How a Bad Steak Led to a $4B Organization
(Photo Credit: Certified Angus Beef/Mick Colvin)
In 1975, Harold Etling went to eat a steak. Harold, a lifelong rancher, left the meal disappointed. His steak didn't meet his expectations. Harold decided to do something about it. He approached the American Angus Association. In January 1978 in West Salem, Ohio, the brand Certified Angus Beef (CAB) launched.
In the mid-‘70s the USDA lowered their standards for beef. Less quality control over beef meant that the quality could be lessened. If consumers experienced a wide range of tastes when eating beef it could lead to lower consumer demand. This was the issue that Harold Ettling faced.
The establishment of the Certified Angus Beef brand would solve this. The American Angus Association would manage the brand. Every piece of meat would need to go through rigorous process.
The program sold its first piece of beef in October 1978. Right after this sale, the USDA canceled the program. They believed the program was misleading. CAB branded beef sold at a premium, which the USDA thought was unfair marketing.
Mick Colvin, an employee of the American Angus Association, fought the USDA and won. On April 2nd, 1979, the USDA re-approved the brand. In order to be a CAB, you needed to meet 10 standards:
Modest or higher marbling – for the taste it ensures customer satisfaction
Medium to fine marbling texture – the white “flecks of flavor” in the beef that ensure consistent flavor and juiciness in every bite
“A” Maturity – the youngest classification of product delivers superior color, texture and tenderness
10- to 16-square-inch ribeye area
Less than 1,000-pound carcass weight
Less than 1 inch external fat
Superior beef muscling – restricts the influence of less-tender dairy cattle
Practically free of capillary rupture – ensures the most visually appealing steak
No dark cutters – ensures the most visually appealing steak
No neck hump exceeding 2 inches – safeguards against cattle with variability in tenderness
Independent USDA graders determine if the beef meets the proper requirements. In the first few years, the CAB grew slowly. But by, 1983, the program was profitable. The CAB had a leg up on burgeoning competitors. Its tacit endorsement from the USDA was heavily promoted.
In 2012, CAB's growth was far and away above any of its competition:
16,000 licensed partners
$4B in annual consumer sales worldwide
10% increase year over year wholesale value of a carcass
The last stat is the most impressive. In 2011, the price of CAB carcass was $180.99/cwt. In 2012, the price was $199.71. This proved that consumers cared about the CAB brand. Even with a national cattle shortage in 2012, consumers were willing to pay a premium to buy CAB over non CAB beef. Branding really does work.
It's a significant reason why consumers equate the word Angus with a higher-quality beef. It's also the reason why many associations have started competing certification programs.
Take McDonald's for an example. Over the past decade, McDonald's has advertised their hamburgers as "made with 100% Angus beef". However, Angus beef isn't always certified Angus beef. If I wasn't writing this article, I wouldn't have known that. How would the average consumer know that?The CAB says that McDonald's burgers aren't CAB. They issued a statement, "Certified Angus Beef does not go to fast-food restaurants. It’s at the higher-end restaurants,” That's been a defining differentiator of CAB since it's inception: premium beef.
CAB has positioned the company for a middle-upper class audience. Its customer cares about the quality of its beef, has disposable income and is typically white-collar.
CAB hired PR firm, Hart, to ensure it's brand wasn't diluted further by fast-food restaurants. Its goal was simple: remind consumers that CAB was the finest premium beef on the market. They used paid, owned and earned media to tell the story. It featured ranchers working from early morning to late evening raising cattle.
The campaign worked:
92% aided awareness of the Certified Angus Beef brand reached an all-time high.
2 to 1 consumer preference of the brand over competing grades and brands of beef.
76% of consumers said they would pay $1 extra per pound for Certified Angus Beef
Today, CAB is recognized as the premium beef in the market. It's combination of superior branding and excellent messaging has succeeded. When you think of premium beef, you think Certified Angus Beef. In the fiscal year 2019, CAB sold 1.25B pounds of meat.
Harold Etling's bad steak in 1975 led to the creation of a brand with $4B+ of sales. The next time you have a good steak at a restaurant, don't forget to thank Harold Etling. He is probably the reason why.