by Bryan Salvage, editor
Twenty-five years ago, red meat (beef, in particular) was America's protein of choice. Today, it continues to lose ground to a swelling sea of innovative competitive protein products-most notably, poultry.
Red meat has superior taste and texture over poultry. So, why does red meat continue to lose share to the poultry industry, and what can be done to reverse this tide?
Many industry insiders insist that the red meat industry must do a better job in creating new products that deliver consistent quality, convenience and perceived value. They are right.
During a recent Demand Strategies conference in San Antonio, sponsored by the National Live Stock & Meat Board, one session focused on regaining red meat market share through new product development.
Some reasons contributing to the shrinking red meat market share dilemma were made painfully clear. Two generally accepted reasons are usually given to explain this dramatic consumer shift from red meat to poultry, according to session speakers:
-- Lower poultry production costs facilitated by vertical integration.
-- Delivery of quality and consistency through genetics and management.
Equally significant, the poultry industry also offers consumers a variety of innovative products-including an increasingly diverse number of new products-that consistently meet or exceed consumer needs. Most of these products are consumer-friendly and ready-to-eat.
Tony Matta, president of Mata & Associates and an NLS&MB consultant, told the audience that the red meat industry faces several challenges in developing new products, including variability in raw materials (particularly in beef); top meat company talent not being assigned to new product development; marketing managers having dual responsibilities; new product development funding tied to quarterly profits; downsizing continuing in R&D; and allocation of R&D resources going into other areas such as safety and cost improvements.
Other external barriers to new product development include an emphasis on leveraging existing brands instead of creating new ones; few meat company CEOs with experience in new product development; and a lack of understanding of the new product process outside the R&D functions.
Mata further explained that the end results of this scenario are low and unpredictable profitability; a lack of new products; industry is perceived to have a low-tech image; consumer and customer needs not being met; and further erosion of red meat market share.
What's the answer?
Several successful case studies on building markets and market share were presented during this seminar-one of which involved the cotton industry.
Twenty-five years ago, the cotton industry was struggling to battle the advent of synthetic fibers. Cotton's share of the domestic textile market at that time shrunk to 20 percent.
But thanks to the development of new value-added products, fostering strategic relationships and innovative marketing, cotton has recovered and now has a 57 percent share of the domestic textile market. The primary driver of these programs is Cotton Inc., a New York-based check-off funded organization for technical and new product guidance.
Various industry associations will continue to help spur new product innovation, but only for the specific segments of the industry they serve.
The American meat processing industry would greatly benefit by having its own version of Cotton Inc., an organization that provides technical and new product guidance for all segments of the red meat industry, funded by check-off dollars from companies in the industry.
Is this possible? Could it work?