Growth Strategy Marketing Example: Wagyu Beef

Growth Strategy Marketing: Wagyu Beef

Building A Consumer-Facing Specialty Food Brand

Wagyu beef is a fascinating growth strategy marketing example that took a high-end product from the upper echelons of Japanese epicures to the shelves of Walmart.

The American love of gourmet foods has created a growing specialty food industry worth over $158B in 2019 and growing 7.5% annually since 2016. 

You can easily buy chia milk (chocolate or vanilla), mini macarons, dairy free yogurt and uncured ghost pepper salami.  The Specialty Food Association defines the category as:

“highest grade, style, and/or quality in their respective categories. Their specialty nature derives from…uniqueness, origin, processing method, design, limited supply, unusual application or use, extraordinary packaging, or channel of distribution/sales.” 

A delicious example of this definition is Wagyu beef, which embodies many of the stated characteristics of a specialty food.  Since its introduction from Japan, domestic US brands have been built around this unique product.

Growth Strategy Marketing: Wagyu Beef

Growth Strategy Marketing Example:
History of the Wagyu Beef Brand

In Japanese, Wagyu means “Japanese cow,” but it is anything but a run-of-the-mill bovine.  The ancestry reads more like Burke’s Peerage as each calf is registered with the Japanese National Livestock Breeding Center.  Four breeds comprise the Wagyu designation:

  • Japanese Black (Kuroge),
  • Japanese Brown
  • Japanese Shorthorn
  • Japanese Polled 

Japanese Black are 90% of Wagyu cattle.  The beef is prized for its extensive marbling that provides flavor and tenderness beyond other cattle breeds.  The marbling is achieved through a refined combination of nature and nurture: unique genetic makeup that allows the cow to add intramuscular fat as it matures and 600-700 days of a grain-based diet before slaughter.

The most well-known of the Wagyu beef is Kobe, from the Kobe region of the Hyogo prefecture.  The Wagyu beef must be from the Kobe region of Japan to earn the appellation of Kobe. 

Growth Strategy Marketing: Wagyu Beef

Growth Strategy Marketing Example:
The Wagyu Brand Comes to America

While the first Wagyu cows came to the US in 1976, the industry did not take off until falling Japanese tariffs on imported meat beginning in 1989 encouraged the export of Wagyu cattle to the US to provide an additional source of beef for the Japanese market. 

Between 1993 and 1997, almost 200 Wagyu bulls and cows were imported to the US before they were declared a “National Treasure” and their export was banned by Japan.  All US-raised Wagyu beef come from these original 200 Wagyu cattle.  (Very few products have the barrier to entry that Wagyu now enjoys).

While most of the beef was exported back to Japan during this time, some made its way onto the menus of fine dining establishments.  Unfortunately, the outbreak of BSE (bovine spongiform encephalopathy) in 2003 stopped the flow of beef to Japan off-and-on for several years. 

This challenge encouraged producers to take the first true step in growth strategy marketing. During those years, as the brand became more widely known, US Wagyu beef producers expanded domestic demand in fine dining followed by direct-to-consumer sales.

In 2016, the Japanese Livestock Industry Association trademarked “Wagyu Japanese Beef” (and has recently introduced regulation to control the use of the term Kobe.  As of 2015, estimates put the amount of Kobe beef from Japan to be about 3,000 kg annually into the US.

In addition to full blood Wagyu cattle, American-style Wagyu can differ from its Japanese heritage in these ways:

  1. First, the Wagyu was cross bred with Angus breeds to “get the best of both worlds” by achieving the flavor of the Angus with the marbling of the Wagyu. 
  2. Second, the grain-based diet was reduced to 250-450 days compared to the Japanese approach of 600-700 days.

The US Wagyu herd (and crossbreeds ranging from 50% to 94% Wagyu) has grown to 40,000 cattle, with an additional 150,000 heads imported from South America to meet the US demand. 

Growth Strategy Marketing: Wagyu Beef

Growth Strategy Marketing Example:
Expanding the Wagyu Brand into Retail

After gaining momentum in the foodservice channel, Wagyu beef is now sold direct to consumers online.  Many sellers are beef producers like Snake River Farms or distributors of gourmet foods like Kansas City Steak Company.  Several more websites like Wagyushop.com offer both imported and American-style Wagyu beef.  Costco offers both Japanese A5-graded (highest grade of imported 100% Wagyu beef) and American-style Wagyu.  D’Artagnan offers a full line of specialty meat products (from duck to Wagyu) to foodservice, Costco and on their own website. 

The prices for Wagyu reflect both the overall excellence of the beef and the cachet differences between them.

Purveyor – Item (March 21, 2022)Price per Pound
Wagyu Shop – A5 Hokkaido Striploin$206
CrowdCow – A5 NY Strip$126
Costco – A5 Top Sirloin$113
  
Wagyu Shop – American style Striploin$105
Snake River Farms – American-style NY Strip$89
Kansas City Steak Company – American-style NY Strip$98

Growth Strategy Marketing Example:
Wagyu Comes to Walmart

Using its private label brand, Marketside Butcher, Walmart has introduced American Wagyu beef at relatively bargain prices. 

Purveyor – Item (March 21, 2022)Price per Pound
Walmart Marketside Butcher American Wagyu Ground Beef$7
Walmart Marketside Butcher American Wagyu NY Strip$27
Walmart Marketside Butcher American Wagyu Ribeye$27

The Texas retailer, H-E-B, has done the same as Walmart with a private label Wagyu offering.

Wagyu beef from Japan is strongly protected both by its trademark and the control of how much beef is imported.  However, American-bred Wagyu, ranging from half to full blood, will have to defend its premium position from recent market additions that can use the Wagyu label.

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