Meeting consumer needs


Wendy’s looks to the beef industry to help satisfy three consumer needs — good taste, a safe product and cost stability, said Kevin Brost, Wendy’s International director of supply chain management.
Our customers and your customers are one in the same, so our goals should be the same, Kevin Brost, Wendy’s International director of supply chain management, told attendees of the 36th Annual Beef Improvement Federation (BIF) Annual Conference Thursday morning. Brost oversees the procurement for beef, pork, chicken and French fries.

Brost said that Wendy’s supports the need for a sensibly constructed and implemented traceback system that can track the product it serves back through the supply chain all the way to the originating ranch. Brost admits that such a process will not be cheap and that Wendy’s is willing to “pay up” to fit part of the cost. “We look at it (increased costs due to a traceback program) as paying for an insurance policy much like you do with car insurance,” he explained.

Wendy’s has a stringent beef shelf-life standard. Beef must be delivered to the retail stores within four days of processing and must be served within eight days of processing. Brost said this is half of the time most retail stores allow.

“We’ve set that standard not so much because of food safety but because of taste and smell,” he explained. The company has found that there is a big difference between eight- and 10- to 12-day-old product.

There are five things a customer demands that encourage them to return to Wendy’s, Brost said. Consumers demand the products they want, good taste, product safety, affordability, and consistency. Wendy’s looks to the beef industry to achieve three of those needs — good taste, a safe product and cost stability.

Another concern of the company is animal welfare. Wendy’s has taken an active role in trying to monitor the care of the animals once arriving at each of the company’s suppliers. The company worked with Temple Grandin to establish standards, and each plant is audited to track compliance.

Product cost is a concern for Wendy’s and consumers. Wendy’s is able to contract the price of lettuce three year’s in advance. Brost said in an ideal world they’d like to be able to contract the price of beef products purchased a year in advance. He stressed the need for the beef industry to stabilize costs and work toward the value of the beef to rely more on the beef cutout value.

Working to increase demand


The consumer is the only genuine or new source of wealth for the beef industry, said John Huston, former executive vice president of NCBA.

During tough markets some cattle people say they’re not in the beef business, they’re in the cattle business. “It’s my firm belief that industry profitability can be achieved by all points along the value chain — rancher, feeder, packer and retailer/foodservice operator — working together with a common goal [of] satisfying the consumer,” John Huston, retired executive vice president of the National Cattlmen’s Beef Association (NCBA) said in his presentation Thursday, May 27, at the Beef Improvement Federation (BIF) Annual Conference in Sioux Falls, S.D.

“This opportunity for industry-wide profitability is absolutely dependent upon a clear-eyed, relentless focus on the consumer and what is required for her or him to persistently spend (more) money on beef,” he said. “At the risk of offending someone, I suggest that people who don’t get that are a costly drag on the industry.”

To improve profitability in the cattle industry, the industry must increase consumer demand for beef, he explained. “We must sell the same amount of beef at higher prices … or we must sell more beef at the same price. Demand is a reflection of consumer attitudes about beef and the value they attach to it.”

According to Huston, the consumer is the only genuine or new source of wealth for the beef industry. The industry can grow only if it competes successfully in the marketplace for the consumer dollar, which requires the focused participation of all industry segments.

Huston reminded attendees that from 1980 to 1997 the beef industry saw a 50% decline in beef demand. Hitting a 20-year low in 1998, demand has continued to increase. In 2003 consumer expenditures for beef were up $14 billion, and demand continued to grow, posting a 5.5% increase in the past year.

“What does it mean for beef producers?” he asked. “$200 more per head for fed cattle.”

Huston shared with attendees how NCBA has worked to increase beef demand by utilizing beef check-off funds. Two of those projects, “Heat and Serve” products and “Mark of Quality” branded products, are exciting developments for the beef industry.

“The Wall Street Journal projects that the heat-and-serve red meats could easily generate $1 billion in annual sales within the decade,” Huston said. “That’s impressive for a category that barely existed just five years ago. But, we must keep the heat-and-serve category in perspective — it is still a niche market.”

Seventy-nine branded beef products have been granted the use of the Mark of Quality seal by the Brand-Like Commission — a panel of U.S. beef producers and NCBA culinary professionals who review beef products. The Mark of Quality assures consumers of superior taste and satisfaction.

In his final remarks, Huston quoted the late Max Brunk, a marketing professor at Cornell University. “You have to work and scheme and sweat to produce livestock and meat products, but that does not give you a right to a market. To get that right you also have to work and scheme and sweat to create markets — to take markets away from someone else — to keep someone else from taking your markets.”
Today, Huston added, “cattlemen now believe you have to work and scheme and sweat to innovate, add value to build consumer demand and to create new markets.”

– by Angie Stump Denton