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Steering the beef consumer

Mix together “alternative” beef products, new labeling and another mad-cow scare, and it’s worth wondering whether Americans want to know: Where’s the beef … from? MSNBC’s Jon Bonné reports.
Cattle graze in Texas.
Cattle graze in Texas.
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American beef eaters may have been given pause by last week’s case of mad cow disease in Canada, but Dale Lasater’s customers didn’t seem concerned. No frantic phone calls or cancelled orders at his ranch in Matheson, Colo. Perhaps that’s because Lasater knows every detail about his cattle’s production, from calving to slaughter, as his family has for half a century. “We do know where every animal came from,” says Lasater. “There are a growing number of people that like that factor and do think it’s worth paying for.”

It isn't fear of bovine spongiform encephalopathy that draws customers to Lasater Grasslands Beef, which produces high-end grass-fed steaks and brisket, though they are often interested in the cattle’s well-being. They’re primarily drawn by the widely reported health benefits from grass-fed methods, which include lower levels of saturated fat and more omega-3 fatty acids.

More consumers are taking a keen interest in knowing what’s behind their burger. That isn’t to say most Americans will suddenly clamor for full disclosure when they order their Big Macs. But a range of “alternative” beef products such as organic or grass-fed beef, have been gaining traction. The organic meat industry, to consider one niche, is estimated for 30 percent growth a year — though the 15,000 head of U.S. organic cattle are barely a speck in the overall U.S. herd.

“It’s a niche market and it’s a very small niche market,” Lasater says of the grass-fed trend, “but the awareness is growing exponentially” — aided by a handful of high-profile books and articles that take the beef industry to task for its methods.

Add to that a mad cow scare that hit Americans a bit closer to home, and it’s worth wondering how many Americans want to know: Where’s the beef … from?

The USDA, at least, intends to tell them. Country-of-origin labeling (COOL) was mandated as part of the farm bill passed by Congress in 2002. By 2004, all beef — along with lamb, pork, fish and some produce — sold in the United States must be labeled with its country of origin, quite literally a “Made in the U.S.A” imprimatur.

Whether that matters to consumers is less clear. A study earlier this year of consumers’ interest in COOL showed that most shoppers in Denver and Chicago would pay a slight premium for COOL beef — as much as 24 percent more for hamburger. But among 17 attributes a beef consumer might seek out, geographic origin fell somewhere in the middle, well below items like freshness and food safety assurances. That wasn’t to say consumers didn’t pay attention to the quality of their beef, but they were more likely to associate it with specific brands which they relied on for quality assurance rather than an official grade or label. As such, the days of generic beef in blank styrofoam and shrink wrap may be getting short.

“What this comes down to is that origin is not going to matter nearly as much as brand,” says Wendy Umberger, a livestock marketing researcher at Colorado State University who conducted the study. “I think we’ll see the meat counter continue to change substantially in the next five years, and see the introduction of lots of new brands.”

Actually, many supermarkets already brand their beef with premium labels. But looking forward, the best analogy might be to the poultry industry, which has largely consolidated its sales under just a few brands, such as Tyson Foods and Perdue Farms.

Thus beef, which historically was sold as a commodity — a more or less uniform product with little differentiation — is starting to be differentiated. That shift, Umberger says, hinges on consumer perceptions of safety and quality that surround established brands. That may manifest itself in nationwide brands, like Certified Angus Beef (a creation of the American Angus Association), or in supermarket packaging that attaches a respected name to an otherwise generic product. Supermarket retailer Kroger, for example, offered its Colorado stores a Cattleman’s Collection brand, created by a small group of ranchers and packagers who handle the entire production process.

When beef is branded as such, consumers can leave the responsibility for quality, safety and the entire production process with a single company. And many within the beef industry believe that sort of private-sector quality mandate is beginning to take precedence over consumers’ interest in USDA quality labels — especially because the average consumer is unlikely to hold forth on the difference between, say, USDA Select beef and USDA Prime. (The USDA system favors the marbled fat within beef, one reason lean beef producers often don’t include it in packaging.)

The butcher shop approach
The branding of beef also involves the desire for consistency. The butcher shop approach — looking for premium cuts that might or might not be there the next time you went to the market — has largely fallen out of favor among beef consumers. In part, that’s because you assume when you buy prepackaged products at the supermarket that they will always be the same: Buy saltines each week, and you expect to always get the same box of crackers. The same trend has extended to roasts and steaks.

“They want the T-bone they bought last week to taste just like the T-bone they buy next week,” says Bryan Dierlam, director of legislative affairs for the National Cattlemen’s Beef Association.

This is the part that keeps Little Beef on the fringes. It’s not that their products aren’t consistent, but niche markets require a fundamental leap away from mass-market standards in favor of a specific interest. Some, like organic beef, are focused on consumers’ fascination with the cattle-raising process. Others, such as lean beef, are targeted at beef eaters who want a specific type of meat.

Because the niche beef market is driven by small producers, many of whom sell direct, buying its products requires a transformative leap on the consumer’s part. Beef no longer exists as an item on the shopping list — it must be sought out as a premium item, more like shopping for a new dress than a food staple. It may not always look exactly the same. And small-batch beef often needs special preparation, especially if it’s bred to be lean.

“Those are the barriers to us little guys,” says Michael McDermott of Blue Ox Farms, which produces lean beef from Scottish Highland cattle in the northern Minnesota woods. “As a small producer, we don’t even make a splash in the ocean.”

Big appetite for Big Beef
Big Beef, meantime, remains focused on the basics, and most consumers keep coming back to the same steaks and burgers they always wanted. Beef producers have launched plenty of niche campaigns over time — lean beef in the early 1990s, for example — but shoppers seem to favor the basics.

“We’ve had different fads and fancies that come in over the years,” says USDA livestock analyst Ron Gustafson. “Again, you’re back at value. They want something that’s going to eat good each time.”

Nor are major beef producers so hot on COOL — ironic, perhaps, given they led the call for geographic labeling. But they had envisioned something less formal than the USDA’s new regulations, which require an elaborate tracking process that ensures any beef marketed as U.S.-produced has gone through a production entirely within the United States and under USDA standards. That tracking process will cost at least $1.9 billion, by USDA estimates, and could range as high as $9 billion — not exactly table scraps, even to the $65 billion retail beef industry.

Since most consumers still see beef as a staple with an inelastic price, like gasoline or bread, the industry worries that shoppers will balk if producers pass on additional costs. What began as a desire to promote the advantages of the American steer has left producers scrambling to preserve the bottom line. “There is a strong demand on the part of producers to market beef that’s born and raised in the USA,” Dierlam says. “The challenge is determining if the consumer shares those demands.”

Label puzzle
Actually, the chaos of the European beef market — which, according to Umberger’s survey, still worries U.S. consumers because of its association with BSE — helps explain some of the difficulties with labeling. Some cattle industries there were hit hard by mad-cow mania: “British beef” became the butt of jokes for years, regardless of documented safety standards. But in countries without contamination fears, national origin wasn’t the key safety issue. A study of Finnish consumers, for example, showed them more interested in meat color and expiration dates than a guarantee they were getting Finnish beef.

But all the different quality standards and labels can leave consumers mystified. Even among alternative beef producers, there’s little consensus on how the various descriptions apply. “Natural” has one meaning by federal standards, another by traditional industry standards — all of it confusing enough to prompt USDA’s Agricultural Marketing Service to look at setting definitions for the various terms.

It already did that with the use of the word “organic” on U.S. food products, for which it established rules last October. Prior to that, food producers could use the organic label on items produced under a wide variety of standards.

“There were all these different labeling claims out there and consumers didn’t know what to believe,” Umberger says. “More labeling isn’t necessarily better. More information is better, but the information has to be from a trusted source.”