Source-verified products can give consumers confidence in beef productionWritten by Saige Albert
“We did a project in collaboration with USDA and the Nebraska Department of Agriculture that deals with the source-verified question,” mentions Calkins. “If we are going to source-verify and market that way, there are some associated costs. The question is the best way to determine what the premiums should be to provide that financial incentive.”
Calkins notes that the project had three primary objectives: to organize a pilot project introducing source-verified steak into restaurants; determine the value of source-verification to consumers; and identify the best method to communicate information to consumers.
“We took two app-roaches,” explains Calkins. “The first was in a series of online surveys conducted with over 1,000 customers.”
Customers from six high-end restaurants were asked to participate in the online survey after dining. To provide incentive, UNL offered a small gift certificate for desserts or extras at the restaurants.
Of the customers completing an online survey, approximately 200 from three restaurants were selected to participate in an exclusive “steak-tasting” event.
“Customers received a coupon good for $25 off the price of a steak,” explains Calkins. “As they chose steaks, some cost more than the $25, and that was our intent – to make it real.”
In the second phase of the project, consumers were offered a choice of four steaks from a specialty menu, with the amount of information and detail provided about each steak being the primary difference in the products.
“One steak was a generic with no origin identified, and we had a second that was identified as from the Midwest. The third choice was a steak from Nebraska, and the fourth was source-verified to a particular ranch in Nebraska,” Calkins says. “We did the work to make sure that we could, in fact, trace the steaks all the way back – the information wasn’t fictitious.”
Calkins explains that, as more information for their source was provided with each steak, costs increased, and customers would be responsible for paying the difference in price above $25.
“We designed the project so we didn’t just get peoples’ attitudes, we got their behavior and what they would do in the real world,” Calkins notes.
The meaning of source-verification
When asked to list the factors considered in choosing a steak, customers didn’t mention traceability of the product until fourteenth on the list, below tenderness, cut and price.
“If you look at just these results, you might have thought that source verification goes out the window,” says Calkins. “However, customers use source verification to indicate other things about that product, and that’s where the value comes.”
Calkins explains that the key observation from the study is in what consumers expect from a source verified product.
“If a steak says ‘Nebraska Source-Verified,’ consumers are convinced it will be premium quality, corn-fed beef that is high-grade, flavorful and tender,” he explains. “In other words, when beef is source-verified and there is accountability in to the system, consumers believe you have made a promise that they will get a high-quality steak.”
One in five consumers believe that a source-verified product confirms people who care about the land and the animals raised the product, according to Calkins.
Paying the premium
Calkins also mentions that consumers were willing to pay a premium for source-verified beef, as long as it was to either the state or ranch level.
“Two-thirds of the patrons who ordered steaks knew the state or ranch of origin,” says Calkins of the study. “When they could identify the ranch from which that animal came from, they were willing to pay an extra $8.75 at high-end restaurant prices. If you could tell them the state, that was worth $4.74.”
With a five- to nine-dollar premium for each steak, Calkins says he believes there is enough incentive to encourage source-verification in the system. However, verification above state-level wasn’t valuable for consumers.
“If we just said the steak came from the Midwest, that didn’t mean any value to the customers at all,” he notes. “It wasn’t better than a generic steak.”
When consumers were asked whether they would pay more for source-verified beef, 60 percent said they would, but Calkins adds that 65 percent of consumers were willing to pay more for the product.
After conducting the survey and analyzing data, Calkins concludes, “The project clearly indicates that customers care about where their meat comes from, they are willing to pay a premium for that, and they understand that source-verification can translate to a promise of quality.”
Conducting a steak survey
The object of a multi-phase project conducted by the University of Nebraska, Nebraska Department of Agriculture and the USDA was the importance of traceability in beef products, but the group recognized that consistency among the steaks served was important to achieve accurate results.
Regardless of origin, all steaks served in the study were 14-ounce strip loin steaks aged at least 28 days. The steaks were classified as upper two-thirds Choice and shipped fresh to restaurants.
“The primary difference was the amount of information provided,” explains meat scientist at the University of Nebraska Institute of Agriculture and Natural Resources Chris Calkins. “The prices also varied.”
“We allowed the restaurant chefs to do the cooking, so we didn’t interfere with that process, but they were all cooked on gas grills to doneness as ordered by the patron,” adds Calkins, noting that each restaurant provided the associated side dishes.
The restaurants utilized in the project were classified as high-end steak restaurants.
“These restaurants were a destination where customers would go to order a quality steak,” he notes. “The restaurants provided us our target consumer.”
Of the consumers surveyed in the first phase, Calkins mentions that 76 percent of the participants consume beef on a weekly basis, and, of those, 52 percent prepare beef in the home one to two times each week, while 48 percent consume beef outside the home one to two times per week.
“Thirty percent of our target consumers dined out once or twice a month and 28 percent dine out every week,” says Calkins. “Most people don’t eat out quite that often. This is your average consumer of a high-end steakhouse – not your average consumer overall.”
Getting the information out
Chris Calkins, meat scientist at the University of Nebraska Institute of Agriculture and Natural Resources, notes that the wait staff at high-end restaurants may be a valuable tool that the beef industry doesn’t utilize as much as it could.
After conducting a study in cooperation with the Nebraska Department of Agriculture and USDA, Calkins presented results at the Range Beef Cow Symposium in late November 2011.
“Though almost half of people don’t think they need advice in ordering, when people do need advice, 92 percent of the time they consult with the wait staff,” says Calkins.
“We think about the fact that we have our highest-priced items on the plate being prepared and served by the lower-paid employees in the restaurant,” he continues. “The wait staff considers themselves to be professionals, and they were anxious, interested and open to learning more about the project and the product they were serving.”
The opportunity to utilize wait staff in educating the public about beef could be important, Calkins notes, adding, “We have a conduit to the consumers through the wait staff that we could do more with than we do now.”