It was recently reported in Meatingplace that a group of Upper Midwest cattle producers are planning to build a $300 million meat processing plant near North Plate, Neb. The group led by David Briggs, CEO of Sustainable Beef LLC (SBL), coupled with cattle rancher Rusty Kemp, is leading the charge to raise the money “from ranchers for ranchers by putting their future in their own hands.”

My July 8, 2021, Meatingplace blog addressed this topic showing evidence of the underutilization of the current cattle processing plants principally owned and operated by the Briggs/Kemp bogeymen — JBS, Tyson, Cargill and National — a.k.a. Beef’s Big Four (BBF), which control 80% of the cattle slaughtered and marketed in the U.S.

Right now, the principle reason that the BBFs have unused capacity is because of a labor shortage. In SBL’s announcements, there was scant mention of this labor component. Plus, please remember labor unions are consolidating in the Midwest to gain more leverage vis-à-vis nonunion meat processors. Witness the recent announcement of the UFCW merging two union locations in Minnesota. Is the UFCW thinking that a new, nonorganized plant employing 875 associates is a target-rich environment? You better believe it!

But rather than re-plowing the same old ground of the foolishness of building more capacity in the face of too much already there, I would like to approach it from a different angle: What will it take for such a “build it and they will come” strategy to be successful?

In a recent blog, I postulated that you must have four things to market a new product: It must be different, better, a better value and trusted. Well, what’s different about 80/20 ground beef or a NY strip steak, or tenderloin steak for that matter? Not much.

Wait a minute; I take that back. If those 80/20 ground beef or steak items are from different cattle raised differently, i.e., breed-specific, or natural, or Organic or grass-fed or other raising claims, that starts a point of difference that is marketable.

And, if you can further process the beef to make it more convenient and tastier for consumers, you have an even greater point of difference. Katy, bar the door!

Try as I might, painting a success picture for competing against the BBFs is difficult. SBL should have started with the marketplace and worked backwards to the raising and processing of the raw material — cattle. It’s the market niches where BBF is vulnerable. BBF's plants can process cattle faster, more efficiently and cheaper than any new, small plant. SBL’s planned 1,500 head per day capacity plant is small in comparison to BBF’s 24 plants, each processing an average of 6,000 head per day. Such SBL plant slowness can only be overcome with niche marketing which itself can become mainstream and may serve as an eventual impetus for acquisition by the BBFs.

In the meantime, something revolutionary must happen for investors to reap a decent return on that $300 million investment. That revolution starts with cattle producers and processors recognizing they must join forces by integrating their operations stretching from the cow-calf operator to the backgrounder to the stocker to the feeder conjoined with the new plant. One profit center marketing one brand, not four or five production “silos” with each trying to make a living off the next one in line.

It starts with the consumer and the conduits to those consumers such as the retailer, big box or regional chains and stores, online venues and the foodservice industry. SBL’s announcement makes little, if any, marketing mention of who and why someone is going to want to buy SBL’s beef. As I said in my blog of July 8, the consumer should have been thought of first before any consideration was given to new processing facilities in an underutilized industry.

Can SBL, its new plant, the ranchers and other investors who are funding it be successful? No, without first identifying the markets they will serve with beef products that they can collectively consolidate to produce before mortgaging their ranches, giving personal guarantees for loans, etc. for a plant that won’t see blood on the floor for two to three years. The world can go flat by then.

Dreams CAN come true — if you start with the consumer

Join for free* to continue reading.