Certified Angus Beef: Brand Champions
Certified Angus Beef’s go-to-market strategies have kept the brand growing at a very steady pace, even through turbulent economic times.
In October 2014, Certified Angus Beef LLC reported its eighth consecutive year of record sales of its Certified Angus Beef brand — and the 10th consecutive fiscal year that the brand had achieved year-over-year growth. In the news release on the achievement, Certified Angus Beef LLC president John Stika noted that consumers favored a premium product such as CAB as they evaluate the price of beef in relation to its value. For the past decade, consumers have chosen to upgrade their experience without breaking the bank, on CAB product that “consistently delivers a great eating experience for their hard-earned dollars.”
Despite having to wrangle with the same extreme economic turbulence and uncertainty everyone else faced through the Great Recession of 2008-09, the company still found demand for its product in the market and success in following its strategies. Brent Eichar, senior vice president of Certified Angus Beef LLC, points out data gleaned from consumers during the economic crisis that revealed a shift in trends, often against what many pundits and prognosticators had been saying about premium brands.
“Economists in 2009 said consumers were choosing lower-quality products, store brands and the like. And while that was indeed true, we also found that there were consumers who were not just ‘price-only’ buyers,” he says. “We really dug into the data and uncovered that CAB is a relatively inexpensive pleasure — that for a couple of dollars more, [the consumer] can have a better steak.”
Furthermore, Eichar says, for consumers who have the ability to pay more for their beef-eating experience — especially with the record-high beef prices of late — they expect more. Prices are higher, but so are the expectations of the consumer.
“If I drive my son’s 2000 Honda, I expect it to get me to work, but I don’t necessarily expect to enjoy the ride,” Eichar explains. “However, if I go out and spend $40,000 for a new Camaro, I have higher expectations — I better enjoy the ride.
“I think beef is the same way,” he adds. “If I’m going to spend that [extra money] for a better steak, it better be a good steak.”
Today, six years removed from the Great Recession, the majority of beef producers and processors have been caught up in a near-constant “worry shift” toward other economic speed bumps, such as high feed costs, droughts and other weather disasters, and restricted cattle supply numbers.
Meanwhile, CAB has been able to charge ahead, buoyed by its firm commitment to connect consumer demand with cattle production and processing, working with its partners up and down the supply chain. Stika explains how the company was able to capitalize on the needs of the marketplace and fill some voids during these turbulent times.
“Back in 2008, when things were tightening up, we were in a position to apply more resources toward helping communicate our value proposition,” he says. “While other organizations were pulling dollars out of customer support, marketing and promotion, … we were in a position to step in and replace some of the value-added services that [had been pulled back by others in the market].”
As such, CAB has grown its employee base as well, adding and diverting resources to improving communication of the brand’s message to licensees, producers and end users. Obviously, without the costs and inflexibility of capital equipment assets with which processors and packers have to wrestle, CAB can be more agile in response to trends in the marketplace.
“To very rapidly increase the visibility of our relevance to retailers, to foodservice distributors, while everybody else is pulling back, [we were] looking for an opportunity to put more resources towards this message, and that came in the form of people,” Stika says. “Because of how we’re structured as a brand, our fixed overhead is not in machinery — it’s in people. We can choose to leverage our people much differently, much more rapidly than someone can choose to re-tool a plant: It’s typically easier to re-tool the focus of a team than it is to re-tool the purpose of a piece of equipment.”
Let the beef do the talking
In February 2012, CAB took the opportunity to make a big splash in the customer-engagement realm when it opened the Education & Culinary Center across the parking lot from its main office in Wooster, Ohio. Eichar relays that opening the doors to the Education & Culinary Center, has afforded the Certified Angus Beef team more opportunities.
“A big part of our program’s success has always been around education and telling the story of our beef, and it’s not that the message is any different now than it was when we told it out of our office building,” he says. “But when you can invite chefs into a culinary center, tell them the story, let them play with the product and break a carcass, it creates a whole new experience for them.”
Stika adds that the center has helped drive innovation since its grand opening in 2012.
“We invested in that and it’s been a remarkable asset to our business — more than we ever thought it would be,” he says. The center has played a significant role in the brand’s growth — from increased sales to additional employees.
“With the addition of our new center came people and added expertise,” Stika says. “We have a larger culinary team now. We have a meat scientist. We have staff who are now providing expertise and hands-on experiences that haven’t always been readily available in a ‘one-stop-shop’ form to retailers, chefs and distributors within our industry.”
The center features a Meat Lab, full culinary kitchen capable of hosting chefs from a variety of market channels, a large conference space and demonstration kitchen and additional meeting rooms. Phil Bass, Ph.D., corporate meat scientist for Certified Angus Beef LLC, explains that while the concept of the center isn’t an industry-shattering innovation, it does give CAB a location at which it can demonstrate the quality of beef from the carcass to the final plate presentation.
“We have folks from all over the world come in and look at different cuts that might be good fits for their menu or meat case — and it’s with products that are already available to them through our licensed partners,” Bass says. “We can bring in products from many different licensed facilities or partners, or we can fabricate our own here by bringing in sides of beef — and that is kind of unique compared to many other culinary centers out there.”
CAB corporate chef Michael Ollier is one of four chefs on staff at the Education & Culinary Center and says, from a culinary standpoint, the center “takes a chef out of the everyday distractions” of his or her own operation and offers a retreat-style atmosphere in which “every bite is intentional.”
“We want them to have a space that’s calm, relaxed and conducive to letting them really focus on the task at hand,” Ollier explains. “This space is even more fantastic because it’s that common space for `genius’ creative sparks to occur, and [when they do], this space becomes all the more valuable because we share those moments with others that come in.”
Bass says plenty of preparation goes into each individual visit, but the basic premise remains throughout all of them: Focus on the beef.
“Simply put, we let the beef do the talking and our guests get to have fun with the rest,” says Bass. “We research their businesses ahead of time and get an idea of what we might be able to contribute to them or what specific cuts might work really well for them.”
Once the visiting chefs begin to discuss ways in which they might prepare the different cuts using their own style or signature flavors, the message has resonated, Bass adds.
“We know then that they understand how the CAB product and its quality, no matter which cut, will accentuate everything they do,” he says.
Eichar says Certified Angus Beef knows the Education & Culinary Center is working in terms of return on investment, as well, having measured visitors’ business before and after making the culinary pilgrimage to Wooster, Ohio.
“In many cases, the brand has experienced a two to six multiple of business increase,” he notes.
Adding value, growing globally
One offshoot of the additional focus on education and R&D has been the growth and improved focus on meeting the marketplace need for value-added products. That segment continues to grow for the CAB brand, says Brett Erickson, director of value-added products for Certified Angus Beef LLC, as retailers and foodservice operators demand higher-quality versions of beef products they may already be using in their product mix.
“CAB has a place in these categories, being able to offer a higher tier of quality and consistency compared to what is otherwise available,” he says. “For a consumer who really wants to serve the best, eat the best and feel confident that they are buying the best quality in the category for their money, CAB helps provide that vote of confidence.”
Erickson echoes the thoughts of his CAB colleagues when he discusses how the facility has benefitted his segment of the company.
“We’ve been able to use the culinary center to showcase how value-added products can have a place within an account’s operation — kind of open their eyes to the opportunities with those products that maybe they would not have accepted as easily if we’d shown them in their own shop,” he says.
Simply put, over the years, foodservice operators have been hesitant to delve into the world of value-added, further-processed, fully cooked-type products, Erickson says, opting for the “from scratch” method that so many foodservice establishments try to promote. But times and situations have changed for many restaurants and institutions, making operators much more receptive — and CAB has heard their calls.
“We have put a major emphasis on the foodservice side for value-added products,” he explains. “Labor continues to be a challenge in the foodservice industry, and value-added products tremendously reduce the skill-set needed for labor — finding people to put in the back of the house who know how to prepare beef from a raw state to a finished product has become harder and expensive.”
Erickson says CAB products are positioned as time, inventory and cost savers as well — allowing for longer shelf life, fewer on-hand ingredients needed, shorter prep time and much more consistent plated product than other options on the market. The product line that has been best able to translate that message into success the last couple years, he says, would be CAB’s marinated thin meats line, as it has been able to serve a wide variety of needs across the foodservice industry.
“Restaurants are looking for products that have good quality and good value; provide an end product that can go into appetizers, lunches or dinners; take a lot of labor out of the back of the house; and feature consistency in the quality of the product. Our skirts and flaps [featured in the marinated thin meats line] have done all that,” Erickson says. “A lot of restaurants may not necessarily have the experience to marinate or tenderize a particular item from one day to the next, and our processors have been able to help fill that need for quality and consistency from one [cut] to the next.”
As the value-added products business has grown, so too has Certified Angus Beef’s relationships with its licensed processors and packers, Stika says.
“Our relationships have evolved to be more mutually beneficial compared to when maybe it was more competitive in nature, based on them merchandising their own brands and products in the marketplace,” he explains. “We have a better appreciation for the things that drive a processor’s business approach and strategy, and we feel fortunate to be a part of that strategy in many cases.”
Stika adds that, moving forward, he is comfortable with the position the brand is in regarding the processors and packers, because it is not a subsidized position, but rather one that’s determined by the market demand for the product.
“We still definitely compete for business, but there’s a greater appreciation for the fact that we’re not the only brand they produce, and that’s OK. It has forced us to continually improve our brand proposition, and as long as we continued to drive demand, the processors have been willing to supply it,” he says.
Meanwhile, across the entire spectrum of CAB product lines, international expansion could provide a significant boost as emerging nations look for better-quality options for their beef experiences. Eichar points out that much has changed in recent years in terms of the demand and supply of CAB globally, and he expects further inroads to be made around the world.
“Ten years ago, I would have told you Colombia or Peru would not be big markets for CAB product,” he says. “But today they want high-quality beef, and we’re exporting thousands of pounds into those markets, which weren’t even on our radar a decade ago. We think global sales will continue to grow and represent a fairly significant part of our business.”
Today, Canada and Mexico represent the brand’s largest international markets, and the team anticipates continued growth there, as well as Asia and the Middle East over the next several years.
As Certified Angus Beef uses its investment in its people and its focus on telling its story through its Education & Culinary Center — all to drum up demand for the value proposition its products offer — there’s no reason to expect continued growth to fall off CAB’s menu.
Value-added products hold great potential for growth on the product development side, but other products, including lesser known and under-utilized cuts, are expected to gain traction as consumers look to find the best value for their dollars within any given beef segment.
“At the end of the day, our continued success rests in our ability to maintain relevance in all that we do,” Stika says. “If we’re relevant to our partners and how they go to business, the sales will happen and so will our collective success as a brand.”
And as consumers begin to spend and trade up in their dining experiences once again, Certified Angus Beef’s products appear well-aligned to meet their needs at a reasonable price point, keeping the company on a steady, successful path into the future.
CAB: a ‘National’ cornerstone
As part of the Certified Angus Beef cover story, Andy Hanacek, editor-in-chief, visited National Beef’s Liberal, Kan., beef-processing facility, to learn about the process for handling and producing CAB product at the plant level. During his visit to the Liberal facility
— the first major licensed beef plant in the CAB program — Hanacek sat down in a group setting with several employees of National Beef and CAB.
Included in the interview were Art Wagner, vice president of cattle procurement for National Beef, Scott Utecht, National Beef’s business manager for the Certified Angus Beef® brand, Brian Webb, general manager/vice president for National Beef’s Liberal facility, and Sergio Banuelos, assistant general manager at National Beef’s Liberal facility. What follows is a portion of their conversation:
Hanacek: What is the value overall for National Beef and for the Liberal facility specifically, in terms of the license and partnership with Certified Angus Beef?
Art Wagner: When the current leadership purchased the Liberal and Dodge City plants back in the early ’90s, our focus was going to be value-added, and Certified Angus Beef was going to be one of the anchors in that strategy. Liberal provided the great platform to begin that, obviously, as an existing CAB licensee and with the reputation that it had. Since then, we’ve grown our portfolio on the branded side exponentially across several different areas, but we’ve always gone back to Certified Angus Beef as the foundation and cornerstone of our branded pyramid.
Brian Webb:Our CAB partnership brings a more consistent animal through procurement, which allows us to run more efficiently through the plant. These cattle typically yield very well, not only from a carcass standpoint, but from a primal standpoint, because of the quality that’s in those animals coming through the operation.
Hanacek: What has been the driving force behind the tenure here at Liberal with CAB? What has allowed it to withstand the test of time? Why it has been such a good partnership over the many years?
Scott Utecht: I would say from the sales standpoint, our partnership with Certified Angus Beef has withstood the test of time not because of it being a brand to us, but its identity to our company and how we go to market. It’s simplistic, yet it’s incredibly dynamic in that, we don’t go to market with National Beef, CAB-Liberal or National Beef, CAB-Dodge City. We go to market as National Beef, CAB, and we’ve got two facilities that are 90 miles apart that are producing more CAB than any two plants in the world. That separates us from our competition, allows us to be successful and it allows our customers to be successful.
Hanacek: How does the National Beef-Liberal team view its role in the CAB program, going down to the floor folks? Do they wear it as a badge of honor?
Sergio Banuelos: I talk to these people every day and for them, it’s a big deal. Whenever they see a CAB logo or label moving along in the process, it means a lot. It’s something special and we see it every day on the floor.
Hanacek: Has there been a lot of collaboration on process or product development as part of the CAB-National Beef partnership? Furthermore, are there any other products that Liberal or National Beef has pioneered specifically for the CAB program?
Utecht: Even though there’s fewer cattle than there’s been in this country in over 60 years, our numbers with CAB have continued to grow. So you sell the basic cuts, but as far as the dynamics of new items out to customers, that’s simply a reflection of their demand — listening to what your customers are trying to do, what they want or need. In Liberal, for example, the retail-ready line is one item in particular that we probably would have never considered processing as an industry or as a company maybe six or seven years ago. However, our customers have passed on their demands, we’ve adapted and we’re now producing those items out of a high-capacity, fully functional beef plant where we would have never considered that many, not too many years ago. Along with that steak-ready tenderloin we’re producing in Liberal, we’re also offering a complete line of every other value-added cut that’s out there. We’re also doing brick ground beef in our Dodge City facility.
Hanacek: On the steak-ready tenderloin, you said it’s probably not something that you would have considered doing without the CAB program. Why is that?
Utecht: We’ve aligned ourselves with a retailer who has an interest in that item, so we know that business is going to be there week-in and week-out for them, for us and for the CAB folks.
Banuelos: On the tenderloins, it’s not an easy thing for us to do. It takes a lot of work, a lot of labor. But as you can see, by the time we get through with it, they’re pretty much ready — it’s a special product for us.
Hanacek: What are some of the milestones National Beef and the Liberal facility have reached, or awards you’ve been given as part of the CAB program over the years?
Utecht: We’re presented with opportunities all the time, we go to market with CAB as our upper two-thirds elite program, and that’s simply what we do and how we do it. We weren’t the biggest guy out there when we started in the program, and we’re not the biggest guy out there today, but we still try to do it better than anybody else. We’re buying the best cattle that we can procure, and we’re trying to sell it to the best customers that are out there. That strategy has stood the test of time. Liberal is the first plant in the history of the CAB program to process 4 million head of CAB cattle, which was awarded in September 2014. Also, we’ve been awarded Marketer of the Year for Certified Angus Beef five times. Another award that means a lot to us is the Proficiency Award, which recognizes carcass utilization. It’s not that we’re just buying CAB cattle, but we’re selling more per head than anybody else out there. It’s not just about adding value. Traditionally, the program was centered around providing a value to the strip, the rib, the middle meat items, the fine white-tablecloth dining experiences. Today that has transformed into utilizing more product from CAB cattle than we ever have in the history of our company. We’re utilizing it because we’re selling it at retail, foodservice and internationally. We utilize as much of that CAB carcass as we possibly can.
Hanacek: So Liberal has processed 4 million head of cattle and started up in the program in 1983. Where does Dodge City stand in comparison?
Utecht: In 2012, Dodge City received the 3 million head award, and for the last two years running, Dodge City has been the No. 1 facility in the world for Certified Angus Beef pounds processed.