WEBVTT - Omaha Steaks CEO Talks Beef Prices, Demand

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news.

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<v Speaker 2>All Right, we're just two days out from Thanksgiving, but

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<v Speaker 2>forget the turkey because Americans can't get enough of beef.

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<v Speaker 2>The US is the world's largest consumer of red meat,

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<v Speaker 2>but inflation, tariff pressures, and shrinking cattle herds have sent

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<v Speaker 2>prices soaring. Despite this, though, our next guest says that

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<v Speaker 2>American demand for beef remains strong. I'm pleased to welcome

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<v Speaker 2>Nate Rempe. He is the CEO of Omaha Steaks. Nate,

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<v Speaker 2>great to have you with us, and we just had

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<v Speaker 2>that chart up of beef prices. Talk us through what

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<v Speaker 2>you're seeing in your seat when it comes to the

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<v Speaker 2>cost of your steaks.

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<v Speaker 3>Yeah, I mean, the demand is really high and the

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<v Speaker 3>supply is low. So my business focuses a lot on

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<v Speaker 3>the power that we built over one hundred years to

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<v Speaker 3>leverage flash freezing where we can buy in the commodities market.

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<v Speaker 3>We see little breaks in the market, build that inventory

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<v Speaker 3>and then leverage you know, some of our supply chain,

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<v Speaker 3>leverage our processes and automations to hold our prices pretty static.

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<v Speaker 3>In fact, America is going to be I think pleasantly

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<v Speaker 3>surprised when they come to Omaha Steaks dot Com. They're

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<v Speaker 3>going to find that our premier gift package, that perfect

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<v Speaker 3>Gift is going to be eighty nine to ninety nine

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<v Speaker 3>again this year. And I told my teams internally, this

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<v Speaker 3>is one of the great moments for Omaha Steaks to

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<v Speaker 3>really step forward and shine and leverage and flex our

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<v Speaker 3>muscle that is, that vertical integration and that ability to

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<v Speaker 3>play that commodities market. But you know, watching the beef

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<v Speaker 3>market now has been just fascinating from my seat, seeing

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<v Speaker 3>what it's doing, particularly in grocery stores across the country.

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<v Speaker 2>Well, talking about the beef market more broadly outside of

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<v Speaker 2>just your business, I mean, when it comes to matching

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<v Speaker 2>supply and demand, how does the US necessarily boost supply

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<v Speaker 2>or is it just inevitable that you're going to have

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<v Speaker 2>to try a source beef from overseas.

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<v Speaker 3>Yeah, I think there's a lot to be learned about

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<v Speaker 3>the supply chain of beef in America. Only about thirteen

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<v Speaker 3>to fourteen percent of the total beef consumed in America

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<v Speaker 3>is imported, and of that percentage, about eighty percent is

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<v Speaker 3>lean trim that goes into ground beef. So in particular,

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<v Speaker 3>you know, portion steaks and roasts and that largely come

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<v Speaker 3>from the domestic supply. And you know, those percentages really

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<v Speaker 3>give you a sense for how important building the domestic

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<v Speaker 3>herd is to meeting the demand of America's desire for

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<v Speaker 3>red meat. And so, you know, imports are an important

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<v Speaker 3>part of the overall picture. But it's not the solve,

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<v Speaker 3>it's not the silver bullet to addressing the cost of

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<v Speaker 3>beef in America. Rebuilding that herd is the inevitable requirement

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<v Speaker 3>for bringing supply up. And that is not a fast process, Katie.

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<v Speaker 3>That's you know, that's a six to eight year process

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<v Speaker 3>to kind of get back to what would be considered

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<v Speaker 3>a surplus in the size of the herd.

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<v Speaker 1>I am carrious, though, Nate. How we do that? And

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<v Speaker 1>by how I mean is there a real push to

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<v Speaker 1>do that beyond just yourself, meaning a more coordinated push.

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<v Speaker 3>Yeah, it is a decision that ranchers and feelot owners make.

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<v Speaker 3>It's called heifer retention. It's an industry term that describes

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<v Speaker 3>a holding back the female animal to build the herd,

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<v Speaker 3>as opposed to sending it to market. Now, as you

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<v Speaker 3>might imagine, when demand is high, there's a lot of

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<v Speaker 3>motivation for ranchers and feedlot operators to send those female

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<v Speaker 3>animals to market and take advantage of the optimal live price.

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<v Speaker 3>But that comes at of cost. And over the last

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<v Speaker 3>number of years, because of the demand for beef, those

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<v Speaker 3>female animals have gone to market and have not calved,

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<v Speaker 3>and the end result is the lowest herd size in

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<v Speaker 3>seventy years. And so to change that is to make

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<v Speaker 3>that decision to hold that animal back to build the herd.

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<v Speaker 3>And we're seeing, you know, early signs of that. But

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<v Speaker 3>what's super interesting, guys, is that when you make that

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<v Speaker 3>heifer retention decision, it actually further exacerbates the size of

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<v Speaker 3>the herd because fewer animals are going to market. So

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<v Speaker 3>to say it's gonna get worse before it gets better.

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<v Speaker 1>Yeah, just real quickly, Nate, we only have about thirty

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<v Speaker 1>seconds here. But I am curious just about long term trends,

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<v Speaker 1>you know, so looking really further out and consumption trends

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<v Speaker 1>and consumption patterns. And I know we've seen oscillations where

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<v Speaker 1>you know, we all favor chicken for a while and

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<v Speaker 1>then it's beef, then it's pork, back and forth. How

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<v Speaker 1>do you sort of manage those swings?

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<v Speaker 3>Yeah, I mean you know, America trades down really in

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<v Speaker 3>any product set, and as it relates to beef and chicken,

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<v Speaker 3>you know, we're seeing some consumers opt for chicken, but

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<v Speaker 3>it's just not as satiable as a protein. It really

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<v Speaker 3>just doesn't deliver like beef doesn't. So we are seeing

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<v Speaker 3>some trade down kind of inside the product set of beef.

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<v Speaker 3>You know, those consumers that may have opted for the

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<v Speaker 3>Fla mignon are now exploring how amazing the top surloin

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<v Speaker 3>is or you know, a strip or a rabbi and exploring,

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<v Speaker 3>you know, up and down the category there and and

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<v Speaker 3>really pushing themselves to educate on where else they can

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<v Speaker 3>get their beef. All right, Nate michaelmas.

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<v Speaker 1>Steaks, all right, Nate, gotta leave it there. Nate Renby,

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<v Speaker 1>of course, the CEO of Omaha states