Learning from Our
Competitors[1]
Dave Nichols is a beef producer from Iowa. He is a managing partner of Nichols Farms, Ltd., a family owned operation, which combines seedstock production, cattle feeding, and farming in southwest Iowa. Nichols Farms is the largest seedstock operation in the Midwest and one of the largest in the US. Nichols raises and sells over 400 head of production tested yearling bulls each year. They host over twenty Cattlemen and Collegiate tours each year at their farm. Dave is married to Phyllis Nichols. They have two children, Fletcher, who owns his own cattle operation and, Jennifer, who is a staff writer for a daily newspaper. Dave is the Charter Board of Director of USA Cattle Information Services, NCBA’s recently incorporated subsidiary. He is also the Chairman of NCBA Product Enhancement Committee and member of NCBA Board of Directors. He is a member of Iowa Cattlemen’s Association Executive Committee and Board of Directors. He is the past President and trustee of the American Simmental Association. He has been appointed to the National Beef Promotion and Research Board. He is also the past President of the National Beef Improvement Federation (BIF).
Q:
What product issues is the beef industry focusing on?
A: Right now the beef industry is really focusing on
pre-cooked, microwavable, ready-to-eat products that utilize the chuck and the
round. I don’t think there’s any doubt these products will continue to grow.
Poultry has had success as they have become more consumer-friendly, user
friendly and easier to prepare. Beef can do the same thing. Delis and fast food
are taking a bigger share of the consumers’ dollar, as well as ready-made meal
solutions. I don’t think there’s any doubt those products are adding value to
the meat you produce.
Q:
How have beef producers recognized and embraced product quality issues?
A: The middle meats, like the loin and the rib-eye
represented 25 percent of the carcass 20 years ago. Now that has increased to
41 percent. Beef producers have finally understood that we have to become
consumer-driven. We have embraced quality issues because it is the consumer who
we are really producing for. History is strewn with the carcasses of failed
companies that didn’t realize the consumer’s ability to recognize quality.
Q:
What caused beef demand to rise for the first time in 20 years?
A: First, some of the diet and health concerns are not
the factors they once were. We’ve had “Chicken Little food police” that sit in
the media rooms have cried wolf so much, I don’t know if there’s anything you
can eat that won’t kill you. By now people have decided they will just eat what
tastes good.
Q:
What are the expectations for beef demand for the future?
A: Stable to increasing. If we can keep the quality
and consistency increasing, beef demand will increase. That’s up to those of us
that raise, process and sell beef. Hamburgers have replaced pizza as Americans
favorite food, in part because foodservice is putting cheese and bacon and
other options on the burger. That’s a classic example of providing a good
tasting product to the consumer.
Q:
Why has Certified Angus Beef been so successful?
A: CAB has concentrated on marbling, which affects the
taste of the product. It has become the fastest growing protein food in the
last three or four years because it delivers good taste and a fair degree of
consistency. CAB’s growth occurred at the height of the diet and health craze,
and they have been doubling their production every two years.
Q:
Do you think there will be more programs like CAB in the future?
A: Yes, other programs are already springing up. The
future of commodity product is not very bright. Certified programs, source
verified programs and farm to fork programs will be more prominent. The whole
food industry may be a series of hundreds of niches. One size fits all won’t
cut it anymore.
Q: In what other ways is the beef industry moving toward a consistent, quality product?
A: Branded products, because we live in a country that
equates quality, price and value with certain brands. For example, the
perception is that Lexus is a high quality, high-price and high value car,
while the Hyundai is a low-priced and lower quality vehicle.
Q:
How is the consumer or the primary shopper changing?
A: You can’t really talk about “the” consumer, because
there is no one profile of a consumer. Consumers are getting older, there are
more single parents and men are doing more of the shopping than in the past.
You can’t put the consumer all in one block, but all of them want a safe,
good-tasting product and something that they perceive to have value.
Q:
What do you think the future holds for beef, pork and chicken, domestically and
globally?
A: It’s really exciting that in the next 10 years 20
percent of the world’s population will be coming out of poverty. One of the
first things that happens when cultures increase their standard of living they
is add more meat to their diets. The United States can produce more high
quality beef, pork and chicken more efficiently than anywhere else in the
world. The younger generation doesn’t have the national fever to buy
domestically and I think trade barriers will eventually come down.
Domestically, beef is going to take more market
share from chicken, because chicken was the first to make products more
consumer-friendly, and now beef is following that strategy. Pork had better get
serious about quality, because about two-thirds of the hams on the market are
pumped full of so much water that they don’t have any flavor. Pork needs to realize
people want quality and that means some inter-muscular marbling. The pork
industry has to start taking quality seriously. About one in five pork loins
that I buy are dry and don’t have much flavor. The industry can’t shrug its
shoulders and say the consumer doesn’t know how to cook pork or use any other
excuses.
[1] Article courtesy of Pork Magazine.
This article is a follow-up from Nichols’ presentation at the 1999 NSIF
annual conference.
| 1999 NSIF Proceedings | 
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