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Alliances, branding help assist in beef marketing
By VICKI JOHNSON
Ohio Correspondent

BOWLING GREEN, Ohio – The trend in beef marketing beef is toward raising animals to meet specific consumer demands. And producers are learning to use marketing techniques to increase and meet that demand.

Ron Lemenager from the Purdue University Department of Animal Sciences told participants in this year’s Great Lakes Professional Cattle Feeding and Marketing Short Course that alliances and branding are components of the technique.

The movement in marketing cattle is toward differentiating a type of beef in some manner – often through alliances.

Lemenager defined an alliance as a partnership in which producers work together to create a product and fairly share in the final product. They can be vertical – with partners coming from production and all the way through the supply chain. Or they can be horizontal – a group of producers working together.

An alliance works toward better production efficiency and a better position for marketing. Although Lemenager said the cattle industry doesn’t hear too much about alliances any longer, it doesn’t mean they’ve died out.

“Their novelty has worn off and their warts exposed,” he said. “There’s been no mass exodus to alliances per se.

“However, the number of cattle flowing through them is growing and that’s a testament to their value. They’ve become a standard part of our business.”

As of January, there were 43 USDA certified alliances, he said. Of those, 29 were Angus-based programs, two were Hereford-based and 12 were not breed specific.

In addition, there were 68 brand programs operating as of summer 2005 and four more were in the works.

“Branding” is a marketing technique in which consumers are taught through advertising to identify certain qualities with a specific product. “Certified Angus Beef” is not an alliance; it’s a brand and a trademark.

Since 2001, Lemenager said the number of alliances had increased and the number of cattle reported to have been marketed through an alliance increased from 1.9 million head in 2001 to 2.5 million head in 2005, a 28 percent increase.

He said a minority of cattle is marketed through alliances, but as numbers increase they are likely to have a larger influence on the market.

Lemenager gave a preview of the 2006 National Beef Quality Audit, which will be released this summer. He said the report shows the lack of information on cattle age, source and identification are the most important shortfalls in the industry.

A 2004 National Meat Case Audit said 42 percent of retail-sold beef was branded.

“The power-shift in the beef supply chain in real,” Lemenager said. “Demand for differentiated products with supportable labels is on the increase.”

The audit also shows consumers want convenience, freshness and “sophistication.” Sophistication, he said, means, “When I’m having company over I want to serve the best.”

One of the forces behind marketing changes has been food retailers.

“They see beef as a significant opportunity to get consumers in the door,” Lemenager said. Therefore, retailers are interested in product development, product improvement and creating more of a demand for beef.

“New alignments have emerged whereby producer marketing groups have formed to supply specification cattle into a marketing stream,” he said. “This is a branding strategy at a supply chain level, and not a simple alliance. It can work on a small scale as well as a very large scale.”

For example, he said the Friona and Caprock feedlots have aligned with the packer Excel and the retailer Kroger to offer the Cattlemen’s Collection beef brand.

Lemenager said the beef industry’s long-range plan to reach by 2010 includes increasing beef demand by 10 percent, increasing beef exports from 1 billion pounds in 2005 to 3 billion pounds and improving the balance of trade and net export value.

The challenges include competition from chicken and other forms of protein in the consumer diet, increased global competition and pressure from anti-beef groups.

Other challenges and opportunities for producers to consider are the aging baby-boomer population and their changing needs; increased ethnic diversity and the demand for specialty products; the emphasis on convenience and health; a generation of youth raised on poultry or meatless options; and the global consumer who increasingly has more disposable income.

Priorities in the long-range plan include creating value through beef production, growth through consumer markets, sustainability through a favorable business climate and opportunity through global competitiveness.

2/15/2006