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4 th Annual Cattleman’s Workshop

4 th Annual Cattleman’s Workshop. January 19, 2008 Blue Mountain Conference Center La Grande OR. Looking at The Changing Beef Industry Current/Future Consumer Expectations From a Retail Perspective. Al Kober Director of Retail Certified Angus Beef LLC. Certified Angus Beef Retail .

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4 th Annual Cattleman’s Workshop

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  1. 4th AnnualCattleman’s Workshop January 19, 2008 Blue Mountain Conference Center La Grande OR

  2. Looking at The Changing Beef Industry Current/Future Consumer Expectations From a Retail Perspective Al Kober Director of Retail Certified Angus Beef LLC

  3. Certified Angus Beef Retail Retail Sales are 50% of total CAB sales 2007 sales - 290,000,000 pounds Top Retail Accounts Meijers Schnucks Giant Eagle Price Chopper Giant PA

  4. Certified Angus Beef Retail >4500 licensed retail stores in the United States Average sale per store 50,000 pounds yr Highest single store sales average 650,000 yr 490 licensed retail accounts

  5. The Changing Retail Beef Industry

  6. The Changing Retail Beef Industry • Private Label vs. Branding • Case Ready • Food Safety • Packaging • Retail Formats • Natural/Organic • VAP • The Hispanic Factor

  7. Private Label vs. Branding • The main driver- To be different • All store banners are brands • Private label only as good as store image • Brands equal consistency. • Quality must be intrinsic, not superficial • Branding and commitment to quality are important to consumers

  8. Case Ready • Food safety • Known costs • Variety • Out of stocks • Consistency • Economical advantages • Liability • Perceived to be lower quality

  9. Food Safety • E-Coli • Salmonella • BSE (Mad Cow) • Recall • Limited impact on sales

  10. Packaging • CO • MAP (Hi-Lo-Ox) • Mother Bag • Overwrap • Vacuum Sealed • Leak proof advantages

  11. Retail Formats

  12. Retail Formats • Conventional-15,000 SKUs • Super Market- 40,000 sq ft -25,000 SKUs • Warehouse- low prices, little service, and limited variety • Super Warehouse- Hybrid-Super store/ warehouse- (Cub Stores) • Limited- 2,000 SKUs- (Aldi, Save-a-lot) • Specialty/Gourmet- Natural-Organic -(Whole Foods) • Ethnic-(Sedanos-Twin City)

  13. Retail Formats. cont. • Convenience Store (Wa-Wa- 7-11)(With or with-out gas) • Super Centers- Drug/Mass Merchandiser, food and non-food.- (Wal-Mart, Meijer’s) • Wholesale Club- (Sam’s, Costco, BJ’s) • Dollar Store- limited sku’s – price driven (Bottom Dollar)

  14. Pricing Strategies • Hi-Lo- High retails-low sales prices • EDLP-Every Day Low Prices • EDHP- Every Day High Prices • Hybrids EDLP-staples HI-LO perishables

  15. Natural/Organic • Perceived Value • Feel good food • Growing categories • Definitions- vague • Primary store- Supermarket-72% • Major area of consumer confusion

  16. V.A.P. • Ready-to-eat- Rotisserie Chicken, Hot bars, etc. • Ready-to-heat- Chilled or frozen fully cooked entrees • Ready-to-cook- Seasoned, marinated, meal groups

  17. The Hispanic Factor • Growing buying power • Cuts and cutting methods • Big beef eaters • Eat at home • End meat users(Chucks and Rounds) • CAB’s highest tonnage stores

  18. Current Issues Consumer Expectations and Demands

  19. Consumer Expectations and Demands • A Great Eating Experience (Taste) • Perceived Value • Convenience • Information/Knowledge • Food Safety • Nutrition

  20. A Great Eating Experience • The goal of the beef industry • Taste ( tenderness, juiciness, flavor) • High quality beef taste better • Consistency (10 CAB specs) • Confidence (Brands) • You are in the Food business

  21. Perceived Value • Quality costs more to produce • Must be ROI • Over 40% of shoppers will switch stores to get better quality. • The customer will pay more if they believe it is worth more.

  22. Convenience • Major driver for consumers • Consumer’s time restraints • Not willing to sacrifice quality for time • “I did it myself” • Failure of early HMR products (Quality)

  23. Shopping Process • The Search- for the desired cut • The Sorting- Right size, weight, fat • The Evaluation- review, appearance • The Selection- Put into cart or back into case

  24. Information/Knowledge • What are they looking for • Consumers want to know more. • On pack best method, for now, but… • Quality statements, preparation, nutrition • COOL

  25. Food Safety • Major concern of all consumers • Same as production channels • E-Coli, BSE, Salmonella, recalls • Consumer’s mis-conceptions of COOL, Natural, Organic

  26. Nutrition • Somewhat important to 90% of customer • Perception-Organic, natural as better What consumers look for on nutrition label • Saturated fat, sodium, trans fat, calories, cholesterol, sugars, protein, fiber, calcium, iron, vitamins C,A,B, zinc

  27. Consumer’s Perception of Quality Beef • Bright red • Non-leakers, not bloody • Little Fat • Tightly wrapped • Superficial/visual vs. intrinsic

  28. Future Consumer Expectations and Demands

  29. 2008 Retail Industry TrendsChuck Jolly- Cattlenetwork.com • 1. Natural Meats- Never Never Never, Grass fed, with-draw, tested (Do not make it just a marketing slogan) • 2. Health Specific- Baloney with calcium, bottled water with caffein • 3. Greener than Thou- Carbon conscious? • 4. Functional Foods- Pharmaceutical advantage. Probiotics in yogurt • 5. Nostalgia-on-a-plate- Blue hair specials Meat Loaf and mamma’s pot roast

  30. 2008 Retail Industry Trends • 6. Lifestyle Products- Self-heating package • 7. Brand Partnering- Oscar Meyer/Ritz • 8. Locavorism- Eat locally produced food • Local co-ops • 9. Heat-and –Serve is the New Scratch Cooking • 10. Full Fat Feeding- Berkshire Pigs (Theseconsumers are more concerned with taste then health)

  31. Consumer’s Future Expectations and Demands More Information (Too many labels) Increased Safety assurance Higher quality More variety Confidence (Is COOL the answer?) More feel good stuff (Green- Sustainability) Associates know more than they do.

  32. What is Certified Angus Beef Doing to Meet these Needs?

  33. Supply Development

  34. Retail and Marketing Division

  35. More Information • CAB has redesigned the CAB logo label to include more quality facts • Extensive consumer research project • New consumer marketing (Using experts) • Quality statement- “A cut above (more selective) than USDA Select, Choice and Prime” • Black trays= higher quality

  36. Increase Food Safety Awareness • These are industry production issue • CAB works closely with the industry to support food safety issues • Education of store associates on food safety issues • An aggressive VAP development team

  37. Higher Quality • CAB lead the industry in re-defining the value of yield grading and introduced new consistency and quality specs. • CAB works with the industry to protect the beef production process against anything that would impact quality.(White paper, feed additives/beta 2-agonists etc.)

  38. Retail Partner’s Education • Cutting tests • Plan-a-grams • Ad and supply availability support • Value based merchandising • Salesmanship • A confident sales associate produces confident consumers • CABU- Meat cutting and Meat Merchandising School

  39. Cutting Tests A cutting test provides yields, profit potential, realized sales value Beneficial when writing profitable ads, selecting ad items, evaluating suppliers, choosing fabrication styles, etc. Many retailer do not know how to do them or how to use them

  40. More Variety CAB is leading the industry with muscle profiling and introducing new beef cuts from underutilized primals. (Chucks and Rounds) Production of brochures showing step by step procedures in pictures and word Instore and industry demonstrations

  41. Chuck Roll Merchandising Ideas

  42. Chuck Roll Merchandising Ideas

  43. NCBA Initiative CAB has partnered with NCBA to assist the launch of the NCBA 2008 major marketing effort. Chuck Roll muscle profiling producing new steak cuts CAB is designing the POS, recipes Using our relationships with key retail partners to launch in early 2008. (Meijers, Food City)

  44. NCBA Initiative The initial retail launch will be exclusively Certified Angus Beef New cuts Chuck Eye Steaks (Standard cut) Chuck Eye Roast- (America’s Beef Roast) Country Style Ribs (Neck end of Chuck Eye Roll) Denver Steaks (Serratus Ventralis) Possibly the Chuck Flank (Splenius)

  45. Conclusion Trends change and fads come and go. What remains consistent is, Consumers want a product that will deliver An enjoyable eating experience one bite at at time every time. Not only tender but one that “Tastes Great” With lots of that great beef flavor Bursting with juiciness in every bite.

  46. Only one Brand delivers this more consistently that any other.

  47. Certified Angus Beef • Highest Quality Beef • Highest Quality People • Integerty

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