RETAILERS URGED TO TAKE ADVANTAGE OF U.S. BEEF SURPLUS

ROBERT VOSBURGH

CHICAGO -- Hit with a one-two punch of drought conditions in the nation's cattle belt and economic troubles overseas, beef producers are fighting back by appealing directly to consumers to boost domestic beef sales.

To help move tonnage through retail channels, the National Cattlemen's Beef Association based here has launched an unprecedented series of weekly print advertisements. The full-page ads, running all this month in consecutive Wednesday editions of USA Today, seek to boost beef sales by highlighting the lower prices.

According to the U.S. Department of Agriculture, prices for all retail beef -- including Choice, Select and ungraded cuts -- averaged $2.54 per pound for the first six months of the year, compared to $2.71 per pound five years ago.

"This [ad series] is a way to hit the consumers nationwide, build awareness of beef products and just get the message across that beef is a great value now," said Jerry Kelly, director of retail marketing for the NCBA.

Retailers have been urged to merchandise beef prices heavily for the rest of the summer as a way of building total store sales.

"It gives [stores] a great price image," continued Kelly. "They can go front page with a hot price, and that pulls customers into their store. So, our message is let's not lose sight of this [value], keep us on the front page."

The top 200 retails and wholesale chains across the country were notified via fax the day before the ad dropped in USA Today. The alert informed the retailers that the activity consisted of two, consumer-focused ads that would run alternating Wednesdays in the newspaper. Kelly noted that the notification was also designed to preserve beef's position against competing proteins.

"Pork is [also] very cheap," he said. "So, we're just trying to position beef and give as much demand-pull through the retail channel as we can."

According to official estimates, the nation's beef industry is facing its largest beef production levels since 1976, with 1998 total expected to reach more than 25 billion pounds.

The high-production level, continuing a three-year trend, has been exacerbated this summer because of two unrelated phenomena:

Drought conditions and scorching temperatures in major cattle-producing areas like Texas, have combined with lower grain prices and heavier weights of fed cattle, and;

The financial crisis in Asia, which has slowed beef and by-product exports, and reduced the price of beef going to Asia.

Additionally, other beef-producing countries like Canada, New Zealand and Australia have likewise been forced to reduce exports, and are in turn looking to the U.S. market to sell product.

The first ad, which broke August 5, announces: "With The Price Of Beef Today, We Were Afraid You'd Buy So Much You Wouldn't Know What To Do With It All." After a short informational paragraph, the reader is invited to peruse recipes for seven meat-based entrees that can be prepared in 35 minutes or less. End cuts made of chuck and round are featured in three of the recipes, in a deliberate effort to move those cuts which don't sell as well during the summer than traditional steaks.

These particular cuts generally "pull the whole beef complex down because it's the largest portion of the animal and they're items that you have to discount to move," said Kelly, adding that featuring the end cuts in the recipes for the ad were one way of adding value to the meat in the minds of consumers, as well as to "offset that downward pull."