SALES & MARKETING
The two questions I most often encounter are
- How do you figure out how to price the veal?
- How and who do you market to?
One of the best workshops I ever attended at the Pennsylvania Association for Sustainable Agriculture's annual Farming for the Future conference was given by Mike and Chick Debach, owners and operators of Leona Meat Plant. In their presentation, they broke down the numbers associated with processing animals adding into the formulas those things I had previously never considered such as shrink (the amount of moisture a carcass loses when it hangs), cut-out (fat, connective tissue, bones) and transportation. Previously, I only worked with the cost of production, live weights and hanging (hot) weights. And then there was the BIG expense I also overlooked, especially as I entered the world of farmers markets---marketing.
The first step is to know the production cost of the live animal and the live weight. This will give you the cost per pound to produce. For example:
- Purchased Calf $50
- Milk replacer $150
- Feed $25
Total Production Cost divided by Live Weight
(50+150+25)/300 = $0.75 per pound Live Weight
The next step is to determine the percentage of live versus hanging weight. Over the years, I have found that calves in the 300-pound range typically have a 50-55% range depending on their body condition. You must also consider that there can as much as 15 pounds of matter in the digestive tract if the animal has been fed within 12 hours prior to slaughter. For this example, we'll assign a value of 160 pounds for a Hanging Weight.
Hanging Weight divided by the Live Weight X 100
165/300 = 55% yield
Total Production Cost divided by Hanging Weight = Cost per pound Hanging Weight
(50+150+25)/165 = $1.36 Hanging Weight
Most folks who typically sell by the carcass stop at these numbers and then just add the butchering costs on to the bill, but if you are going to market individually wrapped cuts via farmers markets, CSA or buyers club, it's well worth continuing with the math to get a better idea of total production costs.
I have patronized abattoirs who charge a flat fee for calves up to 300 pounds and ones who have a set kill fee with a cost per pound for cut, package and labeling. Similarly, I've had processors who provided a custom label for me once I had paid the set-up fee (around $100) and ones who have required me to procure my own labels (around $300 per 10,000)
For this example, I am going to assign a set processing fee of $110 per calf with labeling included which is typical to what I currently pay for processing. One of the significant processing costs that tends to be overlooked is transportation. If you are traveling a significant number of miles to and from the processor (remember, you make TWO round trips--one to drop off the animals and one to pick up the finished product), it helps to include the transportation cost per animal in this part of the equation. I know that delivering live animals costs approximately $25 in fuel and to pick up finished product, $15. If I take three calves at a time, my transportation costs per calf are approximately $13. That would bring the Processing Costs to $123 per calf.
To acquire the cost of processing:
Hanging Weight divided by Processing Costs
165/123 = $1.34 per pound for processing
Now you have a better understanding of the true cost per pound of finished product.
Cost per pound Hanging Weight plus Cost per pound Processing
$1.36 + $1.34 = $2.70 per pound
But wait, we can't stop there, especially if you are going to go to farmers markets. This number is a lot trickier to come by unless you've got a season of markets under your belt and have an idea of your total sales versus your total market costs which include market application fees, vendor fees, liability insurance (this is different than your farm or homeowners and required by most markets), transportation, health department licensing fees for each jurisdiction in which you sell that requires them, etc. In my experience over the years, I've found these costs will add as much as 35% on to the cost of getting a product in the hands of a customer. That means
$2.70 * .35 = 0.95
$3.65 per pound wholesale cost per pound
That might still sound inexpensive at this point, but we've not yet factored in the most important part of the equation....PROFIT. Yes, farmers have to profit or we'd all be out of business and everyone would starve (or eat very poorly). Just as in typical retail, mark-up is 100% bringing the minimum cost per pound of product to $7.29 per pound average for the entire carcass.
While some cuts are more expensive than others, the first few times (and occasionally as time goes by) I inventory every single salable piece from a calf and determine what the average cost per pound for that specific animal amounts to. If I'm not hitting my numbers, it's time to examine my prices on all cuts.
While there is an art to determining how to cut a carcass, there is also one for pricing products. After determining you average cost per pound, now it's time to bring individual cuts into alignment with the open market. Premium cuts, such as tenderloin, scallopine, cutlets, loin & rib chops as well as specialty items like ossobuco, are going to command a premium price while stew meat and ground are going to be at the lower end.
I highly suggest also doing local reconnaissance by visiting other markets--bother farmers markets and retail locations--to gauge prices. The two biggest mistakes you risk by pricing your products too low are:
- Losing profits from not charging what the current market may bear.
- Pissing off fellow vendors who are more experienced and knowledgeable by undercutting them.
The notion that your product should be cheaper than what's in the grocery store is entirely incorrect. I had my eyes opened to what the market price would bear when I went to the upscale grocery store less than a mile from one of my metropolitan markets and found scallopine priced twice as much as mine. Judging from the size of their rib chops, the marbling and the color of the meat, I could tell the calves had been crated or chained, fed predominantly grain, had no access to grass, were anemic and probably weighed close to 500 pounds when they were harvested--certainly not a premium product. What a wake-up call. How was I to compete?
And this is where the second part of the equation comes in.....marketing.
Setting Your Product Apart From the Others
The difference between marketing and advertising was once explained to me in simple terms. Advertising is the methods through which you tell potential customers you have a product for sale. They are going to buy it because they need it. Marketing is telling the customer why they should buy your product.
Thanks to the animals rights campaigns against industrial veal during the 1980's, veal has been vilified as an ugly product from which anyone with half a conscious steer clear. Veal is a product that you can not take to a public market, put up a sign advertising and stand back waiting for sales. People will walk by and sneer, they will make openly rude comments to you, they will complain to the market manager, they will threaten to picket your stand, your market, your farm. That is why for anyone interested in raising and direct-marketing veal it is critical for you to learn how to market your products, to tell your story of why your product is different, is better.
The foundation of my marketing has always been to have an open door policy at my farm. Customers are welcome to visit to see firsthand how their meat is raised, not just with veal, but with all types of livestock, poultry and produce. 100 % transparency without a hint of hesitation has swayed many potential customers on the fence toward a purchase.
Next, tell your story with lots of pictures. There are images of veal calves in pasture on the banner displayed at market, on the farm's website, on Facebook, on Twitter and in the farm's monthly newsletter. I show customers where my calves come from, how they are raised, what they eat and ultimately, where they are processed. But it doesn't stop there.
ROSE VEAL: UNDERSTANDING THE DIFFERENCE
Painted Hand Rose + versus Veal Commercial White Veal -
+ Stays with cow after birth
- Taken away immediately
+ Naturally nursed with colostrum
- Force fed antibiotics & electrolytes
+ Transported directly from local family dairies to Painted Hand Farm.
- Trucked hundreds of miles, often through large auction barns.
+ Fed all non-medicated whole milk products
- Fed only medicated powder milk which is often soy and plasma based
+ Fed with nipples
- Fed in buckets
+ Never injected with hormones
- Synthetic estrogen implants used illegally to promote rapid growth.
+ No antibiotics.
- Prophylactic use of antibiotics.
+ Raised outside in small groups
- Crowded inside with hundreds of other calves in individual crates.
+ No mutilation.
- Ear-tagged or notched
+ Lots of grass & sunshine
- A life of concrete & darkness
+ Processed at a family-operated local USDA facility.
- Trucked thousands of miles to a large scale processor.
I believe in 100% transparency for our food system.
Feel free to visit our farm any time and see for yourself.
This is a sign I post at all farmers markets.
Most folks haven't grown up eating veal, let alone cooking it. Instructions, recipes, ideas have always been an important part of my marketing plan in addition to eduction. Recipes get posted to my website, blog and Facebook with pictures included. Printed recipes are always available at market.
Customers want facts about their food. We've become a nation of label readers. Share scientific nutritional information with your customers, especially in comparison with other meats.
|Beef Nutritional Facts|
|Veal Nutritional Facts|
The key to marketing a niche product such as veal is for the producer to be knowledgeable enough about their own products that the information can be easily and quickly shared with potential customers, especially those who make disparaging comments. Here are some of my most frequent exchanges.
Customer: How can you be so cruel to those baby cows, keeping them in boxes in the dark and feeding them all those antibiotics and hormones.
Producer: My calves are hand-raised in large paddocks and on pasture. They are free to move about their entire life and receive no chemicals or drugs. Hormones are illegal to use in veal calves and wouldn't make much of a difference if they were used. Plus, the milk replacer I feed contains no soy or plasma. My calves are never chained or mutilated. They live as natural a life as possible until they are harvested. I am the farmer and you're welcome to come out to the farm and see for yourself anytime.
Customer: I can't eat veal. It's a baby and I don't eat babies.
Producer: Essentially all animals you are eating are technically "babies". Meat chickens are harvested at 6-8 weeks, pigs at 4-6 months, lamb and goat at less than a year and even beef which don't reach maturity until they 2 1/2 to 3 years old. Beef producers need to get their animals to weight prior to 30 months or their processing is $80-100 more because the USDA requires the spinal column to be completely removed because of potential mad cow disease. My calves may be young, but they still weigh as much as 400 pounds. I am the farmer and I don't want to handle big animals.
Customer: I'll eat organic, grass-fed beef, but I won't eat veal. It's not humane.
Producer: Do you consume dairy products like milk, butter and ice cream? If so, you're contributing to the commercial veal industry as cows have to have babies in order to produce milk. The reality for male offspring of dairy cows, especially for smaller breeds such as Jerseys and Guernseys, is they are sent to auction or killed at birth because they are not economically viable to be raised for beef. They can be trucked dozens, if not hundreds of miles only days after birth and many often die. Sometimes the farmer ends up losing money after paying a hauler and the auction barn commission when the market for calves is down. I source all my calves within five miles of my farm from small dairy farms run by local families--some are even Certified Organic. My farmers give the calves a good start on mother's milk for 3-5 days before I pick them up. Plus, I always pay the farmer a fair price for the calves regardless of what they're going for on the open market. They are started in pairs on bottles for the first month so I can ensure they are getting enough nourishment, then out on to pasture in groups of four to eight where they can run. The truth is at a certain point dairy calves' growth rates stall and it takes a lot of input to get them over the hump to where they'd make a decent beef animal. In terms of resources, such as feed, water, space and fuel, naturally-raised veal calves are much more sustainable than beef.
Customer: That's not real veal because it's not pale in color.
Producer: According to the USDA, this animal has been classified as veal. It is pinker in color because this animal had access to grass for most of its life and it was healthy. Veal that is extremely pale in color is because the animal was anemic and was most likely crated or chained its entire life. The idea that the paler in color the better the veal was a marketing campaign by the Beef Checkoff program when veal production in the U.S. became vertically integrated and industrialized. Pale veal has little flavor and a mushy consistency. That's why its often breaded and covered in sauce. One of my loin chops is like eating a little T-bone. It tastes just fine by itself. If you don't believe me or like them, I'll return your money.
In these conversations, I've not only assuaged the customer's concerns, but go a step further to educate them about my farming practices versus industrial practices. And no one has ever asked for their money back.
But unfortunately, not all exchanges end positively in a sale. I've tried for years to get a trendy local food coop to carry my veal, but their answer is always the same, "We're worried it would upset our members." I have offered to write an educational article for their newsletter as well as their website and hand out samples with a educational display in their store, but they still declined. Yet as I peruse the store on a regular basis, I see products from farms with less-than-stellar agricultural, environmental and social practices. It is that stigma that I hope to diminish through sharing my experiences with raising and selling veal.
Who are the customers and where do you sell?
Over the years I've sold my veal through a variety of outlets in a myriad of cuts--whole carcasses, by the half, off the farm, through CSAs and buyers clubs, to individuals, upscale butcher shops and restaurants, but by far, my most successful avenue has been through direct sales at farmers markets. While the majority of buyers tend to be middle to upper income educated people who have traveled internationally, many of my customers also include many immigrants for whom veal was a staple of their diet in their homeland and they all say the same thing, "You raise real veal," as they are often appalled at the quality and price of products found in grocery stores and specialty meat markets.
Early in my veal rearing venture, I'd imagined that restaurants would make up the bulk of my business, but that was prior to the popularity of nose-to-tail establishments and practically all the chefs only wanted the choice cuts in quantities I didn't have the resources to provide.
For instance, the first thing most chefs ask for when I tell them I raise veal are the sweet breads, which are a fatty gland (thymus) found in the throat of a young animal. Recently, I had three calves processed and ended up with a half pound of sweet breads. Considering a trendy joint can go through twenty pounds of sweet breads a week, that would equate to processing one hundred twenty (120) calves each week just to meet the demand. Similarly, kidneys, liver and tongue are frequently requested items--all each in very limited quantities per animal.Chances are if you see these items as standard fare on a menu, they are coming from a not-so-nice place.
Another popular items chefs want are the bones. Any restaurant worth their salt understands the depth and clarity veal broth and demi glaze brings to fine dining.
"I go through fifty pounds of veal bones a week," said the chef of a local establishment when I was picking his brain at a party. Quickly I did the math in my head. Three hundred pound calf yields twenty to twenty five pounds of bones if I part it into cuts and thirty to thirty five if I turn all the meat into sausages, ground and boneless cuts. Later I would learn that places such as the Greenbrier go through as much a four hundred pounds of veal bones every week. This was definitely not my market.
Similarly, I have had chefs want to 'cherry-pick' the cuts and then demand a wholesale price. When I explain that the only way they are going to get wholesale price is by taking a whole carcass, they've tended to balk. While this is not true for all establishments, many want term of 30 to 60 days and sadly, I still have outstanding invoices from a number of now-defunct restaurants who wanted to only source local and sustainably-raised ingredients.
As CSAs and Buyers Clubs gain in popularity, they too, should be considered an option. However, as veal is not a staple item on American family menus, it tends to be pushed into the "specialty" category with lamb, goat and rabbit as opposed to beef, pork and chicken.Consider partnering with an existing produce CSA to offer products on a monthly basis. Also gaining steam are local "food hubs" where producers drop off product to be picked up by multiple purchasers.
Regardless of which audience you choose to market your veal, your job is not just to produce a phenomenal product, but to also educate your customers about the benefits of purchasing your product. For me, that means championing:
- No antibiotics or hormones
- Environmentally sound and sustainable
- Small carbon footprint
- Locally produced and processed
When I'm in an in-your-face mood, I like to tell people that if you are drinking organic/raw/local milk and eating locally farmstead/artisan cheeses or ice cream, then you should also be consuming the veal that is produced by these dairy farmers. Just as consumers have moved away from industrially produced mainstream dairy and meat products in lieu of ethically and sustainably produced foods, the same should hold true for the consumption of veal.
In my experience, the farmers who truly care the most for their animals are more than happy to establish a relationship with a new/beginning/small scale farmer who wants to humanely produce veal. Repeatedly, I've been told that sending calves to auction is one of the most distressing parts of being a diary farmer, but in their all-to-busy lives, raising and marketing calves for veal is something there just isn't time for. Worse, for some dairy farmers who sell their fluid milk to a cooperative, their contract stipulates that they cannot raise veal for sale using the milk for which the coop has agreed to purchase.
Highlights of this installment....
- Factors and formulas for pricing your product.
- Tips and ideas for marketing veal in a positive spin.
- Determining your market.
PART ONE to this series can be found at this link.
PART TWO of this series can be found at this link.
PART THREE of this series can be found at this link.
PART FOUR of this series can be found at this link.