COVID-19 Spurs Increase in Direct-to-Consumer Meat Sales

“Unprecedented times, new normal, we’re all in this together.”

Chances are these are just a few of the terms you have heard and repeated sometime in the last six months. As the world progresses, we all know that it typically looks different for the agriculture industry than it does for the day to day citizen. It can be assumed this pandemic would be no different.

While many producers often sell whole, half, and quarter sides of beef direct to consumer on a normal basis, the opportunity to sell more individual cuts has grown exponentially. When consumers were instructed to lock down and keep trips outside the home to a minimum; the people of the United States stocked up on many products. A significant item that was made hard to find in stores was ground beef. The price of animal proteins rose 4.3% from March to April, and that was for the meats you could still find on the shelves. Most consumers donned their masks and made the trek to their local grocery store only to find that most meats, eggs, and paper products simply were not available. As word of mouth travels significantly faster than any other form of marketing, farmers were inundated with requests for meat from new customers. While normally an increase in orders would be positive, at a time when every provider is getting an increase it makes the logistics difficult.

Many producers do not sell exclusively direct, they continue to sell commercial as well. This means they carry enough fat cattle to provide for the increase during times as these; the hiccup is with the local processors. Most of these small processing facilities do not have the capacity to take on an extra ten head per week, especially if they are already consistently supplying any restaurant business. Local butcher facilities from the Midwest to the east coast are running anywhere from six months to one year behind due to new influx. Therefore, while the product is available, the processing is not.

Kevin Tate, a producer out of Virginia, has been providing freezer beef to local consumers since 2017. Since that time, he has consistently grown his direct to consumer business each year and was on track to do the same in 2020. To everyone’s surprise this year would be a home run for Mr. Tate and his operation. While he typically would advertise on social media, from March forward he has chosen not to. This is due to him being completely booked and also having a waiting list of consumers eager to purchase his product. Word-of-mouth is the best advertisement anyone could ask for, and during these times that is all he needed to see his business grow exponentially. Through strictly referrals from his current customers he has booked business well into 2021. When asked about increasing herd size to accommodate the sudden influx Tate explained, “I started my first year selling 7 head, second year 37, and this year 90. That number could be even higher in 2020 if the butcher shops could get them in. But I take pride in providing a quality product that is processed in a quality facility, so while I could go farther out and increase sales, I strive on being able to provide this type of quality that keeps people coming back.”

While there are a multitude of advantages of selling direct to consumer, most significant is profitability. “The farm makes more profit when I can send it right down the road, the consumers feel a connection to the product because they know exactly where it came from,” says Tate. When you can cut out extra hands that are in the process, it leads to more dollars being injected directly into the producer’s pocket. At the same time the producer’s business is growing so is their footprint in the local community. For the average producer this may keep them close to or at capacity with their processor.

With the increase in demand this year some producers have been contacted from consumers outside their local area. Tate says, “The logistics add up that by the time you start shipping it, that all adds up on top of worry that the product is not the same quality when it arrives as when it left, and I don’t want to go down that road.” Instead many choose to diversify their business by creating bundle programs. Instead of giving consumers one choice between whole, half, or quarter side of beef they can offer a smaller bundle of cuts for one package price. By providing more choices to consumers who may not have the financial means or space to store a standard side of beef they increase not only their ability to be referred to a larger client pool, but their chances at closing sales.

Tate is estimating to retain around thirty percent of the new consumers that made their initial purchases due to COVID-19 shortages. While knowing that not every order will follow with a renewal order, even a thirty percent increase year over year can provide a significant value over time. By that significant increase one would expect to receive a halved referral business as well. Client referrals feed consumer direct operations; clients want to ensure that the food they are purchasing for their family is sourced responsibly and safely. When repeat customers begin to state their experience and the quality of product they receive, that piques interest in the people from their personal network.  This builds a solid consumer base for the producer that becomes a consistent, residual income.

While producers have been lobbying to increase their direct to consumer sales for some time, COVID-19 may have been just the push that was needed. By more consumers becoming aware to the options outside of their standard grocery store, the knowledge to the public will increase; leading more consumers to follow the farm-direct path. Looking forward and to possibly another shutdown type situation it can be construed that farm-direct sales will continue to increase and that processors will continue to run at full capacity well into 2021.