History doesn’t repeat itself, but it does rhyme. This quote from Mark Twain reminds us to look back at our past while focusing on our future.
Miranda Reiman sat down with industry consultant Nevil Speer to discuss improvements in quality, how far beef markets have come and how modern consumers are choosing to spend their money.
They discuss:
Find more information to make Angus work for you in the Angus Beef Bulletin and ABB EXTRA. Make sure you're subscribed! Sign up here to the print Angus Beef Bulletin and the digital Angus Beef Bulletin EXTRA. Have questions or comments? We'd love to hear from you! Contact our team at abbeditorial@angus.org.
History doesn’t repeat itself, but it does rhyme. This quote from Mark Twain reminds us to look back at our past while focusing on our future.
Miranda Reiman sat down with industry consultant Nevil Speer to discuss improvements in quality, how far beef markets have come and how modern consumers are choosing to spend their money.
They discuss:
Find more information to make Angus work for you in the Angus Beef Bulletin and ABB EXTRA. Make sure you're subscribed! Sign up here to the print Angus Beef Bulletin and the digital Angus Beef Bulletin EXTRA. Have questions or comments? We'd love to hear from you! Contact our team at abbeditorial@angus.org.
Lynsey McAnally:
Angus at Work, a podcast for the profit minded cattleman, brought to you by the Angus Beef Bulletin. We have news and information on health, nutrition, marketing, genetics, and management. So let's get to work, shall we?
Hello and welcome back to Angus at Work. History doesn't repeat itself, but it does rhyme. This quote from Mark Twain reminds us to look back at our past while focusing on our future. Today's host, Miranda Reiman, sat down with industry consultant Nevil Speer to discuss improvements in beef quality, how far beef markets have come and how modern consumers are choosing to spend their money. So let's dive in!
Miranda Reiman:
Welcome to the Angus at Work podcast. I'm your host Miranda Reiman, and today we have Neville Speer with us. Nevil, why don't you just give us first off a little bit of background about yourself and what it is you do in the beef industry.
Nevil Speer:
So I live in Bowling Green, Ky., just about an hour north of Nashville. Essentially, I have my own consulting business and primarily have, along the way, worked with several companies to do business development. And then I have a variety of customers that are producers that I help from time to time.
Miranda Reiman:
Excellent. And you are a speaker at the Feeding Quality Forum where you covered a lot of historical and then a lot of looking into the future. So maybe just start by setting the stage for us a little bit as to where the beef industry was 20 years ago and what progress we've made.
Nevil Speer:
So that's really where we started, Miranda, is just talking about looking back and saying, and talking about how much we struggled, especially with market share while pork and poultry was catching, and not only catching, but actually beating the beef industry by pretty wide stance. And primarily that was because the beef industry was struggling in terms of quality, and yet we thought that's what we excelled in the marketplace, and clearly consumers were telling us otherwise. And as a result, we lose market share. And then also you don't create new opportunities for producers because the market struggles. Dollar spending ultimately translates back into the cattle market.
Miranda Reiman:
I think that the slide that you showed that illustrated that the best was the $106 that chicken had added?
Neville Speer:
Yes. So between 1980 and 1998, new beef spending was $6. Pork and poultry combined got $106. You can't grow a business unless you have new spending.
Miranda Reiman:
Right.
Nevil Speer:
And then we need to remind ourselves too, during the '80s we were fighting the same battle we're fighting now in terms of inflation. So, in effect, we really were going backwards.
Miranda Reiman:
And how has that story changed today?
Nevil Speer:
It's incredible. Ever since about 1998 and 2000 when beef demand bottomed, we have dramatically turned that story around. We grow spending year over year ever since. And, in fact, this year it looks like we're probably going to add on about another 5%, which is really pretty remarkable because as we think about what's going on out there in the business in terms of pricing and competitive pricing, there's a lot of opportunity for consumers to push back and they haven't done that. They continue to spend for this product. They like it.
Miranda Reiman:
You had talked about some of the metrics that we use to track this. You've really got to interpret that a little bit, so you want to explain that a little more?
Nevil Speer:
Sure. Sure. So we talked a lot about one of the things that often gets misinterpreted is the idea of consumption. And beef consumption really is just a derivative of production, minus some exports and what have you, divided by population. In of itself, it's really not that meaningful. In addition, we've changed the way we fab product. So we actually inherently have less retail product coming into the marketplace than we used to because of retail fat trimming. That really doesn't matter. It doesn't tell us anything unless we know what consumers are spending and what they're willing to spend per pound. And right at the end of the day, the only thing that matters is the amount of money or dollars coming into a business.
Miranda Reiman:
And you gave some great examples of a restaurant that's full on a Friday night.
Nevil Speer:
Yeah, it's one of my favorite stories. So in Bowling Green, Ky., we just had a brand new high-end restaurant open. The cheapest item on the menu is $59. We were there on a Wednesday night to visit it for the first time, and the place was completely packed. And I know the owner and he says they've done very, very well. So clearly consumers, even though they're stressed with inflation across all fronts, they're still willing to set aside money to spend for a really good eating experience, whatever that may be, at home or outside at a restaurant.
Miranda Reiman:
Of course, that can make us all smile. That's a pretty good price tag on beef. But this podcast is particularly aimed at commercial cattlemen. How are commercial cattlemen going to get their share of that increasing value?
Nevil Speer:
Well, so one of the slides that I use, it shows the relationship between spending and the fed market, and the correlation is about 0.86. So as we continue to increase spending, we continue to ratchet the market up and it's ultimately the metric that matters the most because at the end of the day, if we don't have consumer dollars coming in, then there's no dollars for the cattle and it really does matter. Now it seems very much removed, and sometimes a cow calf producer can feel very isolated from kind of the end and meaning of that. But we're all in this together and it does matter.
Miranda Reiman:
Sure. I think that one of the statements you made that might be a somewhat unpopular opinion in a room full of very independent cattlemen was that if we are completely independent, we're never going to capture the full value.
Nevil Speer:
Yeah, absolutely right. So we all typically, traditionally in this business, we like to operate independently and anonymously, but we also see that this business is increasingly moving towards coordinated supply chains. And if you really want to capture true value and be a part of that value at the end of the chain, you have to give up being anonymous. And you also have to give up being totally independent.
Miranda Reiman:
And I don't think you're talking about lets everybody vertical integration top to bottom. What are some ways that we can accomplish that working together without just a one owner system?
Nevil Speer:
Right, exactly. And one of the examples that I used with that specific discussion is talking about value added sales, video sales, and it could even be as much as preconditioning or you have pooled precondition sales, whatever it might be, but there are clearly supply chains that are actively pooling cattle, and you can operate within that and sell into that.
Miranda Reiman:
Immediately, my head went to the AngusLink program and some things that the Association's trying to do.
Nevil Speer:
That's precisely right. Yes. And so you are giving up your right to be anonymous, but if you're doing all the right things in terms of using the right genetics and the right management, why would you not want to advertise those and get more value versus operating in a just strictly commodity system? Because all you're going to be is average.
Miranda Reiman:
Sure. And this isn't just like Nevil Speer's philosophy on life here. This is actually backed by some things that consumers are saying they want.
Nevil Speer:
Absolutely. And one of the things clearly that consumers want and or retailers and or food service, we want high quality product. We need it in volume, and we need it to be competitively priced, but then also we want to know something about it. And that's happening more and more all the time. And then as part of that discussion, we also talked about as we get younger consumers, they're even more focused on that. Tell me something about the production chain and what's going along in terms of attributes before these cattle get to be an end product.
Miranda Reiman:
Right. Was there anything else from that Power of Meat study that you had quoted that you think would be important to help tell this story?
Nevil Speer:
Well, I think it's very clear that millennials reference themselves or think of themselves as flexitarians. Right? Okay. So typically at our house, we're going to have some kind of meat item on the menu every night. But as we get into younger generations who are really the coming wave of power in the marketplace, they're willing to not have meat. And so therefore, our job to sell it to them is going to get more challenging going forward.
Miranda Reiman:
Sure. So if you're a cattleman listening to this, that's maybe not a warning so much as an opportunity.
Nevil Speer:
Oh, I think that's absolutely right. I mean, sure, it's a challenge. And it may feel like a warning when you first hear it, because what am I supposed to do? But yet, on the other side of that, if you can gain their loyalty, it's a huge opportunity. Yeah.
Miranda Reiman:
Amen. Well, we like to end this podcast on some good news. There's enough bad news out there in the world. So whether it's something personal or professional, give me a little bit of good news today.
Nevil Speer:
Oh, there's all kinds of good news. And unfortunately, Miranda, there's so much negativity in the world, but I would say if I were a beef producer today, I'm especially excited about what's happened, but then also exciting about what the opportunities are. And by the way, in this presentation that I just did, I mentioned twice, I'm going to have to change my graphs in two different instances because the prices have moved so much higher. And by the way, to that point, we all kind of look back at 2014 as kind of the key market, and we have to remember that we are outpacing 2014 by a pretty big margin on even bigger volume. And so that's one of the things that we talked about also is that everything in terms of demand for product and then also for cattle, it's moving up into the right. And that's the best signal we could have.
Miranda Reiman:
That is indeed good news. Thanks, Nevil, for being on our podcast today.
Lynsey McAnally:
Listeners, for more information on making Angus work for you, check out the Angus Beef Bulletin and the Angus Beef Bulletin Extra. You can subscribe to both publications in the show notes. If you have questions or comments, let us know at ABBeditorial@angus.org. And we would appreciate it if you would leave us a review on Apple Podcast and share this episode with any other profit minded cattlemen.
Thanks for listening. This has been Angus at Work.