market research consumer insights 2011 cattle industry summer conference august 3, 2011 1

Market Research Consumer Insights2011 Cattle Industry Summer

Conference

August 3, 2011

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• Roadblocks to Beef Consumption – Recent Findings

• Emotions of Beef• Consumer Beef Index – Where We Stand

Presentation Flow

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Roadblocks to Consumption

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"User experience" encompasses all aspects of the end-user's interaction with the company, its services, and its products. The first requirement for an exemplary user experience is to

meet the exact needs of the customer, without fuss or bother.

(Nielsen Norman Group website).

User Experience

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Market Research Hypothesis:The user experience is not seamless for beef

The Beef User Experience (hypothesized)

Purchasing Beef

How Beef is Stored

Can I find the cut?

Is the package size right?Does the

package leak?What if my

finances are tight?Is beef good for the environment?

Defrosting Beef

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Will I eat the product soon, or freeze it?Should I

repackage the meat for the

freezer?Does the meat in the fridge smell

bad?

Can I speed up the

defrost? Is that safe?

What if I don’t want to

defrost the whole

package?

Cooking Beef

Is it done?What if I only

have 30 minutes to get dinner on the

table?

General – Home

General – Restaurants

Detail of Change

Recession Reaction

Q.40b: In response to the recent changes, or recession, in the economy, which of the following describe your purchases of beef for use at home over the last 3 months? Q.40c: In response to the recent changes, or recession, in the economy, which of the following describe your beef purchasing when eating out at restaurants or other locations over the last 3 months?

51%

31%

18%

51%

34%

15%

35%

19%

25%

Purchased about the same amount of beef for use at home

Cut back on my beef purchases for use at home

Purchased more beef for use at home

Purchased beef meals about as often when eating out

Cut back on my beef meals when eating out

Purchased more beef meals when eating out

Bought more of my beef at sale prices (home)

Purchased fewer steak meals and more hamburgers when eating out

Bought more of my beef meals from the "price specials" section of the menu

2011 Consumer Beef Index

Recent Increase

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Why this is important• USDA reported beef prices in May were 10.2 percent above May 2010, with steak

prices up 6.3 percent and ground beef prices up 13.6 percent.

• USDA/ERS has projected increased inflation for beef products for most of this year with beef prices projected to increase 7 to 8 percent in 2011.

• Polls show that consumers are increasingly pessimistic about improvements in the economy.

• In an environment of economic pessimism coupled with high prices for gasoline, energy and food, consumers adopt purchasing behaviors designed to reduce their expenses. Many of these behaviors are focused on reducing food expenses.

• A 2008 checkoff study by your market research team found that beef frequently is a target when consumers seek to reduce food costs.

Economics & Food ChoicesAn Analysis of Consumer Response to Food Price Inflation

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• For less expensive food, most consumers are moving toward store brands.

• Regarding beef, more people are trading down or out than are trying to stretch recipes or buying in bulk.

Changes in food purchases

• Snacks and desserts are the most common foods consumers are buying less.

• Beef steaks and roasts are the only other foods that a majority of consumers report buying less.

IPSOS 2011

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Meal planning strategies54% doing more careful home meal planning

66%

66%

61%

60%

53%

43%

15%

14%

Buying meat on sale and freezing it

Eating more leftovers

Cooking one recipe but eating two meals from it

Looking at advertised specials to make a …

Making more meals from scratch to conserve cost

Making recipes that use less expensive …

Buying more meal "kits" containing all the …

Taking some other action

• Buying meat on sale and freezing it is one of the top meal planning strategies consumers are using.

• Stretching food is a key strategy in meal planning, either through eating leftovers or eating multiple meals from a recipe.

• Consumers also seem interested in cost avoidance, but not at the risk of influencing quality

• Shopping based on advertised specials is important, but using less expensive ingredients is less important.

• Meal “kits” are rarely used in planning.

IPSOS 2011

Market Research is working with the Consumer Marketing Team to build strategies to make beef an affordable, every day food in the eyes of the consumer

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Overwhelmed at the beef aisle – so many choices so little education

I usually feel overwhelmed. I know what I want my end product to be, but I am not always sure what cut of meat I would want to use to get there. I like when the store has a chart that shows what cut of meat I should use for different things, i.e. grilling, pot roast, etc. – Greg Kerr, 25

The Sea of Red

39%

45%

45%

44%

50%

2010 Convenience Study

% who would increase beef use if knew the right cut to choose

122010 Millennial Facebook Study

The difficulty of choosing the right beef steak, strips or cubes for a desired meal choice or taste/texture combination

10% 17% 16% 10% 15% 17% 14%

2 to 4 steps 5 steps 6 steps 7 steps 8 to 9 steps 10 steps 11 or more

5% 19% 24% 21% 13% 13%

1 to 2 items 3 items 4 items 5 items 6 items 7 + items

Limits For a Work Night Dinner

6% 11% 14% 22% 17% 20% 10%Total

Up to 20 minutes 25 to 30 minutes 35 to 40 minutes 45 to 55 minutes 60 minutes 65 to 85 minutes 90 minutes

Q.12: Now think about work night dinners that include steak or beef cut into strips or cubes. indicate the level at which you would decide that they meal choice is ”too much” trouble for a work or school night dinner and would then prepare something else instead.

Too Much Preparation Time From Start to Table:

Too Many Steps in the Instructions: Bowls, Pots, Pans, or Skillets That Are Too Many:

Base: Total; N=802

Average

7.8

Average Minutes

Average

53

5.2Total Total

31% 39% 30%

2010 Convenience Study

65 minutes or more40 – 60 minutes

8 steps or more

46%

5 pans +

47%

13

• A recent study conducted by FMI – Food Marketing Institute found:– 72% of shoppers decide what to have for dinner that day– 1 in 4 shopper (24%) decide what to have for dinner within one hour

before eating!

• Only about half of shoppers make most dinners at home with the ingredients they have on hand. – Half of shoppers buy frozen, fresh, prepared, or ‘fill in ingredients’ for

a meal or get take-out from restaurants for dinner at least a few days a week.

Lack of Planning Ahead

FMI, Shopping for Health 2011 Study

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Defrosting

How Beef is Purchased

How Beef is Stored

74% bought Fresh

26% bought Frozen

47% goes into the Fridge

53% goes into the Freezer

43% of Steaks are Frozen

62% of Gr. Beef is Frozen

How Beef is Defrosted

19% cook frozen 31% overnight in Fridge 50% defrost other ways

• 24% on counter• 15% in microwave• 11% water baths

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• How to use this information – THE OPPORTUNTIES:– Culinary team will invest in finding a solution to meet

the needs of consumers

– Safety team will be involved to ensure proposed solutions follow safety regulations

– Market research team will test solutions proposed by Culinary Team

Beef will be an easier solution to be chosen as an everyday meal

Defrosting

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Convenient Fresh Beef

Platform E:Skillet Meals

1. Beef & Three Veg Meal Kit

2. Thin Steak – Mex3. Thin Steak –

Italian4. Thin Steak – Fr.5. Pounded Beef

(Pseudo Veal)

Platform F:Sizzling Skillet

1. Fajita Kit (Top Blade; Flank; Top Sirloin)

2. Cheese Steak (Top Round)

Platform G:Oven Broiler

1. London Broil with Marinade(Broiler or Skillet)(Top Blade or Top Sirloin)

2. Beef Back Ribsin Ovenable Bag

Platform H:No Touch Ground Beef

1. Meatloaf Kit with Bread Crumbs and Onion Soup

2. Burger Patty Kit

Platform A:Microwave Roast

1. Pot Roast w Gravy mix & 40 min prep

2. Seasoned Tri-Tip (2#; 1#)

3. Seasoned Top Sirloin (2#; 1#)

Platform D:Microwave Ground Beef

1. Ground Beef in EZ Drain Pkg

2. Burger Patty in EZ Drain Pkg

3. Seasoned Italian Meatballs

Platform C:Oven Filets

1. Petite Tender2. Sirloin Tip Center3. AdductorComes with dry rub to

apply prior to roasting

Platform B:Skillet Steaks

1. Flat Iron2. Coulotte3. Loin Strip4. Denver CutComes with dry

seasoning pouch

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• Why This is Important– A pipeline of new products that makes beef more competitive

with chicken and other “fast” solutions.• Most with grocery appeal, but a subset that should be considered for

foodservice.

– For the fresh meat case, the industry’s competitive strength.– Positioning beef for multiple appliances (skillet, microwave,

oven).– Many are relatively simple to produce.– Focused on hitting the consumer sweet spot for an everyday

meal … 30 minutes of cooking, simple instructions, no unusual ingredients, as few pots and pans as possible.

Convenient Fresh Beef

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Initial Testing Completed

Philly Cheese Steak

Sandwich

Philly Cheese Steak Sandwich

• Very high interest• Are there other

sandwich alternatives?

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Beef is Better Chicken is Better Difference

Base: Total (N=1,000)Q.37: For each of the factors listed below, please rate whether you think that beef is better

than chicken, that chicken is better than beef or that the two are about the same.

Beef/Chicken Comparison

14%

18%

22%

15%

17%

18%

39%

29%

20%

47%

61%

26%

38%

29%

37%

57%

45%

22%

16%

7%

11%

9%

6%

-19%

-12%

-5%

-34%

-48%

-13%

-26%

-18%

-28%

-49%

-39%6%

8%

9%

11%

12%

13%

13%

13%

15%

17%

20%

24%

26%

26%

29%

34%

36%

Not feeling guilty about eating it

Calorie content

A worry-free food

Good for any night of the week

Nutritional content

Value for the money

Fat content

The variety of ways it can be prepared

A good source of fuel for your body

Ease of preparation

Has many lean options available

Providing lasting satisfaction

Helping to make memorable meals

Is very pleasurable to eat

Protein content

Taste

A traditional "All-American" food

2011 Consumer Beef Index20

Base: Eating Less Beef (N=168)Question: Q.48k: As you noted earlier you have been eating less beef in the last six months, how

important or what impact did each of the following have on your decision to eat less beef?

Reasons for Less Beef Use(Extremely/Very Important)– Past Six Months -

Lesser Importance Items Not Shown

Among consumers stating they have cut back … 17% of population.


NUTRITION

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Emotions of Beef

22

Grilling

23

24

Americans Get Fired Up to Grill Beef

Survey shows America is turning up the heat when it comes to

grilling beef

Consumer Grilling Survey – IPSOS Public Affairs, April 2011Consumer Beef Lovers Survey – Pelegrin Research Group – December 2010

Most Popular Holiday for Grilling?

The results are in! The Fourth of July is the most popular day for grilling with 90 percent of American grillers cooking out, followed by Labor Day (75%) and Memorial Day (73%).

29

31

64%

8%

8%

5%

4%

3%

3%

3%

1%

1%

1%

Steak

Chicken

Pork Ribs

Beef Roast

Ground Beef

Fish

Shellf ish

Pork

Turkey

Ground Turkey

Ham

Q.13e: Now think of the different choices below as if each were a person, imagining that you were considering them as a potential long-term partner. Which would you say:

(Base: Total; N=1,200)

Steak Domination

Expected frequency = 9%

As a potential long-term partner, the one that would “have the greatest chemistry with men”.

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(Base: Total; N=1,200)Expected frequency = 9%

51%

9%

9%

9%

8%

6%

2%

2%

2%

1%

1%

Steak

Chicken

Fish

Shellf ish

Beef Roast

Pork Ribs

Turkey

Pork

Ham

Ground Turkey

Ground Beef

Serving ________ to someone best says “I love you.”

Steak Domination

44%

19%

11%

10%

4%

3%

3%

2%

2%

1%

1%

Steak

Chicken

Ground Beef

Pork Ribs

Fish

Pork

Beef Roast

Shellf ish

Ham

Turkey

Ground Turkey

33


My favorite to serve off the grill is ________.

Steak Domination

41%

15%

11%

9%

7%

4%

3%

3%

3%

2%

1%

Steak

Chicken

Beef Roast

Pork Ribs

Fish

Shellf ish

Pork

Ground Beef

Ham

Turkey

Ground Turkey

34


There is nothing better than coming home from a long day at work to ________ for dinner.

Steak Domination

Consumer Beef Index

35

At Home – what matters (Dinner Entrée) Beef Performance

Jan 2007 Feb 2011 Jan 2007 Feb 2011

Extremely/Very Important Agree Completely/ Somewhat

% % % %

Great Tasting 81 89 85 87

A good value for the money 74 79 60 66

Extremely safe to eat 72 77 55 65

Delivers good results consistently NA 76 NA 74

Balance of taste and nutrition 62 72 57 75

Great source of protein 55 64 82 85

Fits a health-conscious diet 50 56 44 53

Ongoing Challenge … Consumer Expectations are Increasing

Consumers want it all … and beef is delivering

2011 Consumer Beef Index 36

Reasons for More Beef Use (extremely/very important)– Past Six Months –

Base: Eating More Beef (N=159)Question: Q.48j: As you noted earlier you have been eating more beef in the last six

months, how important or what impact did each of the following have on your decision to eat more beef?

Among consumers stating they have increased consumption … 16% of pop


TASTE & ENJOYMENT

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Base: Eating Less Beef (N=168)Question: Q.48k: As you noted earlier you have been eating less beef in the last six months, how

important or what impact did each of the following have on your decision to eat less beef?

Reasons for Less Beef Use(Extremely/Very Important)– Past Six Months -

Lesser Importance Items Not Shown

Among consumers stating they have cut back … 17% of population.


NUTRITION

38

10%

48%

22%

8%8% 8%8%9%7%10% 9%

17%20%

16%20% 19%20%

16%20%

18%

48%47%

45% 46%45%45%46%

43%

27%26% 28%27%26%33%

23%

30%

J an '07(N=1,200)

May '07(N=1,800)

Feb '08(N=1,000)

J ul '08(N=1,006)

Mar '09(N=1,008)

J ul '09(N=1,009)

Feb '10(N=1,000)

J ul '10(N=1,000)

Feb '11(N=1,000)

Bucket 1 – Positives strongly outweigh negatives

Summer cycle results

Q.35: Considering all you know about beef, would you say the positives of beef outweigh the negatives or do the negatives of beef outweigh the positives? Q.36: Considering all you know about Chicken, would you say the positives of chicken outweigh the negatives or do the negatives of chicken outweigh the positives?

Perceptions of Beef

Bucket 2 – Positives somewhat outweigh negatives

Bucket 3 – Negatives somewhat outweigh positives

Bucket 4 – Negatives strongly outweigh positives

69%75%

2007 2011

2011 Consumer Beef Index39

Questions?

40

Thank You!

41

market research consumer insights 2011 cattle industry summer conference august 3, 2011 1

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