The challenge of branded beef

Consumers' valid feelings of anxiety and uncertainty when buying beef present major opportunities for both national marketers and store brands that can deliver tender, juicy, flavorful beef on a consistent basis.

While national-branded niche and premium beef products like Certified Angus Beef and Sterling Silver are reportedly succeeding because of their marketing skills and more tender, consistent product, well-known consumer brands have not succeeded in acquiring a major influence in the high-volume commodity beef business.

But perhaps we are on the edge of a major change. With the purchase of IBP by Tyson, and its recent announcement that it will spend $100 million on building a broader meat brand platform, the Springdale, Ark.-based company's experienced marketing team and respected brand name have the chance to alter the picture.

What will it take to create successful large-volume brands in beef? Results from a major beef checkoff-funded branding research project I worked on a few years back provide some important insights, including encouraging findings that point to a dramatic opportunity for beef to recapture business lost to poultry over the years. The survey report, Receptivity to Branded Beef—A Study of Consumers and Retailers, was published in 1997. The study was conducted by myself and Sheila Courington of Wirthlin Worldwide for the National Cattlemen's Beef Association on behalf of the Cattlemen's Beef Board.

The consumer research indicated that beef users want improved consistency, improved eating enjoyment, and economical prices from the beef they buy at retail. When asked about the importance of brand names, consumers reported that branding is not very influential in today's beef purchases because most retailers stand behind the product. However, branding is seen as beneficial when the product is "better" or "different." Respondents further said they would consider buying beef that has had a flavorless solution added if the solution improved the beef.

As the trade research indicates, supermarkets are strongly committed to building their store brands and creating distinctiveness from competition. However, they are also realists and want the advantages that national brands, with advertising, consumer promotion, and R&D, can bring to create meat department demand and traffic.

The 'performance gap'

In a quantitative national telephone survey of 600-plus heavy beef users, researchers wanted to determine the most important motivational factors in consumers' beef purchases, including the importance of brands, either store or national.

They then asked how well beef delivered on the issues consumers judged important, with the difference classified as the "performance gap" (see table on page 58). On most measures, the respondents' beef "performance" did not meet their "importance" ratings. The largest gaps were found in consistency, tenderness, value, and successful meals. Quick preparation scored lower with these heavy beef users, even though other research among the total population has consistently shown this as a much more important attribute.

Asked what would motivate them to purchase more beef, not surprisingly, lower prices or improved quality at the same price came across as the most powerful incentives to greater consumption. Better and more consistent eating quality followed closely.

Consumers have generally come to expect a premium product when they buy branded as compared with generic or commodity products. Consistency is an expectation of any quality brand—that the product covered by the brand is predictable. Further, consistency is a major factor in creating brand trust.

If a branded beef product delivered consistently, then it would generate trust that the risk of a bad meal outcome would be reduced. As the accompanying chart depicts, one of the highest gaps for 13 percent of consumers is the ability of today's beef to "always turn out right."

Interestingly, consistency was seen as somewhat independent of eating quality. Therefore, consistently mediocre results may be preferable to a great experience one time followed by poor results another.

Branding also signifies accountability. It identifies the entity that consumers can contact with complaints or questions. In meat, however, the advantage of a national brand was seen as somewhat less important because the consumers already feel that their grocer is accountable for their meat, and they see no greater advantage in a national brand if the brand name is the only difference. In other words, people won't pay extra for a pretty label.

Respondents also voiced strong personal concern in additional focus group sessions about becoming very anxious when buying a piece of beef for $6 to $10. Will it turn out tender and juicy or tough and dry? Many meal preparers fear being criticized for poor results, and they likely blame themselves for a poor meal outcome. Consequently, they will often pay higher prices for the premium brands with the hope of a better result.

Moisture enhancement

Consumers were also asked about several options for branded beef products. The one that scored the best asked how willing they would be to try moisture-enhanced beef, which was accepted by 72 percent of respondents.

The Tyson/IBP product sold at Wal-Mart takes a major step toward delivering this concept to the market, although the long-term outcome will depend upon how well the product delivers on the promise.

In addition to the consumers, 20 major retailers and wholesalers nationally, responsible for about 50 percent of U.S. retail beef purchases, were interviewed at length for the retail trade piece of this study.

The outcomes of those interviews reflected a mixture of reactions to beef branding:

•Premium brands like CAB and Sterling Silver provide important and profitable additions to our meat case. "Anybody who has a Select commodity program needs to have a premium program to complement it."

•The widespread strategies to strengthen their store brands, or to brand their stores with uniqueness and distinctiveness, must rely on the meat, produce, and bakery sections to create much of that personality. The survey thus found strong resistance to national lines of commodity fresh beef that would reduce that opportunity for creating uniqueness.

•The distrust between buyers and sellers, and the reluctance to share data, created a strong desire among buyers to have more than one supply source.

•Nationally branded niche lines, such as natural and organic, however, were welcomed as effectively serving their consumers and also adding to their profitability.

•Retailers were favorably disposed to the concept of moisture-enhanced beef if it performed well and was not excessively enhanced.

•Case-ready beef, while poised for growth, was viewed cautiously, although branded case-ready ground beef, such as Moran's, was well-received.

Several recommendations resulted from the research. They included encouraging industry R&D expenditures to improve the eating consistency of beef; testing the benefits of moisture enhancement of beef; encouraging joint ventures with suppliers and retailers to develop "partnership" brand agreements; and continued efforts to prevent known poor quality beef from entering the retail channel.

Today's beef cases are changing. Major brands have introduced many beef lines over the past few years, setting the stage for further expansion. At the same time, retailers are employing partnerships with producers and packers to strengthen their store reputations and uniqueness. As these brands build success in their niches, the opportunity to expand them into the heavy volume portions of the beef business will become much easier.

Here are some issues to consider:

•National meat brands associated with other species five years ago are now marketing beef specialties. Hormel, Tyson, Armour, and John Morrell are among the national brands bringing value-added beef products to consumers over the past few years. How much longer before they begin to market fresh branded beef?

•The need for supermarkets to create a distinct positioning has never been more important. Major packers are partnering with chains to achieve branded status without actually promoting their own brands. Excel is supplying chains such as Kroger and Harris Teeter with Cattlemen's Collection and HT Rancher, respectively, that promise careful selection and improved eating.

•Although store brands are unlikely to retreat in the near future, specially positioned, branded fresh beef products are expected to expand further. Laura's Lean, Coleman Natural Beef, and Maverick Ranch are among the more successful niche lines being marketed to today's more particular shoppers.

•Wal-Mart is selling moisture-enhanced beef nationally through supply agreements with Tyson and Farmland. Consumers now have the chance to react to this approach with their pocketbooks. It's very likely, however that this product-enhancing approach, used widely on pork and turkeys, will expand into more retail beef sections, in part to compete with Wal-Mart.

Future concerns

Where should the industry focus next? While many of the report's recommendations have been implemented, the elimination of known poor cattle from the retail channel still is a serious issue. Further, the funding of technologies to enhance tenderness and identify the tough from the tender seems crucial to achieving the real promise of branded beef, namely that the consumer can trust that the brand consistently delivers tender, juicy, flavorful beef.

It's clear in re-reading the research that the issues of E. coli O157:H7 and food safety were not nearly so compelling then as they are today. But I believe that those issues, along with the increasing pressure for animal traceability, process and feeding verification, country-of-origin labeling legislation, and labor issues will make branded and case-ready programs more, not less, attractive to retailers.

Robert J. Moeller is president of Moeller Management Consultants in Chaska, Minn. He was formerly s.v.p./director of marketing for Cargill's meat sector and a member of the brand management team at Procter & Gamble. He has consulted extensively with the NCBA, beef associations, and various fresh meat suppliers.