Keeping Up With Growth-The Millennium Challenge

Transcribed text from the audio-tape of the presentation
Will McFarlane
Denver Buffalo Company
New West Foods
1120 Lincoln St.
Denver, CO USA 80203

The following article was originally presented at the International Bison Conference in Edmonton, Alberta in August 2000. The conference covered a wide array of bison topics including production, marketing, genetics, history and much more. This article has been reprinted with the permission of the IBC2000 Chairman.

The McFarlanes arrived in North America 200 years ago settling in Prince Edward Island. Today, on the east side of PEI, one in five farms are still owned by a McFarlane family. In 1933 my father purchased an island in northern Ontario where I spent much time while I was growing up. Many generations of McFarlanes visit every year. Our family ties to Canada are very close.

Marketing

The small producer today, the most vital part of this industry, is completely different than the "bison industry" or the larger production of the industry in its totality. Although many small producers have a very successful career managing their herds and marketing their meat in their local economies they are affected by the entire industry and this is where the rub comes. It is the industry at large that will determine the future of where we go and how we go and will affect every bison producer on this continent.

Are we in the bison industry blindly running toward a "Buffalo Jump" and destruction or are we running to tall prairie grasses? The bison of long ago that ran toward the buffalo jump thought they were running to tall prairie grass. Do we? No.

They did not have "marketing", we do. The word has many meanings. Some people confuse it with selling, others with packaging but they are all just part of a whole. Let's talk about marketing in our industry. First, I want to dispel some marketing myths for the millennium

Myth number one is that we should compare ourselves to the beef industry. Yes, we can compare nutrition and flavor to beef, that is good, but bison breeding stock should not and cannot be compared to the beef industry. We are not like them. We are by economic definition an "emerging" industry not a mature industry like beef. We are, yes, selling all of our meat but it comes from the bulls. The economics of our industry today and many years into the future are driven by our breeding stock value. We need that money every year from the sale of our meat but we also need our breeding stock to maintain its high value in order for us to continue to make a living as we become a mature industry.

The second myth is that we have to fear and control the middlemen and especially should fear the marketers. That is bunk. We do not have to fear them and control them, we do have to work together. We have to create alliances so that we may go forward.

Currently, the supply of bison meat is growing at the rate of 20% per year. That is an incredible growth of supply. I do not believe that producers alone can provide the amount of capital that will be necessary to create the demand for a continued growth rate of 20%. We have to work together to make that capital work better for this whole industry. This was predictable. Several years ago I knew there would come a crisis in pricing. Recently, someone asked what was I doing about it. Sorry, I cannot carry the industry on my one back. I wish I could solve the entire problem but that is not going to happen. It will only happen with all of us working together, producers and marketers.

So, what can be done, what is being done?

First of all, we have to continue the good public relations we have started. It is one of the best ways to educate the potential consumer. It is also the cheapest way to go. I am glad to see that everyone here recognizes that. We, as a company (New West Foods), crave that. Anything we can get free to promote not only our products but the products of the industry is welcome. Everyone one of us has to talk it up, not just here but everywhere. We are the choir and there is no need to preach to ourselves. When you as an individual travel or go into a restaurant or a grocery store, talk to the manager and mention the word buffalo. When the next person mentions buffalo it will impact on them that there might be something to this bison thing. We can all do this and it does not cost anything but a little time. There are many people out there that still believe the buffalo is extinct. Have a conversation and set them straight. They will know a lot more after you talk to them.

Second, we must learn and fully understand that we are producing for the consumer not the producer. We have to understand the consumer, everything we do is for the consumer. Listen to the shopper. The shopper will, I guarantee, settle the difference between grain fed and grass fed animals. The shopper will determine prices. The shopper will tell you about quality. Listen.

Third, we have to produce to a consistent quality specification. Specification of that animal for the consumer is all important. I would like to see the entire industry adopt, at the minimum, the Canadian grading system. Perhaps we can even improve on that. This is important. We must get away from the consumer problem of a first time customer eating a bad bison steak. Because the first impression is so important, if it is a negative one, they believe that they do not like bison. On the other hand, if they eat a bad beef steak they know that the next restaurant will have a good one. We do not have that luxury at this point.

Fourth is market research. Who is the "Shopper"? We do not know. To my knowledge, there has been no research done on who buys buffalo meat, data that I could use to target the people that we should be marketing towards. For ten years I have been throwing marketing money in many directions, some of it useful but much of it wasted. Targeted marketing is much more efficient. We need research in genetics, yes, but we also need research in our customer markets. There is a fantastic market out there. We just do not know where it is.

Fifth is education of the consumer. Would you pay more for bison than beef without knowing anything about it? Of course not. Marketing in this industry must include education as consumers do not know about us. We are not selling my brand of cheese versus your brand of cheese. We are selling education as well as product so we must take a very different tact than marketing a common grocery item that consumers are familiar with. Good marketing people who are used to doing brand comparison marketing find that with bison they must first be teachers about the product itself.

We are all doing missionary work and laudable though that is we must also be accountable. The task needs to be much more targeted and scientific. We have graduated from a unique specialty industry to mainstream. Maybe we do not know it but we have. The production levels today dictate that we must move into the mainstream. We have to be in more restaurants and most major retail chains with a large variety of products not just ground burger. That means more marketing and more education.

Sixth, we have to create perceived value, which is what marketing is all about. We have to create a need for our products. We know we have real value but perceived value is what will bring us customers. Today there is a whole new generation of young experimenters who enjoy original activities and are not afraid to try something new. They like to jump off cliffs, shoot the rapids, travel a lot and like to try new foods. That is a market we need to go to. The mature consumer also needs to be targeted to see us not necessarily as a health food but as a healthy alternative to foods they are familiar with. That segment of the population is growing rapidly and they have the means to pay our prices.

Seventh, to do this marketing we need capital. We have to follow the lead of other industries that spend big percentages of volume on advertising and promotion. Somehow we must provide that capital. I am not convinced that the funds collected in any check off system based on a per animal payment will provide enough capital for marketing and perhaps we should not expect all the money to be provided by the producers. Maybe we need funds from outside sources.

Eighth, we need marketing talent beyond what we as individuals or even companies can provide. I have learned about marketing bison the hard way. If there are fifteen ways to make mistakes I have made twenty of them. We need the talent of the retail marketers who know what they are doing to help us manage our entrance into the retail market.

Star B Ranch has detailed the enormous expense it takes to get their product to the stores in their area. Processing, packaging, marketing and distributing product on their own is a huge demand. A large retail grocery chain is normally offered 100,000 new items every year. Very few new products are brought in and most of them fail. This is the list we are on. We have to get in and we must not fail. How do we not fail? We have to do it right by getting the guidance and talent of the experts to help us work into the retail markets.

Food service experts also are needed. Just because we raise the animals and we have a marketer we must not think that is all the talent we need. Professionals from outside are key. Chefs and consumer focus groups that speak to the market on a monthly basis can help us discover new ideas and show us how to implement them. We do not know everything, let us talk to the people, the markets and the experts. We do not have to do it the Will McFarlane way and throw money away hit and miss. These are changing and wonderful times, ladies and gentlemen - we are moving into the mainstream.

Final remarks

I have concentrated on a macro overview of marketing and selling here rather than specifics. This vision is how I see what we should and could be doing to promote our industry so that we may take the next big step toward success. We do not have a pricing problem for our meat; we have a temporary inventory problem. Because of the nature of our business the pricing of the meat is not as important as the pricing of our breeding stock. That is where the economics lie. Think about this for a moment. If we reduced the price of our meat to beef prices how much more would we sell? One percent, five percent, a hundred percent? I believe hardly any. Why would consumers switch from beef to buffalo at any price if they do not know about it? The solution is not to flood the market with lower priced meat because it will go only to the existing customers. It will shift business from one marketer to the other, from one producer to the other but pricing will not create a single new customer on its own. We must maintain our price and market our product with education. If we can do that then this industry will continue to thrive. I am optimistic that we will. I am proud to be part of this.