RIDING THE NEW PRODUCT WAVE TO THE FUTURE

DENVER (November 30, 1999) -- The beef industry just discovered what other U.S. product marketers knew long ago: No matter how good a product is, in the consumer`s eyes there`s always room for improvement.

That`s one reason "new and improved" has become a familiar term to Americans, and why the beef industry has embarked on a new product effort that is redefining the beef market.  In addition to addressing consumer needs, the effort is raising the desirability of beef cuts that have traditionally dragged down the value of the beef carcass -- or been used in items that are big sellers but not profitable for the industry.

"The sale of commodity ground beef is not a profit generator for beef producers," says Lee Hall, chairman of the joint industry New Product and Culinary Initiatives Committee.  "That`s why we`re using beef producer checkoff dollars to look for ways of using the chuck and round that can enhance the value of beef animals."

Hall, a beef producer from Lexington, Ky., says the chuck and round represent more than 50 percent of the beef carcass -- but under 38 percent of that carcass` value.  For that reason, he says, the beef industry needs to focus new product efforts on these cuts.

Randy Irion, a new product consultant, agrees. "There is certainly merit to enhancing the value of individual chuck and round cuts," says Irion.  "We`re keeping some of the product out of ground beef, which helps strengthen the price of this product, too."

Irion says the industry`s effort is well beyond the "concept" stage. "Consumers don`t buy concepts; they buy individual products," says Irion.  "We see ourselves as a catalyst to bring new products into the meat case and make them available to consumers."

Several of the new products assisted by NCBA are already seeing success at the consumer meat case.  Lloyds and Stouffers, for example, have both developed successful product lines of new, convenient beef products.  In fact, while Lloyds has traditionally focused on other proteins, beef now represents 30+ percent of its product sales.  Their new Sloppy Joe product has continued to add to beef`s growing share of the company`s sales. 

In addition, Stouffers has six new "Skillet Sensation" beef items, while Oscar Mayer will soon introduce Carving Board Steak Strips under its Louis Rich line.

New Product Team

Many of these and other new products were developed or supported through a checkoff-funded New Product Team, says Bob Moeller, president of Moeller Management Consultants.  Team members have extensive experience in the beef and food industries, and work with manufacturers throughout the year to stimulate beef and veal product innovation.

"The New Product team helps create and perfect products that have been well-researched with consumers," according to Moeller.  "Then those products are refined before they`re proposed and marketed to food processors."  Moeller says this allows the development and introduction process to be accomplished more quickly and with less risk than is traditional in marketing.

Much of the industry`s new product success can be traced to a contest held for the Cattlemen`s Centennial Celebration in 1998.  The "Best New Beef Product in America" competition, designed to stimulate greater distribution and consumer consumption of more convenient, innovative beef products, generated tremendous publicity for, and interest in, new convenient products both within and outside the industry.

"The centennial award created a much broader awareness of the convenient product category, which was just emerging at the time of the contest," says Moeller.  "In this way, checkoff investments really added some muscle to the new product effort."  Similar success is expected is expected for a contest in 2000, he says.

The industry has received substantial applause for these new product efforts.  An independent 1999 audit by James J. Conroy, Ph.D., found that the checkoff "is doing an excellent job as it relates to new product development."  Commissioned by the beef industry`s Joint Evaluation Advisory Committee, the audit found the effort`s purpose is clear and those involved in it are committed to defining, developing and launching new products into the market.

Manufacturers, too, think the support is worthwhile.  "It has created a more cooperative effort to help reduce the risk of new product development and introduction," says Moeller.  "Manufacturers are very appreciative of checkoff investments and efforts."

Irion, who was with Armour Swift Eckrich for 21 years and was that company`s vice president of marketing for the Healthy Choice line of packaged meats, says processors need this kind of help.  "The producers` participation in this effort is being received with open arms," says Irion.  He adds that because it helps increase consumer acceptance of the product category, "it does a lot for the entire category of products, not just for an individual product."

In a letter to NCBA president Chuck Schroeder, the president of RMH Foods, Jonathon W. Rocke, thanks the industry for its "foresight and courage to support the Value Added Products category."  Added Rocke, "We believe your effort and investment have accelerated the growth of this category to a staggering degree."

Challenges Remain

There are still several challenges in developing and promoting new products, experts agree.  For example, it`s a totally new playing field for many processors.

"Many processors are still commodity suppliers," says Moeller.  "They don`t have the capital or the background for new product introductions."

In addition, adoption at the grocery store may take awhile, since consumers are just now getting accustomed to the concept.  "As value is added, consumers might ask themselves the question: `why wouldn`t I save money by just buying the raw product and cooking it up myself`?" says Irion.  "The answer is that you don`t have the time.  Every year that fact becomes more obvious, as fewer and fewer roasts are sold."

Industry leader Lee Hall points to consumer research as further proof.  "Consumers not only want it easy, they want it now," says Hall.  "And with more single parent households and people working longer hours, it isn`t hard to see that the days of spending hours in the kitchen may be gone forever."

Sky`s the Limit?

It`s too early to determine how big the convenient beef product category will be, most experts agree.  "I do know it will be bigger next year than it is today," says Moeller.  "And I`m very optimistic about the growth potential."

Today, these convenient products probably represent less than five percent of the beef market, says Irion.  "But look at the poultry industry," he says.  "At one time they sold whole birds.  Today about 10 percent of chickens are sold whole.  Who knows what (the convenient product category) could be for the beef industry?"

According to Lee Hall, "the beef industry`s fortunes are at least partially tied to the success of its new products.  "As new products grow, so grows the industry," says Hall.  "We`re excited about that."

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New product development programs are funded by the national beef checkoff, which is administered by the Cattlemen’s Beef Promotion and Research Board (Beef Board).  This 111-member board is appointed by the Secretary of Agriculture to oversee the collection of the $1-per-head checkoff, certify state beef councils, implement the provisions of the Federal Order establishing the checkoff and evaluate the effectiveness of checkoff programs.

Under a contract with the Beef Board, this beef checkoff-funded effort is conducted by the National Cattlemen’s Beef Association, a trade association of America’s cattle ranchers and farmers, and the marketing organization for the largest segment of the nation’s food and fiber industry.  NCBA is producer-directed but consumer-focused, with offices in Denver, Chicago and Washington, D.C.