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, NCBAís 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 Cattlemenís 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 donít think thereís 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 consumersí dollar, as well as ready-made meal solutions. I donít think thereís 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 didnít realize the consumerís 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. Weíve had ďChicken Little food policeĒ that sit in the media rooms have cried wolf so much, I donít know if thereís anything you can eat that wonít 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. Thatís 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. Thatís 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. CABís 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 wonít 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 canít really talk about ďtheĒ 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 canít 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: Itís really exciting that in the next 10 years 20 percent of the worldís 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 doesnít 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 donít 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 donít have much flavor. The industry canít shrug its shoulders and say the consumer doesnít know how to cook pork or use any other excuses.



[1] Article courtesy of Pork Magazine.This article is a follow-up from Nicholsí presentation at the 1999 NSIF annual conference.

1999 NSIF Proceedings