CAB’s president John Stika addresses last week’s World Angus Forum

JUST one raised hand around a boardroom table could have forever changed the course of destiny for the world’s largest and most successful beef brand.

The Certified Angus Beef program has grown from the humblest of beginnings to become a United States red meat marketing colossus over the last half century, but as Angus industry stakeholders heard during last week’s World Angus forum in Brisbane, it hasn’t always been easy.

Certified Angus Beef president John Stika gave a colourful and entertaining account of the program’s history and aspirations – as well as the changing trends seen in US beef generally –  during his presentation to delegates.

The two key platforms that have driven CAB’s success are brand integrity and traceability. Mr Stika made it clear that CAB has continued to invest in the program to ensure it remains a relevant brand in a constantly changing US (and international) beef marketplace.

Readers interested in the CAB story may also be interested in this week’s Weekly Grill podcast, where John Stika talks with podcast host, Kerry Lonergan.

A war against fat

Speaking to younger audience members, he said it might be hard to believe that there had been a time when it was ‘hard to sell an Angus bull’ in the US.

“Unlike today, we saw a time when the market was very unfavourable for Angus genetics, and unfavourable for the livelihood of Angus producers,” he said.

“In the 1960s and 70s, there was a period of transition in our businesses. The cattle industry was fighting a war against fat, working very hard to drive fat out of the American diet.

The US beef industry was working hard to become ‘the second coming of the boneless, skinless chicken breast,’  transitioning away from any focus on marbling or eating quality. Lean red meat yield became the sole focus and an influx of continental breeds into the US helped in that quest.

All this had two impacts, Mr Stika said. Beef supply became extremely unpredictable and inconsistent with regard to eating quality and palatability.

“We ultimately got to a point where one in four steaks in the US was tough, in the eyes of consumers,” he said.

From a breed standpoint, US Angus cattle did not fit in that landscape. As a result, between 1968 and 1978, as this graph shows, Angus cattle registrations fell by 45pc, to just 222,000 head a year.

“It was a difficult time to be an Angus breeder. Little did we know that we were setting ourselves up to lose half of overall beef demand that we were experiencing at that time,”Mr Stika said.

A different approach

During this time, an Angus cattle breeder from Ohio with a strong business mind, had a disappointing Angus steak experience during a visit to the beef capital of Chicago.

In 1975, Harold Etling wrote to the American Angus Association board of directors, outlining a concept that the association could put in place to help deliver a consistent, high quality experience. The central tenet of that letter was later to become the Certified Angus Beef brand.

Birth of the branded beef revolution

Three years later in 1978, the first pound of Certified Angus Beef was sold in Columbus Ohio.

“It was that day that the branded beef revolution that we all now experience was born,” Mr Stika said.

The program’s early days were fraught with trouble. Within a month of launch, CAB lost its USDA license on a procedural technicality, taking six months before it was reinstated.

In 1981, the American Angus Association voted 14-1 to cancel the financially struggling CAB program if it had not turned a profit within 12 months. When that year passed, while the brand still was not able to cover its own expenses, it survived a vote of 8-7 among board members to wind it up.

That may have been a little premature, given where the program is today.

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“Today the US beef industry enjoys the strongest demand it has experienced in 30 years (see graph) and it is not by chance that that mimics what we see in improvement in beef quality,” Mr Stika said.

As seen in the graph below, USDA Prime and Choice Graded carcases are now 84pc of all fed carcases graded in the US, with the Certified Angus Beef carcases representing nearly one in four of all carcases harvested.

This revolution in beef quality had been led by Angus breeders, he said.

CAB today is run as a subsidiary of the American Angus Association, and governed by its own board of Angus producers.

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The business is structured as a not-for-profit, meaning 100pc of the revenue it brings in goes right back out in the form of marketing dollars to support brand development.

“We generate our funds to support the brand through a commission-based revenue model paid for by each packer slaughtering cattle under the program,” Mr Stika said. “Every time they leverage the CAB brand in the sale of a pound of product carrying our mark, they pay a commission.”

While the program was 100pc packer-funded, it was 100pc producer-owned and governed, he said.

“We own no cattle, we own no beef, no packing plants, restaurants or retail stores. What we own is a set of buildings in Ohio, and the single most valuable brand asset we have: the CAB logo and trademark.”

“CAB licenses the use of the CAB mark to thousands of partners in every segment of the beef merchandising landscape around the world, to use to promote and leverage the value of CAB, and ultimately creating awareness among consumers about the quality and reputation for the eating satisfaction that the brand has to offer.”

All of that allows CAB to sell an incredible 1.23 billion pounds (559,000 tonnes) of CAB-branded beef each year, into the US and 54 other countries. To put that into some context, it represents close to half the tonnage of Australian beef sold into all export markets in a typical year.

In the 2024 year, CAB certified just less than six million carcases, meeting the program’s ten specifications for quality (see list below). Compare this with Australia’s entire adult cattle slaughter in 2024 (cows included) of 8.3 million head.

By any standard, this is an enormous juggernaut of a beef brand program.

Economic analysis suggested CAB certification delivers a US$100 per head premium over the grid base price for an Angus fed animal of similar weight.

“It’s an overnight success…. that’s taken 47 years to build,” Mr Stika said.

“It’s also exciting to be able to see the global impact and the influence CAB is having in terms of helping other beef producers around the world see opportunities to add value to their genetics and hard work.”

Quality and consistency keys, driven by marbling

Quality and consistency were they keys, and had been for the last 47 years as CAB’s pillars in order to remain relevant to the marketplace.

Not surprisingly, Mr Stika said marbling was extremely important in the product’s ability to perform for those traits.

“We focus on quality because we have seen countless times that US consumers do not buy beef on price alone. That purchasing decision is based on price, in relation to value.

“What we have learned from consumers is that when they stand back and try to determine that side of the value proposition, what ultimately sits directly opposite from price in their decision-making is quality. Ninety five percent of US consumers say quality is important when they are making a decision on a beef purchase.”

Mr Stika showed the slide above listing the ten key attributes that contributed to the term, ‘quality.’ Of those, taste ranked highest, even above price.

“It’s the taste of the product that is the reason why CAB is the ‘protein of celebration’ among consumers, instead of a piece of chicken breast.

“But we have to be intentional in delivering on that, each and every time we have the opportunity to put a CAB beef item in front of a consumer. We don’t allow that to be left to chance.”

“Our goal is to build repeat business, and 92pc of consumers agree that something can be a great price, but if it doesn’t taste good, they aren’t going to come back and buy it again.”

With that aspiration in mind, since 1978 CAB had put in place the ten carcase specifications published above to deliver a consistent eating quality product.

While all were important in their own way, the one listed at the top of the list (marbling) was the most important, he said.

“That modest to high degree of marbling is what originally allowed CAB to truly differentiate itself in the market in 1978, and still to this day is what puts us in the position to at times, have to defend the price of our product. But rarely, if ever, are we forced to apologise for the quality of the product put under the CAB brand in the marketplace.”

“It’s about being intentional about quality, and being intentional about making sure we don’t disappoint the consumer for lack of focus and being consistent to the standards put in place.”

Protecting the brand

While it was one thing to have a great product, it was also important to protect that equity, and the brand’s integrity, Mr Stika said.

One of the worst things that could happen to CAB as a brand was a restaurant promoting CAB on their menu, and then substituting something else of lower quality for it.

“Ultimately, in that case we are left with the liability of an unsatisfactory eating experience, when the product wasn’t even our to begin with,” he said.

“So from the very beginning, we have taken brand protection and brand integrity as something essential. Since Day One, we have accounted for that by tracking every pound of product, from the moment it is certified on the carcase, through fabrication, value-added process and through merchandising and distribution, both within the US and in export.

In every restaurant or retail outlet bearing the CAB symbol, customers can use their smartphone to check they are buying the product the outlet says it is promoting.

“It means a restaurant customer in Indonesia can expect the same quality as a restaurant customer in Indiana. It’s been a big part of the brand’s success and reputation,” Mr Stika said.

CAB was also pro-active in addressing other (deliberately) confusing and similar brands in the marketplace, both domestic and international, like those pictured below.

Selling the entire carcase

One of the keys to CAB’s success was in ‘getting out and selling the entire carcase’, rather than just the loin cuts, Mr Stika said.

“The majority of our 160 team members at CAB are focussed on this very thing,” he said.

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“It’s not that hard to sell ribeyes and striploins. What’s hard is selling rounds, chuckrolls, thin meats, and at times, ground beef – and doing that at a premium. To do that, you have to have a broad customer base.”

The pie chart at right illustrates that CAB sales are neatly divided between retail (red), food service (yellow, international (brown), and miscellaneous; with more than 45 million pounds (20,000t) used each year in value-added products alone.

“All of those help elevate the value of the entire carcase,” Mr Stika said.

It was for this reason that CAB had managed to build a 5pc premium over commodity Angus USDA Choice graded product, over the entire carcase (see image below).

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“That’s what keeps our packer partners engaged in this brand, when they have every option to sell all that product under a different brand, their own brand, or to somebody who isn’t licensed in our program. Yet the premiums that are there, that have been created over time, keep our packer partners engaged with the CAB brand, and allow cattle producers to receive the economic signals in the form of CAB premiums in value-based marketing systems as well.”

Mr Stika said despite CAB’s success, the US was a very competitive and crowded beef marketplace.

“You better sell the value of your program well, or it will be differentiated in the marketplace on price alone – and that is not a place where a premium brand that’s already at a higher price point wants to be.”

Evolution

As CAB has grown, it has continued to evolve, Mr Stika said.

An example was CAB Prime, a brand line extension added in 2000 which segmented USDA Prime (highest quality grade, roughly equivalent to AusMeat marbling score 3+) from USDA Choice. Today, USDA Prime was one of the program’s fastest growing areas, especially over the next three years.

Another example was CAB Natural, for those customers who valued production systems that did not use growth promotants, antibiotics or animal by-products in feed resources.

Within the last two years, CAB has added a CAB Grassfed product line, and a ‘Ranch to Table’ extension, allowing registered Angus cattle breeders who own the brand, to be able to leverage Angus beef in direct-to-consumer or direct-to-restaurant beef sales.

Sustainability challenge

While quality remained king in the minds of CAB beef consumers, there was no doubt that the expectations that consumers had on CAB today were far broader than they were in 1978, Mr Stika said.

“Today our consumers and customers expect us to be responsive to their questions around sustainability, and in particular their questions around cattle care and environmental sustainability and stewardship.

“From a brand standpoint, we not only work with farmers and ranchers who raise the product to help them continually improve in these areas, but have put in place initiatives to help communicate the great work that producers are doing to make sure the industry gets credit for, in the eyes of the customer.”

Building trust

“It’s no longer simply enough to have the best product in the marketplace, because someone can copy your specifications, easily. There are a lot of US programs out there today that have the exact same product specifications as CAB.

“We’ve also learned that merely telling a great story is not good enough, because somebody might come along tomorrow and tell an even better story. And we’ve learned that just providing the best customer service doesn’t get it done either, because folks really care more about why we do something, than how we do it.”

“All this really comes down to trust, both with the customer and the consumer. When we talk about trust, it really comes down to building relationships with people, who are involved in our business and in our communities. It’s about building a sense of community around the brand, connecting people, enhancing their lives and strengthening their businesses.”

“They trust CAB as a brand they can invest their time and attention into.”

“Ultimately they figure-out that through the CAB beef brand, they truly are a part of something bigger than themselves.”

“It’s the model we’ve worked on for 47 years, and hopefully, with a little bit of luck and some tremendous intentionality on the things that really do matter, CAB can do it for another 47.”