Can grass fed beef scale in the USA? ButcherBox CEO & founder, Mike Salguero, paints a vision for it.
Prime Future 039: the weekly newsletter highlighting trends in animal protein
I am thrilled to share a conversation with Mike Salguero, founder & CEO of ButcherBox. If you’ve read Prime Future for more than a minute, you know I’m bullish on business models that leverage tech and reorganize supply chains in ways that create more value for producers (on one end) and consumers (the other end).
Enter ButcherBox.
ButcherBox was started in 2015 to “ship meat in the mail” with a focus on meat with claims that vary by protein. In the beef category, the company intended to sell grass fed beef which meant sourcing from Australia/New Zealand. But as their business matures, ButcherBox is looking to source grass fed beef in the US…a segment that does not currently exist at scale. There are several oft quoted “reasons this won’t work” that have to be eliminated in order for the US to develop a robust grass fed segment from genetics to pasture management to processing. It will take creativity, technology, incentive alignment, and a lot of time in front of the white board to figure out grass fed beef in the US but where there’s a market, there’s a way.
Mike is a tech entrepreneur turned meat industry believer who is building a brand for the long haul, as in 100-year-time-horizon. This is all the more interesting given Mike’s surprise when he started exploring the meat category that there (really) are no brands in meat, especially as retailers have dialed up private label offerings. But one segment’s miss is another segment’s opportunity, and here we are seeing how business model innovation can create value. Delicious.
I hope you enjoy Mike’s insights as much as I did. A few time points in time to highlight:
7:30 minutes - Why the only early outside capital into ButcherBox was via a Kickstarter campaign, instead of the traditional venture capital model.
14 minutes - Mike talks about some of the messy early challenges of getting ButcherBox off the ground.
24 minutes - The 2 reasons ButcherBox customers are customers? Mike says its split between convenience (easy order, get a box the next day) and access (to meat with specific claims).
31 minutes - Mike talks about the future of ButcherBox which has implications for retail (how consumers purchase meat) and livestock/meat value chain as they look at how to source grass fed beef, at scale, in the US.
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Last week we looked at the processing bottleneck in livestock & poultry, here are a couple of smart replies from readers:
“Doesn't this actually kinda (not all of it) apply to poultry if you start to think about the worker welfare side of things? It's just economically more difficult to create a different model because of margins and vertical integration. But mobile poultry processing is/should be a thing. When you think about butchering trends, breaking down birds is one of the first skills, and it makes a remarkable difference in flavor. I worked for Jonathan Waxman, a fairly known chef who's "thing" at Barbuto is his high temp roast chicken, while he was expanding into Nashville. We only ever let 1 guy break down birds because he was so good at it (minimal handling and gentle and uniform.) Experience is flavor (and vice versa) and it actually makes a difference (maybe/probably just in cooking even-ness) in final chicken texture. I think that poultry slaughtering and processing equipment (both in mobile/on farm context and large scale plants) improvements is an underinvested in space.” - Connie Bowen
“The packers have a fantastic deal going as long as no one “kills the golden goose” by building another BIG plant. But history tells us that usually someone gets greedy. Note the construction of 5 new big (mostly producer owned) hog plants after the big producer margins of 2014. But cattle producers are so much more fragmented than the big hog producers. The cattle cycle makes and breaks feeders and packers who operate in a fixed capacity business. When there are more cattle than bunks or shackles, feeders and packers have leverage as they are not forced to pay up to keep full. The opposite happens with a smaller herd. I remember 20 years ago when packer margins averaged $12/head for nearly a decade. They now average 20x that! Opportunity in the beef packing world is created by HUGE retail margins. That gives great incentives to the D2C model.” - Brett Stuart
My wife has now bought from Butcher Box 3x's. She pulled a fast one on me as I typically purchase the protein for us other than chicken. I don't eat steak often - perhaps 1-2 per month. I am particular on what cut I like and how to season and grill. Candidly, I could tell by taste and texture that the beef was grass fed - I wasn't overly impressed. That said, I recognize it could be an acquired taste.
Thanks for article on Egg sexing - exciting space and would contribute mightily to agribusiness if this works *at scale* as described. I subscribed and look forward to gaining access to the article.