Self interest, shared goal

Branded beef business model highlighted in Texas A&M class

by Anthony Pannone

Being good at what you do every time is no accident.

“My dad said anyone can sell something once,” Prof. John Siebert told his ag business class. “It’s selling something multiple times to the same person that takes a lot of work and expertise.”

On March 19, the Texas A&M agricultural economist asked four links in the Certified Angus Beef ^® (CAB^®) brand supply chain to share their experiences: CAB president John Stika; rancher James Henderson of Bradley 3 Ranch; Joe Boutte, director of business development for Houston-based Freedman Meats Inc.; and Ric Rosser, concept/executive chef for Saltgrass Steakhouse and West Coast Claim Jumper.

Stika kicked off the forum, describing how CAB functions in a segmented industry.

“We don’t own any cattle. We don’t own any steaks, or roasts or ground beef. What we own is a building in Wooster, Ohio, three minivans, and this logo,” he said pointing to the CAB crown jewel.

“Everything that this brand is based on is determined by the value we create in your minds, or the minds of consumers,” Stika said. “Whether they’re at foodservice or retail, it’s the trust that they have that this brand is going to deliver beyond expectations for taste and quality.”

CAB has added value to the breed since 1978, but also helped created “Angus confusion,” he allowed.

“McDonald’s, Domino’s, Arby’s and other Angus beef programs—out of the leading brand’s success, Angus has become the embodiment of quality,” he said.

Siebert described the brand’s influence as a constant flow. “Picture Certified Angus Beef’s finished-product creation working like a stream of water,” he said. “This is called the food marketing chain. Upstream are the seedstock producers of high-quality Angus genetics.”

James Henderson is upstream, literally in the Panhandle’s High Plains near Memphis, Texas, where his family’s Bradley 3 Ranch has operated for 50 years. 

The registered Angus business has created far-reaching impacts on all cattle ranching, he said noting CAB’s first live-animal requirement: “How many black breeds of cattle did we have in 1978? Angus and Brangus were the two black breeds. Now, how many do we have today? All of ’em,” he said. “Because that’s where the economics have said, that’s where the money is.”

To achieve success in the future, Henderson said it’s all about creating relevance.

“Our challenge is, how are we relevant in 2032 when we’re trying to sell something to your kids? The challenge is to make sure we produce cattle that add value to the supply chain.”

Henderson’s relevance is evident to CAB-licensed distributor Boutte, who has managed the flow of beef from rancher to plate for 25 years. After Henderson spoke, Boutte shook his hand.

“We thank you, and all the work you guys do because we buy and expect it to be there,” Boutte said. “You guys have performed and given us good quality beef.”

He highlighted the importance of the beef aging process, saying it allows his product to reach its optimum flavor profile, even though that inventoried meat is a huge investment.

“In my years of selling CAB, I would sample product—and the best thing I could do at that point was just be quiet,” Boutte says. “I’ve sold more by being quiet than I ever thought. The product sells itself.”

Chef Rosser represented the end-user, where value is ultimately added.

“Things I need from a good quality cow or steak are, I need more of it and I need it to be smaller,” he said. “That goes contrary to what James [Henderson] spoke of because he needs his to be bigger so he can make more money, and I need it to be smaller. I think there’s probably middle ground there.”

He said he lives a different life than most chefs, paying attention to weather and different markets because “they affect the overall economics of this business.”

“Producers take 22 months to get it to me, and I can screw it up in 12 minutes, so I ask the cow-calf producer to focus on their 22 months, and I’m gonna focus on my 12 minutes,” he said, noting he sold 2.5 million 16-oz. ribeyes last year.

“The cool thing about being Ric Rosser is that I don’t have to worry too much about what I do to my steak, because it’s a good quality steak,” he said. “We shifted to CAB in 1981. Before then the world didn’t exist; we served horrible steaks, and our complaint levels were high. When we moved to CAB our complaints literally dropped off the face of the earth.”                     

He stressed that he’s not a paid advertiser, just a brand believer. And that’s why Siebert became so interested in the non-profit that consistently creates profit for partners that he decided to invite them to class.

“CAB is a completely unique organization in that all participants along this stream—by following their own best interests—ensure that downstream users get exactly what they want: a great eating experience,” the professor said. “I admire the fact that CAB has created over $300 million in premiums received by beef producers. Without CAB, beef producers would have less income.”

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