John Butler says consumers will pay more for beef they believe is safe and is handled humanely.
Butler is CEO of the Beef Marketing Group, a 15-feedlot consortium in Kansas and Nebraska which specializes in producing and delivering brandable-quality beef.
Butler's group commissioned a study of 2,000 consumers who eat beef more than once a month to learn what is important to them. The top choice of these consumers was "assurance of food safety," followed closely by "humane animal care and handling," followed by "sustainability."
Well over half of these people said they would pay more than 26 cents per pound if they believed beef products were verifiably offering those attributes.
Specifically, Butler offered these numbers:
- 23% would pay more than $1 per pound premium
- 15% would pay 50 cents to $1 per pound premium
- 14% would pay 26 to 50 cents per pound premium
- 12% would pay 11 to 25 cents per pound premium
Giving consumers what they want is profitable, Butler said.
He provided additional, older data from FreshLook which showed the uptrend of value-added, branded beef versus relatively flat sales for the overall beef market. In the year ending April 2007, before the big recession, branded beef sales grew 26% versus all beef sales growth of less than 1%.
In that same time-frame, branded beef sold for an average price of $5.23 and all fresh beef sold for an average price of $3.48.
Adding value to beef cattle is increasingly important, considering the cost of doing business these days, Butler added. It takes $500 more capital to finish a steer today than it did in 2005.
"One thing we forget is we're not in the cattle business. We're in the beef business," Butler said. "The consumer wants to know more about the product and especially where it comes from."