Wyoming Lean Beef: A Case Study In Marketing Chris Bastian and Dale J. Menkhaus Keywords: Product differentiation, branded products, low-fat, health concerns.

By the mid-1980's cattle producers had faced a period of low prices, severe financial stress and declining demand for beef. Consumers were expressing more concerns about health issues. These health concerns, coupled with lower priced substitutes such as poultry contributed to consumers shifting away from red meats, and particularly beef.

These changes in consumer attitudes toward red meats, coupled with the financial stress facing Wyoming cattle producers, prompted some Wyoming legislators to ask - Is the situation with respect to changing consumer attitudes toward red meats an opportunity rather than a problem? Can grass-fed beef produced on Wyoming ranges or short-fed cattle both of which contain little fat, be marketed at a premium price to enhance the profitability of cattle enterprises in Wyoming?

To answer the above questions, Wyoming legislators, in March 1985, enacted legislation which charged the University of Wyoming, College of Agriculture, to "develop a preliminary feasibility study of the marketing of low-fat and reduced-calorie beef grown in Wyoming at a premium price. If the preliminary feasibility study indicates there is a reasonable probability that Wyoming Lean Beef can be marketed at a sufficient premium to cover any additional costs and to increase the price received by producers by at least ten percent (10%), the College of Agriculture shall develop a test marketing program to provide a more definite determination of the market potential of the lean beef." Finally, "the University shall register in the name of the state of Wyoming 'Wyoming Lean Beef' or other variant incorporating the name of the state 'Wyoming' as a trademark or trade name to identify any beef marketed under the program..."

The ultimate objective was to study the feasibility of offering a branded low-fat beef product to consumers in order to address consumer health concerns and increase incomes to Wyoming cattle producers by selling a 'Wyoming' branded product if it were feasible.

Taste panel studies, laboratory test markets, and cost analyses done by the University of Wyoming departments of Animal Science and Agricultural Economics indicated there was consumer interest in a low-fat branded beef product. Production cost analyses indicated a premium price was needed for producers to grow this grass or short-fed product according to Wyoming Lean Beef guidelines. Laboratory test market results indicated consumers were willing to trade some palatability in terms of tenderness and flavor for perceived health benefits even at a premium price. Based on these results it was deemed that there was market potential for Wyoming Lean Beef.

After the results of these studies, a committee was formed to draft and implement a set of guidelines and regulations that producers were to follow in order to produce and market beef under the "Wyoming Lean Beef" trademark. Initially, Wyoming Lean Beef was marketed in five Wyoming cities and in the San Francisco, California area. Most of the sales activity occurred in 1987 and 1988. Unfortunately, sales volume never reached a level to make Wyoming Lean Beef a profitable venture. By 1989 Wyoming Lean Beef was no longer being marketed.

During the early 1980's returns to Wyoming cattle producers were low. By the time Wyoming Lean Beef was introduced prices had started to strengthen and producers were less interested in alternative marketing activities. This affected the ability of suppliers to provide sufficient volume of Wyoming Lean Beef to the new market outlets. Additionally, production of Wyoming Lean Beef was seasonal and this created an inability to provide a consistent supply to consumers during a twelve month period.

By the later 1980's the beef industry as a whole had started to address consumer concerns toward less fat. This was primarily addressed by trimming products closer and marketing more low-Choice and Select grades of beef products at the retail counter. This greatly decreased the differentiation offered by Wyoming Lean Beef as a low-fat product. Moreover, there was little interest at the retail level for merchandising this alternative branded product. Retailers were not interested in risking the prospect of reduced sales of beef at the meat counter with this new product. It became obvious that a great deal of marketing expertise was required to make this product available to the target market. Producers were less comfortable making marketing decisions, as compared to production decisions for this differentiated beef product.

Despite the lack of success for Wyoming Lean Beef a great deal was learned. Meat consumer segments desire different products with respect to health, convenience, and price. To be competitive with substitute meats such as chicken and pork, the beef industry must take a more marketing oriented approach as compared to a commodity approach. Products should be differentiated and targeted to specific consumer segments. There were a group of consumers who wanted and were willing to pay for a beef product targeted to their needs in the case of Wyoming Lean Beef.

For branded products to be successful in the market place advertising and promotion are necessary. Again this would suggest the beef industry needs to focus its advertising and promotion more on branded products. Most poultry advertising is of a branded form (i.e., specific processor labelling versus commodity or generic labelling).

Even though a consumer segment was willing to pay a premium price for this branded product. Producers cannot become complacent about adopting innovations that reduce production costs and ultimately reduce consumer prices. Poultry and pork have become relatively more efficient in production than beef in the last quarter century.

Thus, beef has become less competitive at the retail counter on a price basis. Given changes toward less fat by the beef industry, Wyoming Lean Beef could not compete as a branded product because of relatively higher production and marketing costs.

Chris Bastian and Dale J. Menkhaus are Extension Marketing Specialist and Professor, respectively, Department of Agricultural Economics at the University of Wyoming. Bastian is also a member of the Western Extension Marketing Committee.

Return to Commodity Specific Studies Index

Return to the Western Extension Marketing Committee

This site is hosted by the Department of Agricultural & Resource Economics, University of Arizona
Questions regarding content: Russell Tronstad
Send all other questions and feedback to: arecweb@ag.arizona.edu

Document located at http://ag.arizona.edu/ext/wemc/papers/WyomingBeef.html