U.S. BEEF INDUSTRY POISED TO MOVE FROM COMMODITY DRIVEN TO CONSUMER FOCUSED

WASHINGTON, D.C., Jan. 8, 1998 -- The U.S. beef industry is poised for a dramatic transformation. By moving from commodity driven to consumer focused, the industry is set to increase beef demand in the 21st Century, announced Clark Willingham of Dallas, Texas, and president-elect of the National Cattlemen's Beef Association (NCBA) during a news conference to release an industry report, A Prospectus for the U.S. Beef Industry.

"The beef industry is moving into the future by enhancing its marketing system," said Willingham. "The system will be enhanced through a brand-like approach to increase the value of beef products by responding to consumer demands, adding product quality assurance to beef marketing and establishing accountability for the final product. The goal is for the industry to act more like a company selling a branded product."

Unlike its competitors, the beef industry is not vertically integrated with common ownership from production through marketing. Rather, the base of production is one million cattle and dairymen operating as independent entrepreneurs. For more than a century, cattlemen have produced and marketed beef as a commodity, which causes each sector to operate independent of other sectors or the ultimate consumer. Each segment has viewed its job as being "finished" the day the animals or products are sold, Willingham explained.

"By setting up communication channels to better send consumer signals and production incentives back through the chain, the industry can move toward acting like a branded industry," he said. "The brand-like initiative is a voluntary strategy to enhance profit opportunities and improve beef quality and consistency by coordinating the segment responsibilities to process and produce beef using industry-accepted standards of excellence to fulfill consumer needs."

NCBA Chief Executive Officer Chuck Schroeder said the time has come to reinvent beef products that add value to under-utilized and devalued areas of the carcass, such as the "round" and "chuck."

"The chuck, round and trimmings represent 75 percent of the carcass. However, those cuts have decreased in value over the years. This is the area we will focus on in order to increase demand," Schroeder said. " We know that when it comes to meal planning, Americans want foods that look and taste like it took a lot of effort, but, in reality, were prepared with no fuss, no muss. The beef industry is moving to meet those needs."

For example, Schroeder said that beef companies have developed fully-cooked, ready-to-eat, boneless pot roasts made from chuck portions that can be prepared in seven minutes using the microwave oven. These products are currently being sold in several regions of the country. To spur more innovative products, NCBA will award $250,000 in February to a company which has created a new, branded retail or foodservice beef product or product line that delivers consumer value in a number of criteria, including taste, convenience, innovation, packaging and quality.

The beef industry will also be advancing the use of a recognizable "symbol," marking a specific process and/or product which meets industry-accepted standards of excellence, fulfilling consumer needs. The mark will be used throughout each segment of the industry, including retail products and advertising.

To generate accurate economic signals throughout the supply chain, NCBA is also working closely with meat retailers. Through a Value-Based Meat Management initiative, NCBA has developed unique costing software that helps retailers convert product codes and names to standardized information - a concept that has never been executed by the industry in the past.

"Our goal is to help meat retailers operate more like other departments," said Schroeder. "The result will be an enhanced shopping experience for consumers and increased sales and profits for the industry."

Initiated in 1898, the National Cattlemen's Beef Association is the marketing organization and trade association for America's one million cattle farmers and ranchers. With offices in Denver, Chicago and Washington, D.C., NCBA is a consumer-focused, producer-directed organization representing the largest segment of the nation's food and fiber industry.

* A copy of the report, "A Prospectus for the Beef Industry," is available on the NCBA website, hill.beef.org/prospect.htm or by calling 202/347-0228.