I posted this on my own blog and thought it might be interesting for some of our readers here.
I read the announcement from A&W last week with interest. They announced that they would no longer use beef produced with hormones or antibiotics used for uses other than therapeutic treatment (awbetterbeef.ca). I’ve seen some criticism in social media and the blogosphere which I think is largely self serving. I think it’s a smart move to differentiate in a cluttered market and on a consumer relevant characteristic.
First let’s cover a declaration of bias. I love beef. I eat lots of it. I’ve worked in the beef industry in the past and have a good understanding of how beef is produced. I am comfortable with standard production practices and generally try to buy Canadian beef. I’m not sure it’s better (sorry to those Canadian producers who are offended) but it’s nice to support a Canadian industry when I can. Beef is healthy and safe.
I also like A&W. I don’t eat much fast food anymore – my kids are older and I try to control sodium. But I have a nostalgic feeling about A&W (and the old drive-in in Winnipeg) and it is also a Canadian business. This announcement doesn’t make me more likely to go for a Teen Burger but it also doesn’t make me less likely to go. I believe they have every right to decide to take this approach and, given they spoke about market research in the press release, it likely positions well with consumers. Consumers are paying more attention to where their food comes from and how it’s produced and this matters to some of them.
I am continually surprised at how little the average consumer (is there really such a thing?) knows about how their food is produced. In a recent survey in which consumers were asked some basic true or false questions about food production, 80% answered incorrectly. For meat, there may be some willful ignorance as we don’t want to think about what happens before the steak or ground beef shows up in a retail store or restaurant. Regardless, we are moving towards increased awareness in fits and starts. The question becomes should the industry lead or follow? Do we let people know what we are doing (and not doing) or wait till they ask questions? Waiting carries inherent risk. Changing in anticipation of an evolution in consumer expectations is the key to long term strategic success. This is true generally (ask Blackberry) but is also especially true for food. There is a strong bond of trust between consumers and those that produce their food. The irony is that producers understand so little about what is happening further up the value chain. If (and more likely when) they see what is happening will that trust be at risk? Should we make changes now to be sure? A&W has clearly decided that it is important strategically to say yes! That doesn’t mean that all consumers will buy into their message but they are proactively interacting with customers.
One of the biggest criticisms of the A&W approach is that it “makes the rest of us look bad.” The “rest of us” have every opportunity to talk about what they do and why it’s good. There has been some resistance to doing that. The industry falls back on “approved by Health Canada” and other factors. While this is part of the story it can’t be the whole story. If we can’t look someone in the eye and say this is what we do and why – including producing more cheaply – then we really are in trouble. Consumers are asking questions – someone will answer them. All stakeholders in the value chain have a role in engaging in that conversation. Staying out of it will not prevent the conversation it will just eliminate that voice.
One critic suggested they were exaggerating the difference. The website highlights a number of differences in the production but the marketing focuses on hormones. The vast majority of beef cattle in Canada are implanted with hormones to promote growth. It is safe. But it may make some consumers uncomfortable and they can choose to buy beef produced without it. I’ve seen ads on TV where pork producers talk about pork produced without hormones and antibiotics. This is unfair – hormones simply aren’t used in pork production although antibiotics are. Hormone free pork is not different because its all hormone free. Its true but its not different. A&W’s beef is actually different in production if not different as an actual burger. There are other examples too. Consumers are likely not aware that all branded “Angus beef” is not from Angus cattle. Some of this beef is certified by phenotype (i.e. how it looks) and that means that any animal that is primarily black is considered Angus. Feeders in some southwestern states feed Holstein cattle from dairy farms in California and sell them as Angus. I’ve not heard much concern about that from the broader industry.
A&W has the right to establish new production standards if they choose. The irony in this case is they aren’t. The farms they are buying from (in Alberta, Montana and Australia) are already producing this beef. The ground beef they are selling A&W may actually be a tough to sell by-product. The prime cuts are easier to sell and A&W is simply stepping into an existing value chain and adding more value. Its an excellent strategic initiative.
Will it work? Time will tell. The proliferation of Angus burgers decreased value and there are few remaining. This contributes to the discussion and gives producers the choice. Is the difference real? Who knows for sure but if the difference is real in the mind of the consumer that’s all that matters. It will be interesting tofollow.