AUTHORIZATION REQUEST FOR FY 2017 CBB Budget Category: Promotions Name of Contractor: North American Meat Institute Name of Organizations Subcontracting: End Date: September 30, 2017 AR # 1703-P I. OVERVIEW A. AR Description: The processed meat category represents $4.40 billion in U.S. Meat (Beef, Veal and Pork) sales. Processed beef items are fresh products that have been changed from their original character by cooking, smoking, curing, marinating, restructuring or combining them with other ingredients. Processed beef items include, but are not limited to, corned beef, dried beef, beef jerky, pastrami, beef bacon, bologna (luncheon meat), canned meat, hot dogs, heat and serve foods like beef empanadas and fully-cooked beef-based foods like meatballs and sausage. Processed beef items are produced under a grant of inspection from the USDA s Food Safety and Inspection Service and have a proven track record of food safety. There is a real opportunity in the processed beef category for increasing sales. Nearly one-half of all consumers, Millennials in particular, plan last-minute meals. This is supported by the fact that approximately 40% of consumers only occasionally or hardly ever know what they are making for dinner two hours before mealtime. Continued growth in heat-and-eat, ready-to-eat and valueadded beef items is possible as Millennials seek flavorful, fast and easy meal solutions. Processed beef products provide a solution by offering high quality proteins that are convenient and portable. A number of significant challenges are facing the processed beef category. Probably the biggest immediate challenges are a lack of new, innovative recipes and products and competition from other proteins. Currently, the poultry industry is out-marketing, out-maneuvering and occupying more space in the retail meat case and on food service menus than processed beef items. Also challenging the processed beef category are the recent dietary guidelines recommending consumers reduce processed meat consumption and concerns raised by the International Agency for Research on Cancer (IARC) concerning the consumption of processed meats. The perception of issues needs to be overcome with proper education and messaging focusing on the products that have moved into a more favorable nutritional profile. The overarching objective of this AR is to increase the market share for processed beef products compared to non-beef proteins, not to compete with the fresh beef category. Through research, innovation, education, collaboration and engagement with industry partners, we plan to increase the overall demand for NAMI 1703-P Page 1
AR # 1703-P beef, carcass value and the return on investment to cattlemen. The processed beef category is unique and different from the fresh meat category and needs a focused approach to create awareness and to gain traction where manufacturers are incentivized to choose beef when innovating new products. A focused approach will also require a deep understanding of the consumer packaged goods industry and an understanding of products at the UPC/SKU level. The North American Meat Institute is uniquely positioned to conduct the activities proposed in this AR. The Institute staff and member companies have broad experience in the production and marketing of processed beef products. Working together, this deep pool of knowledge, skills and experience will be able to maximize the impact of the Checkoff resources devoted to this AR s initiatives. The following AR summarizes Strategies and Tactics supporting the Promotion CBB Budget Category and the Beef Industry Long Range Plan. Specific areas of focus: Promote and Strengthen Beef s Value Proposition Revolutionize Beef Marketing and Merchandizing Research and Communicate Beef s Nutritional Benefits Connect and Communicate Directly with Consumers Dispel negative healthy connotations Leverage the convenience solution Amplify variety vs. same old meal ideas Highlight all meal eating possibilities (Beef for Every Meal) Defend Beef s position and grow the percentage for the processed meat category. The opportunity exists in driving more beef consumption by focusing on this under-promoted category and by taking advantage of the current consumer trends. B. Costs for this AR: Source of Funding Direct Costs Implementation Total Beef Board/BPOC $ 770,000 $ 100,000 $ 870,000 Federation of SBCs (FSBCs) $ $ $ Other Potential Sources (describe) $ $ $ Total Cost $ 770,000 $ 100,000 $ 870,000 C. Start date: October 1, 2016 NAMI 1703-P Page 2
II. PLANNING INFORMATION FOR THIS AR AR # 1703-P A. Long Range Plan Core Strategies Addressed by This AR: Promote and Strengthen Beef s Value Proposition B. Committee(s) recommendations for work plan funded by this AR: The Innovation Committee reviewed this AR and scored Tactics 3B, 3C and 3E a 4.0, Tactic 3D a 3.0 and Tactic 3A a 5.0. (Note: The tactics have been reordered in this AR based on Committee recommendations) C. Digital properties and target audience(s) addressed by this AR: Social: Facebook, Twitter, YouTube, Pinterest Audience: Millennials Digital Advertising: Geo-targeted digital advertising with key demographic targets and Google AdWords Audience: Millennials Website: Develop a micro-site dedicated to launching this campaign and share links to all checkoff funded websites and industry partners. III. PROGRAM INFORMATION FOR THIS AR Promote and Strengthen Beef s Value Proposition Today s consumers are very interested in convenience proteins, which is a good fit for processed beef. An article published in February 2016 from The Meating Place documents that the Millennial demographic is contributing to the growth of value added convenience meats. The processed meat category must focus on developing more health conscious versions of products and innovating recipes and products to meet the demands of today s consumer for value, convenience, taste and nutrition. There is a beef jerky revolution going on reported Fortune Magazine in February 2015, when Hershey Foods announced the purchase of the Krave Jerky Company, the number two brand of jerky in the US, with over 17 million dollars in sales. The beef jerky category eclipsed $1 billion in sales in 2014, and continues to grow. The increased demand for and dollars spent on beef jerky is indicative of the potential for processed beef items as a category. Research shows the jerky category growing, however, beef is losing share to poultry. As the total category demand rises, the lower dollar-value cuts and manufacturing trim, which are used in many processed beef items, will increase the total value of the beef carcass. Here s Why Promoting Processed Beef Products Is Important! A major component of many processed beef items is 50% CL beef trimmings. Approximately 10% of a fed steer carcass ends up as 50% CL trimmings. How does the value of 50% CL beef trim affect live cattle prices? NAMI 1703-P Page 3
AR # 1703-P Here s How: So Far in CY 2016 The value of 50% CL beef trim has ranged from above $110 cwt to below $50 cwt. The $60 cwt reduction in value of a product that makes up 10% of a carcass would convert to an approximate $5.50 decline on a live basis. By creating demand for 50% CL trim, we maintain higher live prices. The recent Annual Meat Conference report on Millennials also coined a new term Dashboard Dining, referring to a growing number of busy on-the-go families and singles eating in the car. The other topic was the discussion around the competition between traditional proteins and the emerging non-traditional proteins like cereal, cereal bars, and vegetable proteins. Today s consumers are also looking for convenience proteins, which is where the Processed Beef category can gain traction. This new opportunity will support the long-range plan, increase total consumption of beef, and promote and strengthen beef s value proposition. This will also create opportunities for marketing processed beef items in dollar, drug and convenience store channels. Our plan includes engagement with key opinion leaders along with partnerships with channel marketers and other associations like the Hot Dog and Mushroom councils to maximize the checkoff funds for effectiveness and efficiencies. A. Committee Name: Innovation Proposed Cost * : $870,000-BPOC Tactic 3A: Research Export Growth Protect & Enhance Consumer Trust Beef s Value Research will focus on two areas: (1) consumer/millennial/older millennial parents perceptions toward various segments of the processed meat category, to gain valuable insights to help shape and adjust communication strategies, tactics and messaging; and, (2) manufacturers and product innovation. Measurable objectives: Reach: 100 Engagement: 100 KOL Amplification: 2,500 o Conduct one (1) on-line bulletin board focus group with a millennial audience of at least 100 participants to gauge pre-post perceptual information and to gain insights and understanding to help shape messaging and content deliverables. o Collaborate with manufacturers to review IRI research to identify key growth sub-categories * Proposed Cost includes Beef Board/BPOC, direct plus implementation. Amount in parenthesis includes total cost, direct plus implementation, for all funding sources. NAMI 1703-P Page 4
AR # 1703-P o Research beef cuts best suited for processed beef products and develop 3-4 product concepts in collaboration with manufacturers Proposed cost*: $ 170,000-BPOC Tactic 3B: Product Positioning Export Growth Protect & Enhance Consumer Trust Beef s Value The creation of consumer focused messaging on trust, transparency, variety and beef s value will help position the Processed Beef category more in line with today s consumer preferences and expectations. To overcome old perceptions of unhealthy processed products, we will create messaging and images that portray the processed beef category as a great option for busy on-the-go consumers, including millennials and older millennial parents. This tactic will favorably position the role of processed beef items in a healthy, well-balanced diet that is science-based, achievable and part of an active lifestyle. Measurable objectives: Reach: NA Engagement: NA KOL Amplification: NA o Identify 3-6 product segments within the processed beef category that offer the greatest opportunity for growth. o Identify 3-6 product segments within the processed beef category with like attributes that will allow them to be positioned similarly. o Create new content including messaging (nutrition, convenience, variety, taste and value), and photography and videos to enhance the product image. o A minimum of 3-6 content packages will be developed to support the product segments including messaging, photography, videos, logo lock-ups, headlines and taglines which will be shared with all SBC s, and industry partners. Proposed cost*: $ 125,000-BPOC Tactic 3C: Channel Marketing Export Growth Protect & Enhance Consumer Trust Beef s Value Eighty-two percent (82%) of current chilled, processed meat sales in the U.S. took place through supermarkets or hypermarkets. Convenience, drug and dollar stores are increasing their sales of food items and have significant potential as an emerging channel for processed beef items. The channel marketplace has seen significant changes along with new channel formats that focus on convenience and the ever-changing consumer trends and demands. Beef can win by providing assistance, guidance and leadership in the processed beef NAMI 1703-P Page 5
category ultimately providing a more favorable position for beef and beef producers. AR # 1703-P This tactic will focus on the decision makers and Key Opinion Leaders (KOL) at retail and food service to promote and draw attention to the processed beef category. Our program will encourage the promotion and placement surrounding eating occasions and seasonal promotional activity that lend itself to processed meat products. Measurable objectives: Reach: 1,000,000 Engagement: 100,000 KOL Amplification: 625 o Develop 2-4 versions (customized by channel/retailer) of a sales and merchandising presentation to encourage promotion of, and seasonal activity to support, the processed beef category. Reach and engage with minimum of 25 accounts. o Create one (1) retail promotion executed on an account specific basis with a specific product or sub-category to gauge performance and tract results. A geo-targeted media campaign will drive awareness. Reach 500,000 media impressions/engage 10%. o Create one (1) food service promotion executed on an account or occasion specific basis to gauge performance and track results, including a digital geo-targeted media plan. Reach 500,000 media impressions/engage 10%. Proposed cost*: $ 230,000-BPOC Tactic 3D: Key Opinion Leaders Export Growth Protect & Enhance Consumer Trust Beef s Value Reaching specific nutritionists and health officials with a factual, persuasive message leveraging certain segments of the processed meat category to communicate a positive story on nutrition is the key to success for this tactic. This tactic will provide scientific evidence to support the industry s ability to produce processed beef items that are safe, wholesome, a source of high quality protein and manufactured in a sustainable manner. Create partnerships with bloggers who are currently or willing to promote the processed beef category to their followers, helping to create brand ambassadors to drive awareness and reach and engagement with consumers. Measurable objectives: Reach: 62,600 Engagement: 12,120 KOL Amplification: 1,425 NAMI 1703-P Page 6
AR # 1703-P o Implement two (2) social media-based blogger/influencer programs to engage consumers and promote consumption/purchase within processed beef category. Reach a minimum of 60,000 blogger followers and engage with 20% o Identify a minimum of 10 key nutritionists to connect and engage with providing nutritional information and factual research citing the progress the processed beef category has achieved creating healthier products. o Share all information with SBC s and industry KOL s on a monthly basis via a newsletter with a minimum deployment goal to 100 individuals with an open rate of 20% o Attend one industry event to promote Processed Beef products and reach key influencers obtain key influencers and opinion leaders current perceptions of Processed Beef products with an onsite questionnaire (minimum of 25 surveys gauging understanding and perceptions towards processed beef). Proposed cost*: $ 120,000-BPOC Tactic 3E: Consumer Awareness and Digital Advertising Export Growth Protect & Enhance Consumer Trust Beef s Value Reaching and engaging with millennials and millennial parents with a message of value, convenience, nutrition and taste will be key to the success of this program. This program will include digital marketing to reach the on-the-go consumer with messaging that promotes processed beef products. Lifestyle marketing will also play a key role when on-the-go protein is important in activities such as hiking, camping, and sports along with all day eating occasions like snacking, school lunches and breakfast. Digital assets will be provided to State Beef Councils, Packer/Processors and Channel Marketers to use within their own digital properties. Digital Advertising will include: Google AdWords Facebook Twitter YouTube Pinterest Food Channels Geo Targeting Measurable objectives: Reach: 1,002,500 Engagement: 100,050 KOL Amplification: 625 NAMI 1703-P Page 7
AR # 1703-P o Develop content for one (1) communication strategy and campaign to drive awareness of processed beef. o Develop one (1) digital social media plan using content developed above to deliver campaign message utilizing a consumer promotion to engage consumers. Achieve 1,000,000 media impression with 10% engagement. o Attend one (1) consumer-focused event (minimum for 2,500 attendees) to promote processed beef products and obtain consumer attitudes and nutritional knowledge about Processed Beef products with an onsite questionnaire (minimum 25 surveys). Proposed cost*: $ 225,000-BPO IV. DETAILED BUDGET SUMMARY Beef Board/BPOC Funding Request: Strategy & Tactic Program Manager Completion Date Direct Implementation Total Committee Name: Innovation Bill Sessions 09/30/2017 $ 770,000 $ 100,000 $ 870,000 Tactic 3A: Research Bill Sessions 09/30/2017 $ 150,000 $ 20,000 $170,000 Tactic 3B: Product Positioning Bill Sessions 09/30/2017 $ 110,000 $ 15,000 $ 125,000 Tactic 3C: Channel Marketing Bill Sessions 09/30/2017 $ 200,000 $ 30,000 $ 230,000 Tactic 3D: Key Opinion Leaders Bill Sessions 09/30/2017 $ 110,000 $ 10,000 $ 120,000 Tactic 3E: Consumer Awareness and Digital Bill Sessions 09/30/2017 $ 200,000 $ 25,000 $ 225,000 Advertising AR Totals $ 770,000 $ 100,000 $ 870,000 Other Potential Funding Source(s): (Informational only) Strategy & Tactic Funding Source Completion Date Direct Implementation Total Committee Name: Innovation $ $ $ Tactic 3A: Product Positioning N/A $ $ $ Tactic 3B: Consumer Awareness Digital N/A $ $ $ Advertising Tactic 3C: Channel Marketing N/A Tactic 3D: Key Opinion Leaders N/A $ $ $ Tactic 3E: Research N/A $ $ $ AR Totals $ $ $ NAMI 1703-P Page 8
Total Cost Summary for All Funding Sources: (Informational only) AR # 1703-P Strategy & Tactic Funding Completion Source(s) Date Direct Implementation Total Committee Name: Innovation All 09/30/2017 $770,000 $100,000 $870,000 Tactic 3A: Research All 09/30/2017 $ 150,000 $ 20,000 $170,000 Tactic 3B: Product Positioning All 09/30/2017 $ 110,000 $ 15,000 $ 125,000 Tactic 3C: Channel Marketing All 09/30/2017 $ 200,000 $ 30,000 $ 230,000 Tactic 3D: Key Opinion Leaders All 09/30/2017 $ 110,000 $ 10,000 $ 120,000 Tactic 3E: Consumer Awareness and Digital Advertising All 09/30/2017 $ 200,000 $ 25,000 $ 225,000 Totals - Committee Name: Innovation All $ 770,000 $ 100,000 $ 870,000 AR Totals All $ 770,000 $ 100,000 $ 870,000 V. SUPPLEMENTAL INFORMATION A. Will all of the work detailed in this AR be completed by the end of the fiscal year? If not, please provide an explanation. YES. B. Changes from FY 2016 Approved AR:(This is a first year AR) C. Subcontractor information (agencies, etc.): Name of proposed subcontractor: Streetmarc Advertising & Promotions LLC Will all work with subcontractors be competitively bid? If not, why not? No. The subcontractor has assisted with other checkoff-funded programs and has a proven track record of achieving positive outcomes. D. Identify any relationships between this AR and projects previously funded by the Operating Committee: E. Summary of Prior Year AR Budgets and Expenses: (First year AR) AR Name/ # FY 2016 Approved Budgets CBB/BPOC FSBCs Other Source(s) Total Direct Cost Impl. Total AR Totals AR Name/# AR Totals FY 2016 Actual Expenses (through May 30, 2016) CBB/BPOC FSBCs Other Source(s) Total Direct Cost Impl. Total F. Historical Summary of Budgets and Expenses: (includes all funding sources listed in original AR) AR Totals AR Name / # Total Approved Budgets Total Actual Expenses FY 2015 FY 2014 FY 2013 FY 2015 FY 2014 FY 2013 NAMI 1703-P Page 9
AR# 1703-P POTENTIAL PARTNERSHIP LIST FY 2017 AR Number: 1703-P Please list all potential partners/collaborators* for the related AR and details including the nature and extent of collaboration: (include any partnership and/or collaborations with a third party by identifying the third party, the nature of the collaboration and extent of the collaboration.) 1. Bloggers (TBD): We will develop a relationship with one or more bloggers to promote processed beef products. 2. Nutritionists (TBD): We will develop a relationship with one or more nutritionists to promote the nutritional attributes of processed beef products. 3. Brands/Products/Manufacturers (TBD): We will partner with selected North American Meat Institute members who manufacture and market processed beef items in the development of new items and marketing strategies. 4. Research Company (TBD): We will develop a relationship with a research firm to better define the Millennial market demographic and how best to promote processed beef items in today s marketplace. 5. Culinary Institute of America (CIA): The CIA will assist in recipe and graphic development and the production of videos to support the promotion of processed beef items. 6. Foundation for Meat and Poultry Research and Education: We will collaborate with the Foundation on nutritional and food safety messaging and research. 7. American National Cattle Women (ANCW): We will partner with ANCW members on on-site promotional activities and other events to promote processed beef items. *Partners/collaborators does NOT include subcontractors listed in AR section V.C. Subcontractor Info. Required per USDA Letter dated June 19, 2013 NAMI 1703-P Page 10