YU Ranch pursues a differentiation strategy by offering high quality, grass-fed, and sustainably raised beef at premium prices. It sells primarily to knowledgeable consumers through multiple product offerings and strong brand equity. Yu Ranch sees the need to expand but at a costly price. This case study "YU Ranch: Growing a Sustainable Business" analyzes the growth options that would help YU Ranch achieve its full potential.
Rod E. White; Hadi Chapardar; Ryan White
Harvard Business Review (W15098-HCB-ENG)
April 08, 2015
Case questions answered:
Analyze the strategic growth options that would help YU Ranch achieve its full potential and give recommendations.
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Case answers for YU Ranch: Growing a Sustainable Business
External Analysis – YU Ranch
Strategic Advice to Bryan Gilvesy, Founder/Owner/CEO of YU Ranch
Industry Trends and Drivers
a. Canadian Beef Industry
The Canadian beef industry has been steadily declining as demand has been replaced with substitutes including poultry, fish, and other protein alternatives. Specifically, Canadian beef consumption has dropped 48% from 38.8 Kg per capita annually in 1990 to 20.2 Kg per capita annually in 2010. The industry is categorized into two segments: conventional beef production and Grain Fed Sustainably Raised (GFSR) production.
b. Grain Fed Sustainably Raised Beef (GFSR) Market Trends
The GFSR market is a growing segment as consumers are becoming more health and environmentally conscious. Contrary to the declining demand for conventional beef production, demand for GFSR beef is currently growing at an annual rate of 20%.
A scan of the political climate shows an increasing awareness and regulatory pressure on the health and safety of beef production. Governments continue to regulate traditional beef production practices while attempting to simultaneously promote and incentivize more sustainable production.
Beef manufacturers are also feeling downward social pressure due to massive shifts in consumer sentiments with regards to animal rights and consumer preference moving toward hormone and antibiotic-free beef. There appears to be little technological innovation in the beef industry outside of a shift away from additives and hormones. The positive economic growth over the last couple of years is expected to persist in the near future and should not negatively affect the demand for beef.
For a more comprehensive PEST analysis, see exhibit 1.
Influential Market Factors
i. Consumer Preferences
Societal shifts have contributed to the reduction in demand for beef as consumers are more concerned with the nutritional value of their food. Consequently, beef substitutes (such as chicken and fish) have gained a larger share of the North American demand for meat products because they are significantly more nutritious. GFSR beef satisfies many of these requirements containing lower saturated fat and cholesterol per kilogram than conventional beef while also containing higher levels of protein.
II. Hormone and Antibiotic Use
Conventional beef producers employ the use of hormones and antibiotics to increase the beef yields while simultaneously reducing the time required to bring the cattle up to slaughter weight. In reaction to these practices, there has been a strong social movement to curb the use of antibiotics and hormones in beef production as well as government regulation to curb the use of these additives. The increased awareness has spurred growth in demand for additive-free beef including GFSR.
The price of beef remains higher than the price of substitutes which is also driving the lower demand for beef. This higher price is primarily a result of the…