1 disadvantage to pork and poultry. Speer said the National Beef Quality Audit (NBQA) kept showing that beef’s biggest issues were ones that beef was supposed to be good at — tenderness, uniformity, external fat and marbling. Beef was working in a commodity mind-set. There was no emphasis on value, just on cost. The industry was unresponsive to consumers and, thus, was losing market share.

The industry needed to switch from product marketing, a commodity orientation, to solution marketing, an end-product orientation. Customer-centric thinking was to reverse the traditional value chain, he noted. Essentially, it creates pull-through demand where the consumer wants the product so the product is produced, instead of producing a product and hoping the consumer will buy it. The way to do this was to focus on quality.

It took 20 years of work, but the industry has enhanced beef quality and consistency, with more responsive precision and efficiency of product delivery to various consumer segments. The bottom line, Speer added, is that improved customer satisfaction is anchoring spending in challenging economic times.

To beat the commodity trap, the beef industry realized it couldn’t compete with low-cost rivals on price. Speer explained, “You turn the trap to your advantage, and contain the low-end players’ market power to the low end.”

Beef’s pricing power is more than double the spending on both pork and poultry, he reported. The value of fed cattle has more than doubled in the last five years. Consumers will pay for quality beef and have not hit the price ceiling of what they are willing to pay yet.

However, he warned, complacency is not an option.

He concluded by citing Jim Collins’ book Built to Last: “If an industry is to meet the challenges of a changing world, it must be prepared to change everything about itself except [its basic] beliefs. The only sacred cow in an organization should be its basic philosophy of doing business.”

Speer spoke Wednesday, Nov. 5, during the Angus University program featuring "A Story of A Steak." This extension of the award-winning series of articles in High Plains Journal and segments on The Angus Report was sponsored with support of Merck Animal Health. For more information about the Angus Means Business National Convention & Trade Show, visit www.angusconvention.com.


 

Editor's Note: This article was written by staff or for the Angus Journal®. It is available for reprint upon request to editor Shauna Hermel. Photos are available upon request.

ANGUS MEANS BUSINESS. The American Angus Association is the nation’s largest beef breed organization, serving nearly 25,000 members across the United States and Canada. It provides programs and services to farmers, ranchers and others who rely on the power of Angus to produce quality genetics for the beef industry and quality beef for consumers. For more information about Angus cattle and the American Angus Association’s programs and services, visit www.angus.org.