The Future of Angus Beef

1. The Future of Angus Beef Tom Brink

2. Effective Business Pyramid Added Value & Product differentiation Commodity principles: Low costs & production efficiency Both are required for success in today’s industry.

3. Angus Beef “More or Less” evaluation

4. What will we see MORE of ? LESS of ? Winners, Losers and making the industry better

5. MORE of the SAME regarding Angus Beef Popularity Dominant position with consumers will be maintained, because Angus is synonymous with HIGH QUALITY

6. CAB started the revolution in 1978. • Today USDA lists 51 certified beef brands. • 35 brands use the ANGUS name (69%). • 15 new beef brands were created in 2004 and 2005 alone… • And 14 of these incorporate ANGUS into their label (93%).

7. Packers are using the Angus name in their brands: • Booker Elkhorn Valley Packing • Harris Excel • Packerland National • Swift Tyson • Washington Beef Creekstone • Plus…distributors SYSCO and AFG • Even Wal-Mart has an Angus brand

8. Black Angus SteaksFor those who only insist on the very best, only Angus beef will do. Famous for its tenderness, juiciness, and flavor, this is the kind of meat that melts in your mouth. Pfaelzer Brothers has established a set of strict quality standards to insure that when you care enough to send Black Angus Beef, you get only the very finest.

9. Angus Beef is Everywhere …most recognized name in branded beef Black Angus SteaksFor those who only insist on the very best, only Angus beef will do. Famous for its tenderness, juiciness, and flavor, this is the kind of meat that melts in your mouth. Pfaelzer Brothers has established a set of strict quality standards to insure that when you care enough to send Black Angus Beef, you get only the very finest.

10. Angus Ground Chuck Products80/20 • Midwestern Grain fed • USDA Prime, Omaha Steaks Angus & USDA Choice • Custom Hand-Trimmed • Small Pack Sizes

11. Google Search Test • Angus Beef 1.38 million matches • Hereford Beef 312,000 • Charolais Beef 131,000 • Limousin Beef 124,000 • Simmental Beef 116,000 • Gelbvieh Beef 46,100 • Salers Beef 32,200 • S. Highlander Beef 33,400

12. More Differentiation in Angus Beef Program Specs

13. More “Granularity” • Live animal requirements • Marbling, maturity & yield grade • Carcass weight range • Natural product claim • Source verified • Age Verified • Story line… “raised and fed with a mountain view” Affording both opportunity and risk for producers.

14. More Room for a few strong Non-Angus Beef Brands

16. More Angus Beef from Southern Cattle in Southern Plants

18. Costing the Beef Industry >$160 million per year

19. The problem is easy to see…

25. What do most Southern Genetics need ? Answer: He’s black and walks on four legs

26. More Angus Beef from “Non-Angus” Parents

27. More Angus Beef Produced from Hybrid-Angus Bulls on Angus-based cows

28. Why? because… • No success goes unchallenged • “Can’t beat them….join them” • Hybrid vigor still matters in the cow-calf business • Structured cross-breeding too difficult to implement • Hybrid seedstock are convenient to use • More muscle (better YGs) from Continentals • Feeders, packers and consumers don’t care how the Angus genes get into the final product

29. Tracking the Hybrid Movement Simmental ---SimAngus - 40% of annual registrations Gelbvieh ---Balancers - 33% Limousin ---Lim-Flex -12% 60% and 40% of Chi and Maine registrations are Angus-based hybrids, respectively. Approximately 50,000 total registrations this year and growing by 15% to 20% annually.

30. Hybrid Seedstock Registrations* 100,000 by 2010 Per Year *Angus-based.

31. Five Rivers’ Personnel Comment on Angus’ Strengths “Grade, Grade, Grade” [Quality Grade] “Premium Programs” “Uniformity” ---add uniformity to a calf crop “Rib and Volume” “Able to eat a lot of feed” “Crossing ability with other breeds” “Marketability”

32. Five Rivers’ Personnel Identify Angus Soft Spots “Over fats” “Cutability problems before reaching desired dressing percent” “Higher percentage Angus means lower yields and a higher percentage of YG4s & YG5s” “Dressing percent, yield grade & muscling” “Not enough muscle for their out weights” “They cost too much”

33. Ideal Angus Percentage? They said…. 50% - 75% With the balance being Continental, as opposed to another British breed.

34. More problems with YG4s in the Northern U.S. (in the short run)

35. Increasingly difficult for feeders and packers to deal with

36. What will we see LESS of? LESS opportunity to produce cattle with anonymity LESS profit potential on commodity cattle that can’t fit any branded beef program LESS room for seedstock and commercial cattle that have no Angus influence LESS of a “hard line” distinction between some breeds---Angus genetics are becoming the common link

37. What does all this mean to you as an Angus breeder?

38. Angus genetics will be recognized as the main ingredient for the entire beef supply chain But not the only ingredient

39. A whole new level of genetic accountability for seedstock and commercial producers is on the way

40. Extremely broad range of needs & wants within commercial cow-calfsegment

41. Angus genetics---some in a non-traditional package---will continue to win big in the years ahead

42. Angus in both Purebred and Hybrid form will dominate more of the seedstock sector

43. Cement is the main ingredient in concrete

44. Both products can produce concrete

45. Purebreds and Hybrids Selling Side by Side ANGUS “Angus inside”

46. The U.S. Beef Industry WINS too.