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Would more consumers buy -- and more grocers carry -- natural beef, poultry, and other proteins if those consumers were clear on what "natural" means? It stands to reason, especially given the current state of confusion about all of the variations that exist between the many different natural meat programs in the market.
Retailers continue to take the plunge with programs of typically more exclusive and expensive all-natural protein lines. However, the lack of a uniform standard for defining what constitutes "natural" continues to hold many others back. In conversations with Progressive Grocer at the Annual Meat Conference in Orlando, Fla. this past spring, for example, retailers who've not yet jumped in lamented the fact that the crazy quilt of definitions in the market make it inordinately hard to evaluate the trend from the perspectives of marketing and ROI.
At present, how you define "natural" in the meat case is primarily a marketing issue, says Michael Uetz, principal of Chicago-based Midan Marketing, a strategic marketing and concept development and research consultancy.
Confusion abounds, suggests Uetz, because of the vagueness and sheer number of current definitions of natural, and also because the brands proliferating in the game now tend to address some specific natural attributes, but not all of them.
Suppliers are eager to respond to the growing demand for natural products, and many are repackaging current items. "Retailers are being brought more and more of these natural products that fall within the broad definition of 'natural,'" says Uetz, but this makes it all "quite confusing, not only for [grocers], but also for their customers."
Relief could be on the way. The U.S. Department of Agriculture currently defines "natural" meat broadly as being minimally processed, with no artificial ingredients. However, the agency is expected shortly to issue a new definition for natural meat, which would in turn enable retailers to more accurately differentiate those products from their mainstream counterparts. "Until then, products produced using a variety of methods can carry a 'natural' claim," says Uetz.
One thing is clear: Substantial numbers of consumers want natural meat, even if they don't quite know what it is. A recent study about trends in meat at retail over a three-month period shows more than one in five shoppers bought natural or organic meat. The 2007 Power of Meat study, conducted by the American Meat Institute and the Food Marketing Institute and released in February 2007, also indicates that such interest is growing compared with the prior year's research. And of the shoppers interested in natural proteins, 73 percent bought natural chicken and 50 percent bought natural beef.
Uetz says that the market is driven both by a "primary natural/organic shopper" who tries to shop and live in accordance with her beliefs, and by others who might not be as willing to pay a premium for natural/organic meat on a regular basis, but will do so for special occasions.
The Power of Meat study shows that of customers who purchased any natural/organic items, 21 percent purchased most of their meat and poultry products in natural/organic form; 40 percent purchased only specific kinds of meats in natural/organic form, and 27 percent purchased natural/organic meats for special occasions.
And what of differences, perceived or otherwise, between natural and organic designations? Hoffman Estates, Ill.-based FreshLook Marketing reports natural and organic sales as one category due to the present challenge of separating them out from the data. FreshLook says natural accounts for the bulk of unit volume and sales dollars, while organic meats comprise a small but growing segment of the category.
That small segment is a busy one, however. The FreshLook research shows the natural/organic segment is growing faster than overall sales in beef, chicken, and pork.
Thanks to the broadness of the current USDA definition, a few meat suppliers have already created new programs "with a wide variety of additional attributes," says Keith Welty, v.p./marketing for Kansas City, Mo.-based National Beef, which is one of those suppliers. The attributes, he says, include "no antibiotics (with various days' withdraw), no added hormones, vegetarian-fed (various days' withdraw), humane handling standards, [and] breed claims."
Welty says National Beef developed three branded natural programs -- Naturewell, NatureSource, and Vintage Natural -- to meet a wide variety of consumer needs.
"The structure and approach to marketing is different for each of these three programs," he explains. "However, what is consistent is clear and consistent labeling and marketing communications that explain the brand program attributes and communicate a specific value set and benefit to the consumer marketplace."
Welty says National Beef has generated valuable insight into the natural consumer via proprietary research, in-store surveys, and feedback obtained through its Web sites and information hotlines.
"There is a broad range of consumers with varying purchase desires, from 'true organic' to a desire to support and consume product from varying management styles and feeding practices," he says. "They are universally tied together by their desire to have added assurance and confidence that the products they purchase deliver on label claims.
"Consumers have told us that they want to be informed about the products they purchase and consume," continues Welty. "They derive trust and confidence through a clear message -- delivered via packaging and labeling and in-store marketing communication -- of what the product does and does not deliver."
Household income, product availability, and access to retail outlets all have impacts on purchase decisions for natural beef products, adds Welty. The attributes get weighed against the market price, as well as the price and availability of other alternatives. "This is demonstrated by the natural category's flexibility to add more attributes if the price/value relationship change is minimal," he notes.
Shoppers also look for additional assurances regarding oversight, processes, and production systems that monitor and audit compliance -- in other words, evidence that the product attributes they desire are consistently delivered. "Consumer belief in the system and its implementation is critical for developing brand acceptance and trust," says Welty.
Most critically, each consumer segment in the natural category is also motivated by a specific lifestyle need, which can include environmental concerns, health concerns, safety concerns, or combinations of all three, he says. As a result, "Each consumer segment has a different vision of what natural beef should be, and requires different attribute sets and assurances that define natural beef products for their consumer segment."
Stephen McDonnell, founder and c.e.o. of Bridgewater, N.J.-based Applegate Farms, says authenticity and transparency in natural meat programs are the key components for building confidence and loyalty among retailers and consumers.
"The most significant development relating to natural/organic meat sales is the willingness of consumers to pay a premium price for this type of meat," says McDonnell. As consumers become further educated about food and the impact of their choices, "they are voting with their forks."
That's exactly what San Antonio-based Super S Foods is counting on. The grocer recently lined up Huntsville, Texas-based Nolan Ryan's Guaranteed Tender Meats as its exclusive supplier of fresh all-natural beef. Super S, which serves markets throughout central and south Texas, converted the entire fresh beef departments in 46 stores to the baseball legend's branded program.
Prior to the launch at the beginning of April, Super S thoroughly briefed its meat managers on the attributes of the beef products and the details of the rollout. The chain is backing up the beef program with weekly ad activity, a radio ad campaign, and branded point-of-sale materials and signage featuring Nolan Ryan.
All parties agree that many of the challenges and opportunities facing retailers revolve around educating consumers. This is especially acute as, thanks to a longer and more costly production cycle, natural/organic programs typically call for a premium -- and the surging cost of corn affecting feed prices isn't helping the equation.
"Suppliers and retailers should work to educate their customers about the product attributes that natural products possess that are different from other products in the meat case," says Midan Marketing's Uetz. Education and effective communication should help consumers to understand and accept the higher price of natural/organic, he predicts.
Nolan Ryan's c.e.o., Charlie Bradbury, says frequent ads also a key ingredient to success, as are communication and motivation. "The retailers must be aggressive in promoting the product in their ad circulars and in the media." This is why an exclusive distribution contract is so important; since grocers have something their competitors don't have, "They can justify telling the story," he explains.
The inventory turn of natural/organic products is another challenge for retailers. To remedy that, Uetz says, many natural/organic brands are now offering case-ready products. At the same time, retailers can merchandise natural/organics to a greater extent in the full-service case as well.
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Congressmen back 'natural' poultry debate
At presstime two congressmen called on USDA to reform labeling requirements for all-natural chicken products. In a letter to the agency, Reps. Chip Pickering (R-Miss.) and Dennis Cardoza (D-Calif.), who is also chairman of the House Agriculture Committee's Subcommittee on Horticulture and Organic Agriculture, requested that USDA prohibit the "natural" label on any fresh chicken that has been pumped with water. They also urge the agency to require a more prominent display of "solution statements" so consumers can more readily identify what ingredients are injected into products.
"Consumers are being cheated in their wallets and their health," said Pickering in a news conference. "They are buying chicken by weight that has been injected with 15 percent sodium water. And they are buying chicken as a health-conscious decision, but getting 800 percent more sodium per serving than truly natural chicken."
Meanwhile several poultry processors recently formed a coalition aimed at persuading USDA to tighten the use of the word "natural" in poultry. The Truthful Labeling Coalition, made up of Laurel, Miss.-based Sanderson Farms, Inc.; Livingston, Calif.-based Foster Farms; and St. Cloud, Minn.-based Gold 'n Plump Poultry, are hoping that the agency will change what the group calls a flawed definition of the term.
Gold 'n Plump understandably has a vested interest in pushing for higher standards: It recently bowed an all-natural chicken line. "The meaning of 'all-natural' has eroded over time, leading to confusion and skepticism over what the term means," notes Tracy Miller, senior product development manager at Gold 'n Plump.
Miller says the 22-item line follows on the heels of the company's move to raise antibiotic-free chicken for the past two years. "Though the use of antibiotics poses no food safety threat, we know more and more consumers want meat products raised without them," says Miller. "As a result nearly all of our chicken products are raised without antibiotics, [but] only our All Natural line is being labeled as such."