Promotions put beef on front burner
Here comes summer: Beef's best-selling season. I don't know about you, but I for one need something to be hopeful about because this economy has taken its toll.
Here's what gives me hope. The National Cattlemen's Beef Association, working with the State Beef Councils and as a contractor to the national Beef Checkoff Program, is working to spark beef sales and maximize the return on our checkoff investment.
The global economy is tough. We are affected at the producer level by soft export demand and a relatively high dollar. The drop credit value (offals, tallow and hides) is down $5 to $6 per cwt., led by a decline in hide values. Hides mostly are sold to South Korea, where prices are off as much as 50 percent. The auto industry is another customer for our hides, and we all know where they are.
Domestically, consumers have changed their buying habits. Nearly 60 percent of consumers are trying to manage their food costs. Retail beef sales are up. Foodservice sales are down, as consumers eat at home more often.
Dining out is one of the first cuts families make. Foodservice sales were down in 2008, and Joe Pawlak of Technomic Inc. in Chicago says they will continue down in 2009. About 50 percent of beef sales, measured in dollars, typically comes from foodservice.
On the other hand, retail beef sales are up 4 percent through April compared to the same time a year ago, according to Fresh Look retail pricing data. However, at home, consumers are buying less expensive cuts of meat, such as hamburger, or changing their protein purchases to something less costly. They often see steak as a luxury item or "special occasion" food. And when consumer steak sales slow, it affects prices all the way to the producer level.
Yet, steaks are a great value right now. Middle meat wholesale prices are at a 7-year low, says CattleFax. NCBA and the State Beef Councils are working with retailers and foodservice operators nationwide to increase featuring of these cuts.
When beef is featured in the meat case or at a restaurant ... or when steaks are merchandised in a way that conveys a great value, we win consumers. And it's consumer dollars that infuse profitability up and down the beef supply chain, including to us producers. Here are some things we're doing with your checkoff dollars to win customers.
--We kicked off grilling season early, moving up promotional plans to early May. Various grilling promotions will run throughout the summer into late September.
--We're working with consumer product companies to provide consumers with $1- to $3-off coupons for beef. Last year, we had 10 million coupons in the marketplace; this year, we'll have more than 60 million.
--We're working with consumer magazines to extend the checkoff's "Beef. It's What's For Dinner" advertising; and special summer recipe advertorials will reach more than 17 million readers.
--We're helping restaurants tell consumers about the great beef deals to ensure, when consumers are eating out, they're choosing beef.
--We're even launching a mobile marketing effort so that consumers can dial-up recipes and shopping lists on their cell phone when they're standing at the meat case. What a cell phone can't do nowadays.
At NCBA, we are committed to protecting and enhancing your profitability. That mission takes on new importance in this environment and we will use our collective resources--policy and checkoff--to reach that goal. You have my word on it.
--J.D. Alexander, federation division chairman for the National Cattlemen's Beef Association and a farmer feeder from Pilger, Neb.