The beef industry spent two decades trying to shake consumers loose from the notion beef is bad. Now, the industry faces a new challenge, one that could send demand — and the price — for beef down. Or will it?
Amid growing concern that America is eating itself to death, Kraft Foods recently announced it will reformulate its vast product line to help combat a national obesity epidemic. According to the U.S. Surgeon General, more than 60% of Americans are obese or overweight.
By itself, the Kraft announcement would have limited impact, but Kraft is the world's largest food company and an industry leader. Over time, other food concerns, including the huge fast-food industry, are expected to follow Kraft's lead.
Beef Not Specifically Targeted
Kraft's plans don't specifically target beef. But if fast-food companies follow Kraft's lead and cut portion sizes, demand for beef could slump. When demand tumbles, so does price. Even a 5-10% reduction in the size of hamburger patties would significantly impact beef demand.
For now, the beef industry is taking the Kraft move calmly.
“One reason we're not really concerned is that beef plays a role in a healthy diet and that's what Kraft is talking about,” says Randy Irion, director of retail market services for the National Cattlemen's Beef Association.
In addition, the beef industry has measures under way that could help maintain demand for beef even if the burger industry cuts patty size. Beef advertising encourages consumers to incorporate modest servings of beef into everyday meals, such as stir-fry dishes. The chicken industry has used this approach for years with great success.
“We think there's an opportunity for beef in this arena as well,” Irion says.
The watchword, says Jim Magagna, executive vice-president of the Wyoming Stock Growers Association, is to get a lot of people to eat a healthy amount of beef regularly, rather than to get a small number of people to eat a lot of it.
Quite possibly, the Kraft announcement may lead nowhere. It could follow the same route as previous food industry health initiatives like the McDonald's McLean sandwich, which rolled out with fanfare but flopped.
Restaurants may face the same resistance if they try to cut the size of hamburger patties or other restaurant fare.
“There's no real demand on the consumer side for smaller portions,” says Bob Goldin, executive vice-president of Technomic, Inc., of Chicago, a major food research and consulting firm. “If portions are reduced, it will be very gradually. What is more likely is that the trend toward increased portion sizes will end.”
Multiple factors are driving the food reform movement. First, half of all Americans are overweight and one-fourth are obese. Carrying too much weight stresses joints and can lead to heart attacks, strokes and diabetes.
Second, food makers are fearful of being targeted in health-related lawsuits similar to those plaguing the big tobacco industry. “The specter of lawsuits is looming very large,” Goldin says.
Both Kraft and McDonald's already have been the target of such suits. A pair of teenagers sued McDonald's for their obesity. And, in California, a lawsuit against Kraft sought to block Oreo cookie sales to children in the state. Both lawsuits failed, but more are expected.
Kraft has particular reason to be mindful of litigation. Kraft is owned by Altria (formerly Philip Morris), which has been the focus of numerous health-related lawsuits over its tobacco products.
Others Follow The Move
Other food purveyors are also moving toward lower-calorie eating. For instance, Applebee's International announced in late July its signing of an exclusive, five-year contract with Weight Watchers International to offer lighter menu items in its restaurants. The items will carry Weight Watchers' trademark point system.
Whatever happens to the American diet won't happen quickly. Americans are slow to change their habits. Antismoking measures took several generations to seriously cut cigarette sales.
Even if Americans jump on the “healthy diet” bandwagon, beef doesn't have to suffer. Americans should give up candy, french fries, sugar-laden pop, cakes, pies and greasy chips, and cut back on margarine consumption. These products add weight and provide little or no nutritional benefits.
Beef, by contrast, delivers protein, B vitamins, iron, and zinc. That, says NCBA's Irion, creates a marketing opportunity for the beef industry.
“The push for healthier eating creates an opportunity and a challenge for us to get our message out that beef contributes to a healthy diet,” he says.
Doug McInnis is a freelance writer based in Casper, WY.