Consumer Preferences for Local Beef: Results of a Recent Consumer Surveyin Tennessee

By Kim Jensen, Megan Bruch, Leah Dobbs, and Jamey Menard*

*Professor, UT Department of Ag. & Resource Economics, Marketing Specialist, UT Center for Profitable Agriculture, Graduate Research Assistant, and Research Associate, UT

Department of Ag. & Resource Economics

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TN Value-Added Beef Conference, March 18, 2014, Manchester, TN

Funding is provided in part by USDA Federal-State Marketing Improvement Program (FSMIP) and Tennessee Department of Agriculture

In 2011, cash receipts from cattle and calves =$586.3 million, or 16.7% of all Tennessee agricultural receipts (TDA, 2012).

Receipts from cattle and calves were the largest among all agricultural commodities. 9th in the number of beef cows and 15th in all cattle and calves (TDA, 2012).

Most of the state’s cattle farms (about 90%) (USDA/NASS) are cow calf.

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Opportunities may exist for farmers to have cattle slaughtered in federally inspected facilities and sell meat directly through on-farm retail outlets, farmers markets, or wholesalers.

10 federally inspected slaughter facilities: 5-East Tennessee, 2-Middle Tennessee, and 3-West Tennessee (TDA, 2013).

Potential to capture a portion of the value-added from processing and marketing the beef

Value-added can be captured is if consumers are willing to pay a premium for a locally produced and labeled beef product.

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Understand Tennessee consumers’ preferences for and their willingness to pay a premium for Tennessee beef. ◦ Two products, ground beef and a boneless ribeye steak. ◦ Counties in and around Memphis, Nashville, Chattanooga,

Knoxville, and Tri-Cities were targeted

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Sample was drawn from two different frames representing the population of the study area: land-line telephones and wireless phone numbers.

18 years old and involved in planning meals or shopping for the household.

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1,211 surveys completed, May to August 2013; 739 land-line sample frame,472 from wireless frame.

Using American Association of Public Opinion Research formulas: response rate of 28.7% and a cooperation rate of 68.2% among the land-line sample. Wireless sample frame the response rate was 23.3% and the cooperation rate was 54.3%.

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Beef Consump-

tion

Willingness to Pay for Tennessee

Beef

Preferences to Attributes

of Tennessee

Beef

Demo-

graphics and

Attitudes

Steak Questions

Ground Beef

Questions

Randomly Assigned

Consume Beef

SteakOther cuts,

or both types

Ground Beef

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Assignment of Beef Consumers to Steak or Ground Beef WTP Questions

TENNESSEE BEEF means the animals must have been born, raised, and finished within the borders of the State of Tennessee. I'm now going to ask you to choose between TWO Choice-grade, 12-ounce, Boneless Ribeye Steaks. Before making your decision, consider your household's budget for food, keeping in mind if you spend more on steak, you'll have less money to spend on other food products. Both steaks are the same weight and have IDENTICAL freshness, cut, color, marbling, meat texture, fat, tenderness, juiciness, and flavor.

Similar description was read for ground beef, 85% meat/15% fat, with the products being identical in leanness, freshness, color, meat texture, juiciness, and flavor.

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Two identical choice-grade, 12-ounce, Boneless Ribeye Steaks, except for Tennessee Beef label.

For the ribeye steak, the base product price was $9.25 per pound.

Price options for the Tennessee Ribeye based upon USDA, AMS retail beef price reports, USDA Weekly Retail Beef Feature Activity (USDA, AMS 2012).

Randomly Assigned to Tennessee Ribeye Price Level

$9.25, $11.56, $13.88, and $16.19.

At that price level for Tennessee Ribeye

Base Ribeye Steak (Not labeled as

Tennessee Beef)$9.25

Tennessee Ribeye Steak

Neither

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Base product price=$3.36 per pound.

Price options for the Tennessee 85/15 Ground Beef were based upon USDA, AMS beef price reports, USDA Weekly Retail Beef Feature Activity(USDA, AMS 2012).

Randomly Assigned to Tennessee Ground Beef Price

Level$3.36, $4.20, $5.04, $5.88

At that price level for Tennessee Ground Beef

Base Ground Beef (Not labeled

as Tennessee Beef)$3.36

Tennessee Ground

Beef

Neither

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Household Beef Consumption and Reasons for Households Not Consuming BeefBeef Consumption and Reasons Do Not Consume PercentRespondent or others in household consume beef (N=1,211) 76.96

If do not consume beef, reasons (N=267):•Health Concerns 45.69•Vegetarian 34.46•Taste 15.73•Safety Concerns 7.49•Costs 7.49•Environmental Concerns 5.62•Religion 2.99•Other 1.50

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Number of Meals Prepared at Home with Beef Served in a Typical WeekMeals Percent (N=888)

0 25.56

1 13.74

2 to 3 31.42

4 to 5 13.74

6 to 7 7.88

8 to 9 3.04

10 or more 4.62

Results-Beef Consumption

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Among beef consumers, average number of meals with beef served = 2.90 meals/week. Among all consumers (76.96%), the overall average =2.23 meals/week with beef

1.52%

3.19%

5.31%

6.07%

12.29%

22.31%

28.98%

44.61%

93.02%

0.00%0.00%

1.06%

1.36%

1.66%

5.14%

9.08%

13.77%

79.12%

0% 20% 40% 60% 80% 100%

Where Usually Purchase (N=661) Have Purchsed From in Past Year (N=659)

TYPES OF VENDORS USED TO PURCHASE BEEF IN THE PAST YEAR

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Type of Beef Consumed in the Past Month Among Beef Consuming Households

Percent (N=657)Ground Beef 91.78

Steak 71.84

Other 63.01

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80.64%

17.01%

0.88% 1.47%

Meals with Steak (N=341) 1 or less

2 or 3

4 or 5

6 or more

42.21%

43.94%

9.00%4.84%

Meals with Ground Beef(N=289)

NUMBER OF MEALS PREPARED AT HOME WHERE STEAK OR GROUND BEEF IS SERVEDIN A TYPICAL WEEK AMONG HOUSEHOLDS CONSUMING THAT TYPE OF BEEF IN THEPAST MONTH

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1.0

1.5

2.0

2.5

3.0

Steak (N=329)

Ground Beef (N=270)

Very

Importance of Various Qualities when Purchasing a Steak or Ground Beef to Cook at Home

Not

Impo

rtan

ce

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1.0

1.5

2.0

2.5

3.0

Treatedhumanely

Naturallyraised

Locallyproduced

Grass fed Grain fed

Steak (N=310)Ground Beef (N=266)

Very

Importance of Various Attributes when Purchasing a Steak or Ground Beef to Cook at Home

Not

Impo

rtan

ce

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95.65%

35.21% 32.50%17.39%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

$9.25 $11.56 $13.88 $16.19Price per Pound for TENNESSEE BEEF Ribeye Steak

Percent Choosing TENNESSEE BEEF Ribeye Steak (N=310)

=Price per Pound of Base Ribeye Steak

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91.07%

30.43%

11.32%20.97%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

$3.36 $4.20 $5.04 $5.88Price per Pound for TENNESSEE BEEF Ground Beef

Percent Choosing TENNESSEE BEEF Ground Beef(N=263)

=Price per Pound of Base Ground Beef

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Steak Ground BeefWTP $12.21*

(0.2825)$4.06*(0.1148)

Premium above base price

$2.96* (0.2825)

$0.70*(0.1148)

Premium as a percent of the base price 32.00% 20.83%

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Beef consumers are willing, on average, to pay a premium for TENNESSEE BEEF. The average premium for a ribeye is nearly $3 per pound, while the premium for ground beef is $.70 per pound.

***=statistically different from zero at 99% confidence level.

Potential Reasons for Selecting TENNESEE BEEF, Overall, Steak, and Ground Beef

Potential Reasons for Selecting TENNESSEE BEEF

Mean Influence Rating1=no influence, 2=some

influence, 3= great influence

Overall Steak G.Beef(N=199) (N=114) (N=85)

Purchasing TENNESSEE BEEF makes me feel like I am supporting farmers in my state. 2.78 2.80 2.76Purchasing TENNESSE BEEF makes me feel like I am supporting the state's economy. 2.75 2.74 2.76TENNESEE BEEF is likely fresher than out-of-state beef 2.59 2.55 2.64TENNESSEE BEEF has to be transported shorter distances, so it is better for the environment 2.45 2.42 2.49I know more about where Tennessee beef comes from, so I feel it is safer 2.38 2.27 2.53*Knowing how the beef was produced 2.37 2.33 2.41Tennessee beef is likely higher quality than out-of-state 2.29 2.20 2.40*Price of TENNESSEE BEEF compared with other 2.18 2.11 2.27Knowing the farmer who produces the beef 2.03 2.00 2.06The experience purchasing directly from the farmer 2.02 2.02 2.01Being able to visit the farm where the beef was produced 1.88 1.83 1.95

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* Statistically different between Steak and G. Beef at 90% confidence level or higher.

Types of Vendors From Which Would Purchase TENNESSE BEEFOverall Steak Ground Beef

Vendor Type (N=211) (N=119) (N=92)Percent

Grocery Store 94.31 93.28 95.65Big Box Retailer 54.50 57.14 51.09Farmer Direct 47.39 51.26 42.39Gourmet Stores 44.55 44.54 44.57Butcher 43.60 44.54 42.39Warehouse Retailer 41.71 45.38 36.96Farmers Markets 36.49 37.81 34.78Internet 6.64 7.56 5.43

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Types of Packaging Would Prefer for TENNESSE BEEFPackaging Type Percent Preferring Packaging Type

Overall(N=221)

Steak(N=125)

Ground Beef(N=96)

No Preference 40.27 40.00 40.63Vacuum Packaged 27.60 30.40 23.96Shrink Wrap 15.84 15.20 16.67Butcher Paper 16.29 14.40 18.75

Product Forms Would Purchase for TENNESSE BEEFProduct Form Percent Who Would Purchase

Overall(N=197)

Steak(N=111)

Ground Beef(N=86)

Fresh 90.95 96.40 97.67Frozen 63.96 59.46 69.77Fresh-frozen Then Thawed 30.46 31.53 29.07Cooked 25.89 24.32 27.91

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MLN6

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MLN6 Should packaging type in second chart be product form?Moore, Leah Nicole, 2/25/2014

0% 10% 20% 30% 40% 50% 60% 70%

Trust beef products from major beef prod. states more thanlocally prod.

Don't believe Tennessee beef is better quality

Prefer corn fed beef over beef that's grazed

Cannot afford to pay more for Tennessee Beef

Can afford to pay a higher price Tennessee Beef, but aren'twilling to pay

8.46%

15.00%

24.16%

53.08%

60.77%

Percent Citing as Reason

Reason (N=260)

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Low Food Prices Relative to Other Priorities

PriorityRanking

1=food prices, 2=about same, 3=other priority

Keeping Food Prices Low is More Important Than

All Respondents(N=1,019)

Beef Consuming Households

(N=811)

Respondents Choosing

TENNESEE BEEF (N=235)

Providing safe, healthy, and nutritious food choices

2.38 2.40 2.47

Ensuring humane treatment of animals used in food production

2.26 2.25 2.39

Ensuring that farmers receive a fair income

2.22 2.22 2.38

Supporting the local economy 2.11 2.10 2.27Protecting the environment 2.00 1.98 2.09

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Overall Beef ConsumingChose

TENNESEE BEEFCharacteristic Percent or MeanFemale Gender 59.00%

(N=1200)57.65%(N=928)

58.37%(N=245)

Age in Years 53.78 (N=991)

54.19(N=816)

51.90(N=236)

Household Size 2.64(N=997)

2.68(N=822)

2.86(N=235)

Primary Food Shopper 74.85%(N=1014)

75.45%(N=839)

75.95%(N=237)

Farm Background 37.22%(N=1013)

39.01%(N=838)

44.30%(N=237)

Children Less than 18 Reside in Household

27.90%(N=982)

28.82%(N=819)

33.76%(N=237)

Education Level (1=Less than HS, …, 5=Postgraduate)

3.15(N=993)

3.16(N=825)

3.17(N=235)

Household Income Category for 2012a 6.66(N=384)

6.61(N=342)

7.34(N=111)

Urbanization of Residence (1=rural, …4=urban)

2.77(N=954)

2.74(N=798)

2.66(N=228)

a Household Income for 2012-1=Less than $20,000, 2=$20,000 to $29,999, 3=$30,000 to $39,999, 4=$40,000 to $49,999, 5=$50,000 to $59,999, 6=$60,000 to $69,999, 7=$70,000 to $79,999, 8=$80,000 to $89,999, 9=$90,000 to $99,999, 10=$100,000 to $109,999, 11=$110,000 to $119,999, and 12=$120,000 or more.

MLN7

Slide 27

MLN7 Added space between "in" and "years" Moore, Leah Nicole, 2/25/2014

Beef consumers are willing to pay premiums for TENNESSEE BEEF (ex: Ribeye steak, ground beef)

Most commonly cited reasons for not selecting TENNESEE BEEF were budget related

Important reasons for purchasing TENNESSEE BEEF are ◦ supporting farmers in state◦ supporting the state's economy◦ likely fresher than out-of-state beef

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Respondents would prefer TENNESSEE BEEF to be sold as fresh, followed by frozen

Many did not have a strong packaging preference

Additional analysis will look at how demographics influence the WTP estimates to help in identifying target markets.

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