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Don't get mad: with all the hype around bovine spongiform encephalopathy in the United States, what's happening at retail?

Supermarket meat managers and cattle ranchers still voice their concerns about the impact that mad cow disease might have on their sales. The impact has been 10 years in the making, and will continue to prompt shifts in consumer purchasing habits.

Oprah Winfrey's now-famous words, "It has just stopped me cold from eating another burger," not only created a huge (if temporary) decline in beef sales, but also placed her at the defendant's table in the first lawsuit under the Texas Food Disparagement Act. The legal saga, which began in 1996, finally dragged to a dose in 2002, when the court dismissed the suit "with prejudice."

It all started when Howard Lyman, an ex-cattle rancher turned vegetarian, shocked Oprah and the nation by revealing on TV that cattle slaughterhouse waste was being fed to cattle, a practice that could lead to mad cow disease--officially known as bovine spongiform encephalopathy, or BSE--in the United States.

Oprah's exposure of the issue, and the attendant reaction, placed "mad cow disease" on Americans' radar screens. However, overall supermarket beef sales have barely been affected, save for one significant long-term adjustment: More shoppers are now buying organic beef than ever before.

According to ACNielsen Label-Trends data, beef sales have been increasing significantly since 2001. Equivalized unit volume for total fresh beef and Angus beef for the 52-week period ending Aug. 18, 2001 for food, drug, and mass retailers, excluding Wal-Mart, measured 63,661,699 pounds--by 2005, that volume had more than doubled, to 138,648,502 pounds.

Dollar sales for the combined total of fresh and frozen beef increased more than 200 percent over the five-year period, from $481 million to $990 million. In the subcategory of fresh beef and Angus beef, sales grew from $262 million to $632 million over the same time.

Curiously, however, in the 40-day period following the initial discovery of mad cow disease, on Dec. 23, 2003, total UPC-coded beef and Angus beef equivalized unit volume actually increased 5 percent. Farmers and retailers, no doubt nervous about the potential impact, discounted the category and saw a sales volume increase of just 2 percent.

In the organic beef subcategory, where certification actually prohibits the use of animal protein as feed for other animals, sales dollars were down 10 percent and equivalized unit volume was down 12 percent. Why? Organic consumers are typically attuned to health and food news, so when the report of mad cow surfaced, it can only be surmised that the impact on these shoppers was more acute than on the general population, and for this period they bought less beef.

The second case of mad cow, announced on June 24, 2005, elicited a much different reaction from shoppers. Dollar sales declined 3 percent and equivalized unit volume was down 2 percent, but the organic beef category showed increases of 11 percent and 10 percent in dollars and equivalized unit volume, respectively.

To add perspective, organic beef represents just 0.3 percent of the total fresh and frozen beef category. Still, the sales trends shown in the chart below would indicate that consumers' understanding of and reaction to mad cow have evolved over time. They apparently believed that the first case, in 2003, was an isolated instance, but following the second discovery, some of them shifted their buying behavior away from conventional product, perhaps in the belief that there could well be a threat.

Consumers are reading more labels and looking for products that are less processed and more natural. While sales of organic and hormone-flee beef still represent a fraction of total beef sales in the United States, there's little doubt that as shoppers continue on their path toward better nutrition, the beef industry will have to re-engineer its future if it wants to remain America's primary protein.

Consumer Insight columnist Phil Lempert can be reached at PLempert@SupermarketGuru.com.
Impact of mad cow discoveries

Total fresh beef and Angus beef and organic beef (UPC-coded products)
in equivalized unit volume and dollar sales

FIRST DISCOVERY OF MAD COW DISEASE: DEC. 23. 2003

                                  Six weeks ending   Six weeks ending
                                      Dec. 20            Jan. 31

EQUIVALIZED UNIT VOLUME
Total fresh beef and Angus beef   20,816,966 lbs.    21,901,967 lbs.
Organic                                8,246              7,291
DOLLAR SALES
Total fresh'beef.and.Angus beef       $78,675,242         $80,168,611
Organic                                    52,397              46,916

SECOND DISCOVERY OF MAD COW DISEASE: JUNE 24, 2005

                                  Six weeks ending   Six weeks ending
                                      June 18            July 30
EQUIVALIZED UNIT VOLUME
Total fresh beef and Angus beef   44,775,063 lbs.    44,058,986 lbs.
Organic                              162,891            178,917
DOLLAR SALES
Total fresh beef and.Angus beef       $146,313,254       $141,401,479
Organic                                    801,388            886,016

FIRST DISCOVERY OF MAD COW DISEASE: DEC. 23. 2003

                                  % change

EQUIVALIZED UNIT VOLUME
Total fresh beef and Angus beef       5%
Organic                             -12
DOLLAR SALES
Total fresh'beef.and.Angus beef       2%
Organic                             -10

SECOND DISCOVERY OF MAD COW DISEASE: JUNE 24, 2005

                                  % change
EQUIVALIZED UNIT VOLUME
Total fresh beef and Angus beef      -2%
Organic                              10
DOLLAR SALES
Total fresh beef and.Angus beef       3%
Organic                              11

SOURCE: ACNIELSEN LABELTRENDS
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Title Annotation:The Lempert Report: Consumer Insight
Comment:Don't get mad: with all the hype around bovine spongiform encephalopathy in the United States, what's happening at retail?(The Lempert Report: Consumer Insight)
Author:Lempert, Phil
Publication:Progressive Grocer
Geographic Code:1USA
Date:Nov 1, 2005
Words:852
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