There’s an aphorism about business that goes something like this: you can develop the greatest surfboard ever invented, but if there are no waves, the efforts will be useless. That’s a fitting axiom for what’s occurred around the beef industry during the past five to 10 years.
This column has regularly focused on the enduring improvement in beef quality by the industry—building a better surfboard. Those efforts are best demonstrated in economic terms. As explained in last week’s monthly column, Prime and branded sales have consistently grabbed a greater portion of market share over the years. Meanwhile, consumers have recently shown greater affinity for middle versus end meats. As noted in last week’s Industry At A Glance, “…consumers are clamoring for quality and high-end beef cuts.”
Fortunately, the beef industry has done a tremendous job to underpin that demand. That is, the beef complex has made great strides toward improving beef’s quality and consistency. And that’s enabled beef producers to establish greater resiliency and reduced the need to compete head-to-head with pork and poultry. In other words, the beef industry has made strides to de-commoditize its product.
The second part to all this surrounds the economy. The current economic expansion has been an extended one. Generally, a better economy is perceived as being beneficial to the beef industry—the waves have been favorable. Improving economic conditions serve the beef industry well and have seemingly underpinned its ability to take full advantage of better quality and consistency. And that’s kept consumers coming back for beef.
To that end, this week’s illustration highlights the current economic expansion from a historical perspective. The graph outlines the duration of all the expansions since World War II. The current expansion now stands at 103 months – the third longest in the post-WWII era.
How do you perceive the convergence of improving beef quality and a growing economy? How long do you believe the current expansion will last? And once we experience a downturn, has the beef industry earned long-run consumer loyalty because of quality? Leave your thoughts in the comments section below.
Nevil Speer is based in Bowling Green, Ky., and serves as vice president of U.S. operations for AgriClear, Inc. – a wholly-owned subsidiary of TMX Group Limited. The views and opinions of the author expressed herein do not necessarily state or reflect those of the TMX Group Limited and Natural Gas Exchange Inc.