Marketing specialist: Beef industry needs to focus on consumer

The beef industry has taken some hits in recent years--some of them self-inflicted--but can rebound on both the domestic and export fronts by overcoming some bad habits and focusing aggressively on consumer demands, said a Kansas State University livestock marketing specialist.

Ted Schroeder spoke Nov. 6 at the annual Ag at the Crossroads Conference, sponsored by the Nebraska AgRelations Council and University of Nebraska-Lincoln Department of Agricultural Economics.

Schroeder noted that the United States was the second largest beef exporter in 2000, behind only Australia. "But we hit a wall in December 2003" when the first case of bovine spongiform encephalopathy was discovered in the country.

"Our export markets shut down immediately, overnight," he added.

That resulted in a $4 billion loss to the industry in 2004. While exports have bounced back some, they're expected this year to be worth only about 75 percent what they were pre-BSE, Schroeder said.

In the meantime, Brazil passed both Australia and the U.S. in beef exports. On a recent trip to Brazil, Schroeder said, he was impressed. Industry leaders there are young, highly educated and multilingual. "They had a confidence about them. They expect to have 4, 4 1/2, 5 percent growth a year," he added.

"That's the kind of competitors we have in the world."

Some in the U.S. beef industry did not respond constructively to the challenges of recent years, Schroeder said. "We pointed fingers. We not only pointed fingers. We said, 'doggonit, we're going to legislate and fix them.'"

Packing plants were the first scapegoat. Then blame focused on speculators in the cattle-futures markets. "Then we blamed the Canadians," Schroeder added.

Some of these efforts only made matters worse, he said.

And in the meantime, consumers "were walking away from our product and we weren't doing anything."

Consumers cite a number of expectations for meat products: guaranteed safe, tender, flavorful, consistently high quality, healthy and nutritious, environmentally friendly production, animal friendly production, local production, convenient to prepare and competitively priced.

Consumers don't know, at the time they buy a product, whether it meets many of those attributes, Schroeder noted. The industry needs to commit to meeting these expectations and then market to them.

"Explicit labeling and brands are essential to convey and assure information," Schroeder said. "We don't tell our story enough. We don't let the consumer know what our product is about."

Schroeder cited five errors the industry makes:

--Defensiveness about criticism. "All that does is feed the fire."

--Too much secretiveness. "We need to be open and honest about what we're doing."

--Camouflaging through labeling gimmicks. For example, Schroeder said, "The word 'natural' in the meat case means almost nothing."

--Assuming "consumers are stupid." "They're not stupid. They're very savvy, and they have lots of information."

--Scare tactics.

Schroeder offered these tips for the beef industry to better connect with consumers:

--"Give 'em what they want."

--"Show and tell our story."

--Invest in new technologies that are aimed at consumers.

--Coordinate and share information within the industry, rather than keeping it secret for what may be a short-term competitive advantage that hurts the industry in the long term.

--"Give 'em your 800 number." Encouraging consumer feedback sends the message, "I'm proud of this. Come talk to me about it."

The entire continuum of the beef industry needs to be part of the solution, Schroeder said--"from the 75-year-old rancher out in western Nebraska ... to the 14-year-old in Chicago who's working in fast food.

"I am optimistic. I think there's lots and lots of opportunities," he added.

1/5/09
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Date: 12/31/08

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