A CONSUMER demand model for high-quality beef demonstrates the market power behind a leading premium brand.
Using 2002 as an index base, a Kansas State University (KSU) model charted demand for commodity U.S. Department of Agriculture Choice beef near the 110 level for most years between 2002 and 2013 (Figure). It jumped to 120 in 2010 before eroding for the past three years, falling below 100 last year for the first time since 2004.
Consumers apparently turned toward a premium beef brand, according to the KSU paper, "Defining & Quantifying Certified Angus Beef (CAB) Brand Consumer Demand."
The CAB demand index shot upward for the past four years to surpass 208, more than doubling the 100-point index base.
KSU economist Ted Schroeder and 2010 master's degree student Lance Zimmerman conducted the initial study that year and updated the paper last year.
Zimmerman, now a CattleFax analyst, continues to update his college project as new data become available and recently added the 2013 information.
The related figures were expanded a year ago to include a comparison between demand for CAB and all premium beef, which eclipsed demand for the brand for seven years but fell behind CAB levels in 2012 and 2013.
The recent "divergence of demand patterns" suggests that there are "perceived differences in CAB relative to its greater product category in the mind of consumers," the paper says.
When compared to Choice and higher grades of beef, including Prime and branded premium beef, CAB demand has seen a 54-point increase in four years, even though the category in general has experienced a 29-point drop. In fact, CAB demand jumped nearly 28 points in a single year between 2012 and 2013.
Based on amounts sold rather than produced, demand for CAB grew by more than 108% over the last 10 years, while demand increased by 51% for Choice and higher-grading beef but declined by 1% for non-branded commodity Choice beef.