Are niche markets a buffer against volatility?

Nov 5, 2010
by DTN

Most American beef travels a familiar, traditional trail from pasture to plate. Here and there, though, some producers have chosen a road less traveled to meet the more specific needs and wants of consumers.

Established niche marketers will tell you the premiums they earn are relative to the amount of extra management required. And those premiums aren’t so much dictated by the cattle market, but by consumer desire for their particular product.

“There’s definitely money to be made with a good product, but you earn it,” says Columbia, MO, cattleman Don Mayse. “If you’re asking a premium price, you have to have a product that merits it. For us, that means very intensive management.”

At Sho-Me Farms, Mayse utilizes sophisticated techniques like DNA marker technology to deliver highly tender beef to consumers. Using GeneSTAR Molecular Value Predictions, Mayse has enhanced dramatically the tenderness of the beef Sho-Me offers to customers through online sales, retail outlets and restaurants.

Along with providing carcass data and other measurements, the system helps Mayse identify and select purebred Shorthorn cows and sires whose progeny yield beef far more tender than average. He calls it “Born Tender Beef.”

The producer goes so far as to employ taste panels to identify cattle lines that produce beef that tastes better.

And along with that good taste, he promotes the fact that his product is intentionally high in heart-healthy omega-3 fatty acids. Inspired by a Kansas State University study, Sho-Me Farms feeds its cattle a ration containing up to 10 percent flaxseed, a source of the essential fatty acids.

Just outside McCune, KS, Cherie and Kevin Schenker are part of a burgeoning “natural” beef trend. As Certified Naturally Grown grass-fed beef producers, the Schenkers have developed a product line ranging from steaks to beef sticks. Merchandising includes web-based sales, retail outlets and weekly delivery routes into the metropolitan areas of Kansas City and Wichita.

There is even a niche within the niche, with steady orders coming in from U.S. servicemen and women stationed in Iraq and Afghanistan. It’s a natural fit, since Kevin is an officer in the Kansas National Guard.

Each month, several 70-pound packages of beef products go overseas in specially designed containers.

The Schenkers also participate in the Adopt-A-Platoon program, sending thousands of Beef Snack Sticks to the troops.

For the most part, though, customers are upscale, urban and willing to pay more for their beef. The key is that they want to know how it was produced, and the Schenkers are happy to oblige.

The degree of profit varies with markets and products, but Cherie likes the fact that the operation’s profitability is no longer subject simply to “the whims of the cattle market.” She adds that she especially likes no longer having to haul anything to the sale barn.

Offering consumers the melt-in-your-mouth gourmet taste experience and silky texture of Wagyu beef sets Mark and Jill Schmitz apart. Majinola Meats, based on their Panama, IA, family farm, provides steaks for high-end restaurants in Omaha, Des Moines, Kansas City and Mt. Vernon, IA.

Renowned for its dense marbling, Wagyu beef boasts a higher ratio of mono-unsaturated to saturated fats.

The Schmitz operation crosses purebred Wagyu bulls on Angus and Angus- Wagyu cows. Calves are fed to between 20 and 28 months of age. They finish at 1,500 to 1,600 pounds on corn and forage grown on the Schmitz farm.

About 75 percent of the offspring grade Prime or better. Since only the steaks are sold to restaurants, most low-end cuts like chuck and round go to a wholesaler.

“People tell us it’s the best beef they’ve ever had,” Mark reports. “And that’s exactly what we’re trying to produce.”

It’s just the kind of hook niche marketers have to create for themselves. There has to be a good reason for consumers to pay a little extra for their beef. For beef producers taking that lesstraveled road, there is money to be made. But it is definitely money that must be earned. — DTN