Senior Farm and Ranch Broadcaster Ron Hays visited with the President of Certified Angus Beef, John Stika, about how CAB grew its business over the past fiscal year.
This is part two of the conversation with Stika, click here for part one.
Certified Angus Beef grew by about 4.8 million pounds, a 0.4% growth from last year, resulting in its second most productive year.
“While International is the smallest of the three divisions that we have, we grew our international sales by almost five percent this year,” Stika said.
Domestically, food service experienced the second-best year ever, marking 14 years of growth out of the past 15. However, retail continued to feel the pressure of high prices which translates into margin pressure at the store level, then typically a reduction in feature activity of beef and Certified Angus Beef. Retail sales were down 1.5%.
“That gives you some idea of how we grew. It was really at International food service, but make no mistake, our volume still flows through retail,” Stika said. “Retail makes up forty-two percent of our overall business. Food service, domestically, makes up about a third, and international business makes up about sixteen percent. The residual is product that goes into further processing, like grinding operations and so forth.”
Stika admitted that Certified Angus Beef can only enjoy such success when the producer is able to produce the product profitably and the end users are able to do the same. He said, “It’s been really exciting to see that we as a brand over the last forty-six years have been able to bring all segments of this industry together as a brand community to, hopefully, drive everyone’s success by creating a shared focus on quality, across the gamut from the producer to the end user and to the consumer.
“It all comes down to creating value in the eyes of the consumer and that value translates, hopefully, into margin, and that flows back through every segment of production.”
As cattle numbers dwindle it becomes increasingly more difficult for Certified Angus Beef to meet the needs of end users and consumers, but Stika said CAB’s strategy is centered on creating demand.
“One of our best supply-generating activities is that if we create enough demand for the product, Certified Angus Beef, and go to one of our licensed partners that is selling under our brand name, that is the key to getting cattle and product into a Certified Angus Beef bag or box. Along with that, I think we are all in the same boat. It’s not only making sure that existing customers get the product that they need but also how do we all continue to grow market share. It definitely isn’t going to get any easier moving forward, but for us, the next couple of years are going to be all about making sure that the brand remains strong, and well-positioned for the growth that we expect to see as pastures once again begin to populate with even more Angus cattle.”
A recent press release from CAB reported that while the total fed cattle supply declined by 1.6%, this year a record 5.96 million carcasses, up 2.4%, were certified for the brand, with 37.4% of all Angus cattle meeting the brand’s strict quality standards. A record 730,000 carcasses qualified for Certified Angus Beef ® Prime.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Ag Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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