What are the Lessons from the Earls Beef Imbroglio?

We saw in the news yesterday that Earls Restaurants has announced that they have sourced the beef they want for a portion of their Canadian restaurants from Canadian suppliers. Earls apologized for not working harder to find Canadian product and committed to finding more Canadian product that meets their specifications. They did not say they were changing their standards. So what are the lessons we’ve learned and what can we expect in the future?

It is worth noting that Earls are still buying beef raised without supplemental hormones (RWSH)and raised without antibiotics (RWA). I’ve blogged before on my perspectives on these production approaches. It is, however, clear that some consumers see real value in these characteristics and firms will work to provide it. While the beef industry may not like it much, we need to build value chains that make it possible for consumers (and more importantly the restaurants and retailers that sell to those consumers) to get the type of beef they want. That is not to say that the industry shouldn’t continue to tell its story and talk about production characteristics and their value, but we need also to recognize that we may not always convince them of the value of our choices and be willing to provide the products consumers want. The alternative is not that they buy what we produce but that they buy what they want from someone else. And it’s clear from the Earls experience that others are out there willing to provide it.

We often express consternation about a long term reduction in beef demand. Beef is, however, still a premium and preferred product for many (even if their total consumption is decreasing). This strikes me as an amazing opportunity to develop premium products and supporting value chains. Being different doesn’t mean others are bad. We’ve seen several products developed by the industry – Angus beef, corned beef. Why can’t consumer choices also drive some of these developments?

I expect that Earls is just the tip of the iceberg. The have profusely apologized about not working harder to find a Canadian source and now are sourcing from more than one supplier (which requires more work and has a greater risk of product variability). It seems to me the only mistake they made was announcing the change. I wonder how many restaurants are serving RWA and RWSH now without the fanfare. I expect that the major food service distributors have the product available. I doubt that Earls will get any credit from the industry for working harder to get the product they want – it will simply be seen as “we showed them.”

I believe that RWSH will continue to grow despite arguments about the value of supplemental hormones.

The RWA discussion is more complex. I think it is irresponsible to declare that absolutely no antibiotics will be used. A sick animal should be treated with an approved product and then be subject to the appropriate withdrawal period before slaughter. I understand that it’s a simpler message but also believe that this is one that consumers will understand and respect. I think the RWA argument is a weak one. That’s not to say there isn’t a movement and expectation to reduce antibiotic use. I think the industry has shown an inclination to to move in that direction.

The real risk is that the industry misses the message and just thinks it “won.” They’ve  made progress and consumers perspectives will continue to evolve. They should continue to work at talking to consumers about how they produce beef BUT also be willing to change if there is something that some of them don’t accept. It is interesting times in the beef industry.