April 7, 2015
The meat industry is starting to take notice of the growing popularity of grass-fed beef.
In December, California-based quick-service chain Carl’s Jr. rolled out the All-Natural Burger, although it could be called the Take-Notice Burger. People have taken notice of the menu addition to the chain’s more than 1,000 outlets because Carl’s Jr. is the first major fast-food chain to introduce a grass-fed beef burger.
The meat industry has taken notice of the All-Natural Burger because it’s another sign that grass-fed beef is becoming more accepted in the US. Carl’s Jr. is sourcing grass-fed beef from Australia for the burger, which costs $4.69.
“We’ve seen a growing demand for ‘cleaner,’ more-natural food,” said Brad Haley, chief marketing officer of Carl’s Jr.
The term “natural” has trended high among culinary types the last several years. About one in three consumers say they’re eating “natural” foods more often, according to Technomic, a Chicago-based researcher of food trends.
Grass-fed beef sourced from cattle on a diet free of hormones, antibiotics and steroids is about as natural as it gets. And, incidentally, grass-fed beef proponents say people who eat it rave about its robust and rich flavor.
George Frangos and Jason Mann have opened three Farm Burger locations in Georgia and one each in Asheville, NC and Berkeley, Calif.
Besides Carl’s Jr., there are other signs that grass-fed beef is growing in popularity in the foodservice segment. Late last year, Farm Burger, an Atlanta-based chain that offers grass-fed burgers, opened its fifth location in Berkeley, Calif. Farm Burger opened its first restaurant in Decatur, Ga., in 2010. George Frangos, co-founder and owner, says Farm Burger’s sales are about $2 million per store and growing.
Last fall Owensville, Mo.-based Shire Gate Farm, which produces and markets grass-fed beef hot dogs and burgers, announced an agreement with the Edward Jones Dome, home to the St. Louis Rams, to sell Shire Gate Farm’s products. It marked the first time that what Shire Gate Farm’s calls “high-welfare, sustainable hot dogs and burgers” were served by a stadium concessionaire, in this case Delaware North Companies Sportservice, a St. Louis-based food, beverage and retail management company.
Recently, Vina, Calif.-based Panorama Grass-Fed Meats, one of the nation’s top suppliers of grass-fed beef at retail, announced it’s looking for another certified-organic plant to process its products on the East Coast to supply growing demand of the product in that region. Panorama currently utilizes two plants in California and Colorado. In 2005, Panorama processed 12 head a month into grass-fed beef. It now processes 200 head a week.
Shire Gate Farms' grass-fed beef hot dogs and ground beef are sold at the Edward Jones Dome, home to the NFL's St. Louis Rams.
Allen Williams, a Mississippi-based consultant of branded-meat programs and a partner in Winston-Salem, NC-based Joyce Farms, which processes and sells grass-fed beef to restaurants on the East Coast, cites statistics from the Wallace Center of the Winrock Foundation that retail sales of domestically produced grass-fed beef topped $400 million in 2013, compared to less than $5 million in 1998. Williams notes the demand for grass-fed beef has grown about 25 percent a year for the last 10 years, and that grass-fed beef will comprise 30 percent to 40 percent of the total beef market sector within the next 10 years.
“Grass-fed beef will become more than a niche product – no doubt about it,” he says.
The grass-fed beef movement is consumer-driven and has been since its inception in the mid-1990s, Williams says. Back then, there wasn’t much marketing and promotion to drive the category, and grass-fed beef was only in demand in a few regions, such as the Northeast and West Coast.
But when the first case of bovine spongiform encephalopathy (BSE) hit the US in December 2003, some consumers turned to grass-fed beef based on the perception that it was a safer alternative to its grain-fed counterpart.
“There was a strong uptick in sales,” Williams says.
Consumer demand for grass-fed beef brands such as Niman Ranch took off following the first case of BSE in the US in 2003.
There was also a barrage of mainstream media attention for grass-fed beef, which was highlighted in food magazines and TV shows. Grass-fed beef brands like Niman Ranch and Panorama Meats took off.
“It was like having free advertising for about five years,” Williams says. “It helped drive consumer awareness of the product.”
When the Great Recession hit in 2007, economists expected grass-fed beef sales to plummet because it costs more than its grain-fed counterpart. But the opposite occurred – more consumers purchased grass-fed beef and growth continued.
“It boggles the mind, but that’s precisely what happened,” says Williams, explaining that while the financial downturn caused more consumers to dine out less, many of them opted for more-upscale foods to eat at home, such as grass-fed beef.
More than nibbling
Darrell Wood, president of Panorama Meats, says the “turning point” in the grass-fed beef segment happened about seven years ago when consumers and meat-industry insiders no longer considered it a fad. Wood contends many retailers didn’t want to get in the grass-fed beef business but had to because of consumer demand.
Frangos founded Farm Burger with Jason Mann, who he says represents the farm side of Farm Burger because both saw an opportunity. Mann, an organic farmer, formerly operated a restaurant in Athens, Ga., called Farm 255, a full-service, farm-to-table restaurant. Grass-fed burgers were one of the restaurant’s most- popular items.
“[Opening Farm Burger] didn’t seem like a leap of faith,” Frangos says.
Wood says Panorama Meat’s market research reveals there are four distinct demographic groups that buy grass-fed beef: young professionals, aged 25 to 42, who earn at least $75,000; baby boomers, who are concerned about health and longevity; wellness and fitness buffs of all ages; and food-allergy sufferers.
Panorama’s biggest customer is Austin, Texas-based Whole Foods Market, which carries Panorama’s grass-fed beef in 240 stores. Panorama’s biggest seller is its ground beef, which “is flying off the shelves,” Wood says.
Williams predicts double-digit sales for grass-fed beef will continue for the foreseeable future, especially if the major packers and processors get more involved.
Cargill has already delved into the segment. In 2013, the Wichita, Kan.-based packer entered into an agreement with Teys Australia to bring Australian grass-fed beef to the US. Even though it’s imported grass-fed beef, it will heighten awareness of the sector in the US and lead to more demand for US-produced grass-fed beef, Williams believes.
If the Big Four – Cargill, Tyson Foods, National Beef and JBS – implement homegrown grass-fed beef programs, the category will experience another growth spurt, which will be “exponential”, Williams says.
“[The Big Four] have the ability to really heighten consumer awareness,” Williams adds, noting the companies’ resources for marketing and promotion.
While smaller grass-fed beef companies may feel threatened by imports and the Big Four’s entry into the sector, Williams welcomes both. “I believe that a rising tide lifts all boats,” he adds.
Even though grass-fed beef is growing, supply will continue to be a challenge, as it is for other beef segments.
“No matter how you finish beef and market beef, we still have a historically low national cow-herd inventory,” Williams says, stating that grass-fed beef’s growth will come at the expense of cattle normally reserved for other sectors, such as grain-fed beef.
On the ranch, grass-fed beef’s finishing infrastructure needs to grow, Williams says.
“We don’t have enough of what I term ‘professional forage finishers’ in the US,” he explains.
One of grass-fed beef’s biggest challenges has been inconsistent taste, but Williams insists that is improving.
“Taste is getting more consistent because we’re getting smarter about how to finish these cattle,” Williams adds. “There were problems with grass-fed beef having off flavors, and it being too lean, tough and dry. But the better finishers are solving those issues.”
But Williams admits grass-fed beef quality can run hot and cold.
“When it’s good, it’s really good,” he adds. “I’d rather eat a grass-fed steak over a grain-fed steak anytime. But if it’s a bad grass-fed steak, I don’t want it.”
Price is also an issue with grass-fed beef, which is more expensive than grain-fed beef because grass-fed cattle must graze longer in pastures. Also, imported grass-fed beef is cheaper than US product, which is why large supermarket chains and Carl’s Jr. opt to import product.
Bacon costs extra on The Farm Burger (left). The No. 6 comes with a sunny side up egg and salsa verde.
Farm Burger is trying to beat the high-price game, even though it uses locally produced grass-fed beef sourced from Moonshine Meats, an “integrated meat community” that markets meat throughout the southeast US. Frangos is keeping costs as low as possible on the menu, where a burger sells for about $7, by saving money in other areas of the business, such as the rent and build-out he pays for the counter-service only restaurants. Frangos realizes that Farm Burger runs higher food costs than the norm, but he’s OK with that.
“We owe that to the product, and we owe it to the consumer,” he says. “But the price of beef is our biggest challenge.”
Williams predicts the price of US grass-fed beef will decline once producers improve input costs and finishing capabilities and refine genetics. Wood notes that grass-fed beef processors must find markets for animal byproducts, which will lower processing costs.
Both agree that increased consumer demand will also drive down price.
“It’s on its way to becoming more than a niche product,” Williams says.
Adds Wood, “I think we’re just scratching the surface.”
Indeed. People are taking notice.