High on grass-fed
Jan. 26, 2017
Verde Farms sources meat from a network of family-owned farms that specialize in pasture-raised cattle.
Grass-fed beef commands premium prices, but Dana Ehrlich, co-founder and CEO of Verde Farms believes his company can bring grass-fed beef within the financial reach of more consumers; and he’s leading the charge to “democratize” grass-fed beef by expanding his company’s product lineup to include more moderately priced cuts of beef.
In September, the company launched Never Ever and Grass-Fed beef product lines. Verde Farms Never Ever features pasture-raised meats sourced from cattle that were not fed in feedlots and never treated with growth hormones or antibiotics. The company’s grass-fed products include beef sourced from cattle that have received antibiotics only when necessary to treat a specific condition.
Verde Farms counts Wegmans Food Markets, Whole Foods Market Inc. and other national retailers as current customers for the company’s organic, grass-fed beef line.
Founded in 2005, Woburn, Massachusetts-based Verde Farms is a supplier of pasture-raised, grass-fed beef for both retail and foodservice customers. The company leverages a network of family farms in Uruguay, Australia, the United States and Canada that raise cattle without growth hormones while adhering to humane animal welfare standards.
The company sources predominantly Hereford and Angus breeds of cattle. Live weights are between 1,100 lbs. to 1,200 lbs., and weights can vary by season. The meat is typically leaner compared to grain-finished beef, but Ehrlich says leanness is an attribute that goes well with the consumer that’s looking for healthier product. But the price of grass-fed continues to be a hurdle to consumers interested in it but who may be daunted by the price point of grass-fed beef.
“As we progressed, we noticed that there was a big gap between the conventional and grain-finished beef – where the cattle are finished in feedlots – and our organic grass-fed beef,” Ehrlich says.
For example, the difference in commodity retail beef prices and grass-fed retail beef prices in November were as low as $3.13 for short ribs to a high of $23.55 for filet mignon, according to the US Dept. of Agriculture’s National Monthly Grass Fed Beef Report.
To address the price premium, Verde Farms developed the Grass-Fed line as an entry-level grass-fed program for foodservice and retail customers, while the Never Ever line is a middle-range program within the grass-fed sector. Verde Farms also offers a Reserve line which is a steak-house quality, 100-percent grass-fed, grass-finished line. Ehrlich believes the premium between commodity beef and grass-fed beef will narrow over time.
“Grass-fed beef doesn’t have the corn-based subsidies that are so predominant within the feedlot-based system,” he says. “So, over time there probably will be some premium, even at the entry-level grass-fed program. But as we scale up and we use the economies of scale that the rest of the sector uses we can pass on those cost savings to the consumers.
“So our entry-level grass-fed price point, while still above conventional (beef) is still accessible to the vast majority of Americans,” he adds. “Then, there are other things that we can do such as distribution. The wider our footprint gets on distribution the more accessible not just within the Northeast, mid-Atlantic and West Coast, but throughout the middle parts of America.”
Ground beef leads the category regardless of the tier within grass-fed, but Ehrlich says Verde Farms is well-balanced by using the whole carcass. “So, that means using everything from your middle-meats to end cuts to ground beef.” Ehrlich adds that Verde Farms currently is engaged in some value-added beef production and the company will focus on that segment going forward.
Ehrlich was a semi-conductor engineer prior to entering the beef business. He was working on his MBA at the Tuck School of Business at Dartmouth College when he participated in an exchange program in Buenos Aires, Argentina.
“It was there that I started eating a lot of grass-fed beef, probably at least five (to) six days a week; and it wasn’t until I was back in the US that I discovered there was something different about the beef we were eating here, and I started to delve into it,” he says.
He discovered a strong potential of a business opportunity, coupled with his personal interests in entrepreneurship, food, the environment and health and wellness. “I saw the intersection of all these things come together and the promotion and transformation of the cattle industry almost back to the grass-fed cattle model could solve a lot of environmental issues, as well as personal issues,” he explains.
Ehrlich admits he faced challenges transferring to the beef business from a background in the high-tech industry, but he says many of his skill sets applied to the beef sector.
“I had a tremendous amount of background in operations and product management/product development and that carried over very well,” he says. “And there were a lot of things that did not carry over in terms of my knowledge base. It took a significant amount of time to learn at the beginning, and of course, you always learn as you go along. It’s been a long road, but now we’re at the point where we’ve developed the company into something substantial and we have a lot more progress to go.”
Part of the company’s progress is the conversion to a new proprietary information technology infrastructure based on the Salesforce platform.
“From what I’ve seen, especially in most small-to-mid-sized meat companies, is they’re very knowledgeable about the meat industry, but less sophisticated when it comes to the technology side of things,” Ehrlich says. “So, I’ve taken my background and knowledge and contacts within the tech sector and tried to figure out a way that we could leverage that knowledge and apply it to our platform to make it more scalable, provide more insights into the data that we’re collecting, and ultimately provide a lower-cost and higher customer service touch to our customers.”