CAB: More gas on the fire

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dun

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From Drovers:

Demand for CAB outstrips Choice
By Drovers news source | Tuesday, October 20, 2009




When times are lean, sales of luxury items are typically the first to fall off. However, when it comes to beef, it appears that consumer demand for the higher quality and pricier Certified Angus Beef ® (CAB®) brand held up better than that for USDA Choice or lower grade beef.

What has been called an “economic collapse” in fall 2008 led many observers to speculate that the demand for premium brands would give way to lower-quality alternatives. Industry analysts Julian Leopold and Daniel Bluntzer, of Leopold Foods and Frontier Risk Management, respectively, dug deeper. They set out to explore the short- and long-term value and demand dynamics of the CAB brand versus Choice beef that would quantify the branding value of CAB.

To gather information, the two looked at pricing and volume data based on sales of the 15 highest-volume CAB cuts, not including ground chuck and round, and accounting for nearly 75% of total brand sales. The USDA “National Weekly Boxed Beef Report” provided data on Choice, while CAB pricing came from the Urner-Barry Yellow Sheet and volume from brand records.

Results were strongly supportive of premium brand value in this case. Overall, they showed that in four years (2005 to 2008), demand for the CAB brand brought in $367 million dollars more at the wholesale level than it would have if sold as Choice product.

Expressed as a percentage, the combination of CAB price and volume showed a 26.9% advantage over Choice grade beef in those four years. Conventional wisdom would suggest that could not hold up after the economic recession hit, but that would be wrong.

In fact, the CAB advantage over Choice more than doubled, to 56.1% when the sales and pricing data include the first half of 2009 vs. 2005, on a 22.4% increase in volume.

“The findings clearly show that CAB pricing, volume and revenues held up far better during tough economic times, compared to USDA Choice,” Leopold said. Granted, CAB pricing declined 10.3% for the first half of ’09 versus a year earlier, but Choice pricing fell harder, by 12.3%. Moreover, CAB sales volume rose 4.6% in that time period, on top of a 4.5% increase the previous year.

Even with lower prices, the market placed an extra $56.7 million value on these 15 representative CAB products, compared to their value if sold as generic Choice, a 21.1% increase from the same period a year earlier. “With overall revenues falling in the beef industry, this is precisely what we would hope to see in an established premium brand,” he said.

While many observers from academic to producers tend to worry about a narrower Choice/Select spread, Leopold said that misses the point by not including volume. “During a time of sluggish beef demand, total revenues for Choice beef still managed to increase 5.6% from 2005 to ’09 – but CAB licensees have been able to garner 8.9% more by selling as a premium brand,” he explained.

“It is fair to say that the consumer continued to support the CAB brand during the recession, paying more for it, perhaps as a reward for a special meal at home,” Leopold concluded.

Note: Additional charts and information available at www.cabpartners.com/news/research/
 

Running Arrow Bill

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Irrespective of the pros and cons of angus CAB meat... I think most consumers want tender, flavorful beef regardless of what the breed was, the marketing propaganda was, or what the hide color was. After all, I don't think humans eat the hide anyway...

Even in the worst of times some people always have discretionary money to spend.

Even in the best of times some people never seem to have enough money to buy essentials.

The smartest people manage to manage their affairs and finances to carry them through bad times. The other people generally haven't got a clue as to how to manage their finances and always seem to be behind the curve financially...deferred gratification often seems foreign to them...

Then, there are those "smart" people who are greedy, play the stock market, get seduced into "quality investments" and later find out they have been taken for a ride. The only "sure" money is what you have in your pocket or in an FDIC insured bank account...at least they get their "principal" back even if the money doesn't increase in value (or devalues due to world money issues or inflation).
 

grannysoo

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Running Arrow Bill":fxe4neyn said:
the marketing propaganda

And that marketing propaganda has worked. Until someone comes along with better propaganda, I'll just continue to raise, market, and sell my black hides. :nod:
 

novatech

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Aside from the way I feel about their way of marketing, CAB is good beef, pure and simple. I have found through the years that people will always be willing to pay the price for higher quality.
I sure bet you pure bred Angus folks are sure happy that some people had the foresight to include other breeds in their program to get the volume of quality they need. :nod:
 

robert

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novatech":3ictsgrx said:
Aside from the way I feel about their way of marketing, CAB is good beef, pure and simple. I have found through the years that people will always be willing to pay the price for higher quality.

Exactly, a consistent quality product whose demand is based on the fundamentally sound premise that it will be consistently and reliably good.


novatech":3ictsgrx said:
I sure bet you pure bred Angus folks are sure happy that some people had the foresight to include other breeds in their program to get the volume of quality they need. :nod:

CAB specs insure 'no harm, no foul' if other breed/crosses get through the live specs then hit the carcass specs then they cannot damage the name. Chances are though that the majority of non-Angus sired qualifiers have a percentage of Angus blood anyway. And demand is still not being met, looks like huge opportunity for expansion to me.
 

novatech

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robert":gthu8nk8 said:
CAB specs insure 'no harm, no foul' if other breed/crosses get through the live specs then hit the carcass specs then they cannot damage the name. Chances are though that the majority of non-Angus sired qualifiers have a percentage of Angus blood anyway. And demand is still not being met, looks like huge opportunity for expansion to me.
So what percentage of pure Angus qualify for CAB? There are some pure Angus breeders that have hit as high as 80% +, and I applaud them. Seems as though most of the others are riding on their coat tails.
 

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we've had several sires that produced progeny who went better than 80% in meeting CAB specs, though not necessarily marketed through the CAB program. These cattle would be high percentage Angus, the best thing is that the heifer mates to these cattle form the base of our commercial herd and we see that quality come down through the next generation. Additionally none of these cattle are the 'popular carcass lines', selection is based on reproductive efficiency and production.

I am aware that the qualification rate for CAB is significantly higher for cattle that are sire identified as registered Angus vs. just black hided, last I read it was over 33% vs. 16% so at least this demonstrates a tangible advantage for using registered Angus over generic 'black'.
 

robert

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talldog":36qk6ov1 said:
Are you trying to say----- Because it's "CAB" its not choice, cause it Da** sure ain't ALL prime !!!!!!!!! :tiphat:

upper 2/3 choice and prime, which in reality is the level for choice prior to USDA's tinkering with the grading system. There's more to CAB than just the Choice grade, it considers the texture of the beef and the deposition of the marbling, in practical terms it is the lack of marbling that cuts most carcasses that qualified on the live specs.
 

alexfarms

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robert":34qpqm11 said:
talldog":34qpqm11 said:
Are you trying to say----- Because it's "CAB" its not choice, cause it Da** sure ain't ALL prime !!!!!!!!! :tiphat:

upper 2/3 choice and prime, which in reality is the level for choice prior to USDA's tinkering with the grading system. There's more to CAB than just the Choice grade, it considers the texture of the beef and the deposition of the marbling, in practical terms it is the lack of marbling that cuts most carcasses that qualified on the live specs.

Robert, do you believe it is possible that marbling could be over emphasized, in terms of eating quality?
 

robert

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alexfarms":1g91hoeq said:
robert":1g91hoeq said:
talldog":1g91hoeq said:
Are you trying to say----- Because it's "CAB" its not choice, cause it Da** sure ain't ALL prime !!!!!!!!! :tiphat:

upper 2/3 choice and prime, which in reality is the level for choice prior to USDA's tinkering with the grading system. There's more to CAB than just the Choice grade, it considers the texture of the beef and the deposition of the marbling, in practical terms it is the lack of marbling that cuts most carcasses that qualified on the live specs.

Robert, do you believe it is possible that marbling could be over emphasized, in terms of eating quality?

Anything is possible, but here is what we know, from carcasses graded 'Select' there was consumer disatisfaction with 1 in 4 (25%), with carcasses grade 'Choice' that level of disatisfaction fell to 1 in 10 (10%), with carcasses meeting CAB specs (and that isn't just marbling) the disatisfaction rate was less than 2%. The main difference is marbling, the emphasis should be on what it takes to consistently deliver a steak that meets and exceeds consumer expectations. Can steaks with no marbling be tender? Sure! Can steaks with marbling be tough? Sure! But what will give us the most reliable level of consumer satisfaction?

There is one other technique that could, and arguably should, be implemented that would improve the overall quality of beef to the consumer and that is to actually hang the carcass for a week or ten days, radical idea I know, but it would certainly be a big step towards better beef. Likely will never happen though, unfortunately.
 

novatech

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robert":10hbs9tt said:
There is one other technique that could, and arguably should, be implemented that would improve the overall quality of beef to the consumer and that is to actually hang the carcass for a week or ten days, radical idea I know, but it would certainly be a big step towards better beef. Likely will never happen though, unfortunately.
Nothing radical about it. The only reason it may not be common practice is that it costs more money. I have had mine hung 21 days.
 

robert

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Radical in the sense that the mainstream packing industry will never do it, like you we hang our freezer beef for at least 12 days, usually 14days.
 

Frankie

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Robert, you need to get a higher octane of gasoline. This little thread is nothing compared to what we've had here before in CAB discussions. :)
 

robert

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Frankie":zfgbo67a said:
Robert, you need to get a higher octane of gasoline. This little thread is nothing compared to what we've had here before in CAB discussions. :)

:lol: not too interested in trying to ram CAB down peoples throats (metaphorically speaking) but keep the debate accurate and hopefully help folks see that the recipe for successful branding is freely available.
 

novatech

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Frankie":jg03hsew said:
Robert, you need to get a higher octane of gasoline. This little thread is nothing compared to what we've had here before in CAB discussions. :)
I just havn't had the urge to lite you up lately. ;-)
 

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