Domestic

New brand extension program for JBS Australia

04/07/2011

JBS domestic manager Tony Carroll with samples of Southern Supreme on display at the recent National Retail Innovation ExpoCommercial beef brands operating under the Meat Standards Australia grading program are  beginning to segment their products into narrower, more specific ranges, providing opportunity to optimise value from each item entering the system.

Part of this involves the re-emergence of the ‘Four Star’ and ‘Five Star’ descriptors, which were originally part of the MSA parlance, but which gradually disappeared as MSA largely became an ‘in-or-out’ process in the marketplace.

For those MSA stakeholders who have the critical mass to make it viable, brand extension or segmentation programs offer some real commercial potential, it appears.

One of the stakeholders now exploring opportunities in brand extension is JBS Australia.

As good an MSA brand program as JBS’s Royal Blue brand produced out of the company’s Brooklyn plant near Melbourne is, the fact remains that up to now, the product still carried considerable variation in eating performance, while all being within the acceptable MSA range.

Up to a few weeks ago, a carton of JBS Royal Blue could have contained a primal from an MSA Boning Group 1 animal, and another from a boning group 8 carcase. Both are perfectly acceptable under MSA grading requirements, but one is considerably better than the other – and some customers are prepared to pay a higher price for those examples at the premium end.

JBS unveiled its new Southern Supreme four-star MSA brand at last weekend’s National Retail Innovation Expo with exactly this strategy in mind.

JBS domestic national sales manager Tony Carroll said Southern Supreme Four-Star was an extension of the existing Royal Blue brand, based on grassfed Yearling and Young Beef categories.

The Royal Blue brand has been an MSA fixture for some years, incorporated under the JBS flag when the company bought Brooklyn as part of the Tasman Group purchase early last year.

In its original form, Royal Blue was packed under an MSA boning group 1-6 range, later extended to 8. Instead of having such wide variance within the one pack, Southern Supreme is designed to take the premium end (boning groups 1-4) out of that broader spectrum and pack it under a different identity, and price point.

Mr Carroll said this was JBS’s first attempt to segment more narrowly within existing MSA brand programs, and that between 35 and 40pc of the former Royal Blue program bodies were grading successfully for Southern Supreme.

“As a general rule the MSA cattle grade very well in Victoria, so it is perhaps not so surprising that so many qualify for boning groups 1-4 and the Southern Supreme brand,” he said.

The season this year had obviously helped, but other factors included the softer breed types and relatively low use of HGP across the region.

“The cattle being produced under Southern Supreme at the moment are exceptional,” Mr Carroll said. “We’re seeing good marbling in carcases, with the boning group 1-4 examples mostly 1s and 2s, with occasional 3s – which is very high for young cattle off grass.”

Asked how much variation there would be in a more typical year, summer to winter, he said it was inevitable that there would be fluctuation, coming off grass, but the company felt it could maintain reasonable supply of the premium line throughout a yearly cycle.

While there is no breed distinction attached to the Southern Supreme brand, it is predominantly British-bred, milk to four-tooth steers and heifers, with supply out of Victoria, southern regions of NSW and the eastern portion of South Australia.

The program is currently generating 400-500 bodies weekly, with intentions to grow volume to 200 to 250 a day. Average carcase weights have been 280-320kg.

While there is no current limitation on the use of HGP for the program, with relatively few cattle bearing an implant in the supply region currently, JBS might consider it as a qualifier at some future time. It would also be only a short-step across into a program which could also carry a ‘natural’ tag, Mr Carroll agreed. JBS’s parallel southern grassfed brands, King Island and Tasmanian Premium, already carry HGP-free and antibiotic-free components as part of their brand story.

Food service application

Southern Supreme has only been in the marketplace a month, but had already aroused solid demand, principally in the food service sector for restaurant use, he said. The early response from the food service market in terms of eating quality performance had been ‘highly encouraging.’

JBS is hopeful it can charge $2-$3/kg more for loin cuts at wholesale level, over the existing pre-existing Royal Blue branded product.

“We’d have to get that to justify the segregation and extra work,” Mr Carroll said.

JBS spent a considerable amount of money on the Brooklyn plant when it purchased the site as part of the Tasman acquisition in May 2008, including extra chilling and carcase sorting capacity for MSA work.

Whether a similar segmentation strategy is applied in Tasmania/King Island brands is yet to be determined, but numbers will be a factor. It may emerge that several southern JBS brands might ultimately pack under a common spec for the Southern Supreme program.

As JBS’s brand and MSA volumes grew, the opportunity to segment-out different products became greater, Mr Carroll said.

One of the frequent questions that emerges when brand ‘segmentation’ like this is discussed is whether it in fact compromises the performance of the pre-existing brand (in JBS’s case, Royal Blue).

Mr Carroll said while it was true that the elite performing carcases were no longer part of the Royal Blue program, carcases beyond group 4 were still ‘very good young beef’ in their own right.

“We’re finding that the heavier cattle tend grade better, partly due to the greater presence of marbling. But that bigger, heavier, more marbled meat is not as well suited for retail as it is for restaurant/food service. The Royal Blue product tends to have smaller cut size, which is more appealing to the retail trade where portion size can be a real problem with heavier bodies.”

“And it can be argued that Royal Blue itself will now be a more consistent product, because it is now being produced in a narrower band of boning groups,” he said.

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