Estimating the Value of Retail Beef Product Brands and Other Attributes
Steve W. Martinez
USDA-ERS
1800 M ST, NW
Washington DC 20036
martinez@usda.ers.gov
Selected Paper prepared for presentation at the American Agricultural Economics
Association Annual Meeting, Orlando, FL, July 27-29, 2008.
Views expressed are those of the author and not necessarily those of the U.S. Department of
Agriculture.
Estimating the Value of Retail Beef Product Brands and Other Attributes
Abstract
This paper finds wide variation in brand premiums and discounts across types of branded beef
cuts, ranging from -98 cents for a brand of ground beef targeting cost-conscious consumers to
$4.15 for a brand of steak produced by a family-operated beef alliance. Other factors affecting
beef cut prices include package size, price promotions, store format, ground beef leanness, type
of steak cut, and geographic region where the beef was purchased.
Introduction
Since the late 1970s, per capita consumption of beef in the United States has fallen, while
chicken and pork have gained or maintained market share. One reason cited for the reduction in
beef consumption is declining demand due to inconsistent and poor eating quality characteristics,
such as excessive fat and inadequate tenderness, and lack of convenient, value-added products.
Part of the problem plaguing the beef industry is an antiquated cattle price discovery process that
prices slaughter cattle at about the same average price. Consumers might be willing to pay a
price premium for high-quality products that differ from the commodity standard. However,
price signals that prompt responses to consumer preferences were not being transferred to cattle
producers, so that they could make the necessary investments for producing high-quality cattle.
In a commodity pricing system, producers are encouraged to compete by increasing in size to
reduce costs. This leads to government intervention to ease the transitio