Beef: Adding ― and Creating ― Value

Meghan Pusey, National Cattlemen’s Beef Association, a contractor to the Beef Checkoff

Wade Hanson, Technomic

What You’ll Learn Today

• Dramatic business opportunity that beef represents to Grocerants

• Deli prepared foods trends and Beef’s current situation

• Consumer & shopper insights on beef and implications for Grocerants

• Resources to help ignite beef’s profitability to fuel your prepared food sales

Beef Leads in Fresh and Foodservice

Beef Chicken Pork Turkey Other Meats$0

$5,000,000,000

$10,000,000,000

$15,000,000,000

$20,000,000,000

$25,000,000,000

$30,000,000,000

Fresh Meat Dollar SalesTotal U.S. Retail, 52 weeks ending 7/26/15 (FreshLook

data)49.6% of

meat sales

Beef Chicken Pork Turkey Other Meats0

1,0002,0003,0004,0005,0006,0007,0008,0009,000

Volume Sold into FoodserviceTotal U.S. Foodservice MM Lbs, 2014 (Technomic data)

35.1% of meat volume

But Not in Retail Prepared Foods!

2.8%Beef’s share of meat dollar sales in deli prepared foods

Source: IRI/FreshLook Marketing, Total U.S. Multi-Outlet, 52 Weeks ending 6/14/2015

37%of shoppers

say beef tastes better than chicken

Your Shoppers Want Beef

37% 15%

Source: Consumer Beef Index, The Beef Checkoff, March 2015

• Millennials have an unexpected preference for beef• 3-to-1: Prefer the taste of beef

over chicken

• They are willing to pay for beef• More than 80% think beef is priced

‘just right’ or is ‘expensive but worth it’ at both retail and foodservice

Millennials Want Beef Choices

Source: Consumer Beef Index, The Beef Checkoff, March 2015

• 38% more likely to shop the prepared foods section more often if it had a great beef selection

• 43% would get their meal from a grocery store instead of a restaurant if there were great beef choices in prepared foods department.

• 40% report that a prepared foods section with great beef choices would increase their likelihood of considering that a “high quality” store

© 2015 Technomic Inc.

MARKET OBSERVATIONS

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9

Market Observations

Supermarket foodservice is one of the fastest growing segments in the away-from-home food industry and its underlying fundamentals suggest continued robust performance.

Food and beverages being offered within supermarket foodservice are far more sophisticated than one to two years ago.

1

2

Market Observations

One of the primary reasons for the strong historical and projected growth of supermarket foodservice is that core consumer needs are being met – not least among them being the desire for restaurant quality at less-than-restaurant pricing.

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3

Consumer Perceptions

Food Service Atmosphere Speed Convenience ConnectionCSR

Source: Consumer Brand Metrics, Technomic

Restaurants Supermarkets

© 2015 Technomic Inc.

CONSUMER DATA AND INSIGHTS

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Purchase Behavior

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2-3 times4-6 times

10+ times7-9 times

1 time

Purchase Behavior in a Typical Month

17%

42%

23%

8%9% Light Users: 17%

Medium Users: 65%

Heavy Users: 17%

Value-Added Proteins

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Main reasons consumers purchase ready-to-eat and ready-to-heat protein items at supermarkets

Consumers want more ready-to-eat and ready-to-heat chicken and beef options at supermarkets

Convenience - quick and easy option

Taste and flavor

Something I don't want to do at home

Variety, something different

Quality and value of the products

Healthy and nutritious

Flexibility - we get what we each want

Flexibility to customize

Something to impress my family/guests

76%

46%

33%

30%

19%

18%

17%

14%

3%

Proteins consumers would like to see more of

38%

45%50%

63%

Interest in Value-Added Proteins by Age

15

25-34

61%

76%

54%

65%

35-44

49%

57%

45-54

43%

54%

55+

“What Prepared Foods Protein Options Would You Like to See More Of?”

Heavy Users (10+ prepared foods purchases per month)

69%

73%

BeefChicken

© 2015 Technomic Inc.

BEEF OPPORTUNITIES, BY TIER

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Prepared Foods Tiers

Tier Segment Description

Foodservice Specialists blur the line between supermarkets and restaurants. Gourmet menu items, limited table service, a warm atmosphere, and restaurant-type amenities likely exist.

Foodservice Specialists1

Destination Supermarkets have a comprehensive perimeter that offers extensive choice across cuisine types. The perimeter often contains made-to-order stations, well-designed seating, and well-trained service.

Destination Supermarkets2

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Prepared Foods Tiers

Prepared Foods Departments have increasingly shifted focus away from meats and cheeses and to ready-to-eat or ready-to-heat meals. In most cases, shoppers get more than just the basics, including select ethnic offerings.

Prepared Foods Departments3

Extended Delis, while still emphasizing sliced meats and cheeses, typically offer customers several hot meal alternatives as well as a ready-to-eat cooler selection.

Extended Delis4

Tier Segment Description

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Beef Opportunities

Tier Segment Description

Foodservice Specialists1

Destination Supermarkets2

• Steak • Burgers

• Tri-Tip • Meatloaf

• Brisket • Meatballs

• Brisket • Burgers

• Meatballs • Meatloaf

Tiers 3 and 4 focus on ground beef (meatballs/meatloaf) and roast beef – expect that to change

Examples of Beef in Prepared Foods

Coffee & Chili Braised Beef Short Ribs

Roast Tri-Tip

Honey Garlic Skirt Steak

Grilled Teriyaki Flank Steak

Examples of Beef in Prepared Foods

Examples of Beef in Prepared Foods

© 2015 Technomic Inc.

WHY BEEF?

Why Beef? Why Now?

• Consumer Demand for Variety• Changing Demographics• Increased Culinary Capabilities• Food as Theater• Customization Trends

Many barriers to using beef are being broken down

Your Resource for Growing Sales of Beef in Prepared Foods

Product Development and New Cuts

Issues & Crisis Management

Menu DevelopmentCulinary Innovation

Menuing Strategies

Market Research & Intelligence

Nutrition Research

Safety Research

Industry Education and Training/Tools

Beef Production Education and Engagement

Product Quality Research

Sustainability

Pilot Programs

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Questions?