Grass-fed beef commands premium prices, but Dana Ehrlich, co-founder and CEO of Verde Farms believes his company can bring grass-fed beef within the financial reach of more consumers; and he’s leading the charge to “democratize” grass-fed beef by expanding his company’s product lineup to include more moderately priced cuts of beef.
In September, the company launched Never Ever and Grass-Fed beef product lines. Verde Farms Never Ever features pasture-raised meats sourced from cattle that were not fed in feedlots and never treated with growth hormones or antibiotics. The company’s grass-fed products include beef sourced from cattle that have received antibiotics only when necessary to treat a specific condition.
Verde Farms counts Wegmans Food Markets, Whole Foods Market Inc. and other national retailers as current customers for the company’s organic, grass-fed beef line.
Value proposition
Founded in 2005, Woburn, Massachusetts-based Verde Farms is a supplier of pasture-raised, grass-fed beef for both retail and foodservice customers. The company leverages a network of family farms in Uruguay, Australia, the United States and Canada that raise cattle without growth hormones while adhering to humane animal welfare standards.
The company sources predominantly Hereford and Angus breeds of cattle. Live weights are between 1,100 lbs. to 1,200 lbs., and weights can vary by season. The meat is typically leaner compared to grain-finished beef, but Ehrlich says leanness is an attribute that goes well with the consumer that’s looking for healthier product. But the price of grass-fed continues to be a hurdle to consumers interested in it but who may be daunted by the price point of grass-fed beef.
“As we progressed, we noticed that there was a big gap between the conventional and grain-finished beef – where the cattle are finished in feedlots – and our organic grass-fed beef,” Ehrlich says.
For example, the difference in commodity retail beef prices and grass-fed retail beef prices in November were as low as $3.13 for short ribs to a high of $23.55 for filet mignon, according to the US Dept. of Agriculture’s National Monthly Grass Fed Beef Report.
To address the price premium, Verde Farms developed the Grass-Fed line as an entry-level grass-fed program for foodservice and retail customers, while the Never Ever line is a middle-range program within the grass-fed sector. Verde Farms also offers a Reserve line which is a steak-house quality, 100-percent grass-fed, grass-finished line. Ehrlich believes the premium between commodity beef and grass-fed beef will narrow over time.
“Grass-fed beef doesn’t have the corn-based subsidies that are so predominant within the feedlot-based system,” he says. “So, over time there probably will be some premium, even at the entry-level grass-fed program. But as we scale up and we use the economies of scale that the rest of the sector uses we can pass on those cost savings to the consumers.
“So our entry-level grass-fed price point, while still above conventional (beef) is still accessible to the vast majority of Americans,” he adds. “Then, there are other things that we can do such as distribution. The wider our footprint gets on distribution the more accessible not just within the Northeast, mid-Atlantic and West Coast, but throughout the middle parts of America.”
Ground beef leads the category regardless of the tier within grass-fed, but Ehrlich says Verde Farms is well-balanced by using the whole carcass. “So, that means using everything from your middle-meats to end cuts to ground beef.” Ehrlich adds that Verde Farms currently is engaged in some value-added beef production and the company will focus on that segment going forward.
Argentina inspiration
Ehrlich was a semi-conductor engineer prior to entering the beef business. He was working on his MBA at the Tuck School of Business at Dartmouth College when he participated in an exchange program in Buenos Aires, Argentina.
“It was there that I started eating a lot of grass-fed beef, probably at least five (to) six days a week; and it wasn’t until I was back in the US that I discovered there was something different about the beef we were eating here, and I started to delve into it,” he says.
He discovered a strong potential of a business opportunity, coupled with his personal interests in entrepreneurship, food, the environment and health and wellness. “I saw the intersection of all these things come together and the promotion and transformation of the cattle industry almost back to the grass-fed cattle model could solve a lot of environmental issues, as well as personal issues,” he explains.
Ehrlich admits he faced challenges transferring to the beef business from a background in the high-tech industry, but he says many of his skill sets applied to the beef sector.
“I had a tremendous amount of background in operations and product management/product development and that carried over very well,” he says. “And there were a lot of things that did not carry over in terms of my knowledge base. It took a significant amount of time to learn at the beginning, and of course, you always learn as you go along. It’s been a long road, but now we’re at the point where we’ve developed the company into something substantial and we have a lot more progress to go.”
Part of the company’s progress is the conversion to a new proprietary information technology infrastructure based on the Salesforce platform.
“From what I’ve seen, especially in most small-to-mid-sized meat companies, is they’re very knowledgeable about the meat industry, but less sophisticated when it comes to the technology side of things,” Ehrlich says. “So, I’ve taken my background and knowledge and contacts within the tech sector and tried to figure out a way that we could leverage that knowledge and apply it to our platform to make it more scalable, provide more insights into the data that we’re collecting, and ultimately provide a lower-cost and higher customer service touch to our customers.”
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Focus on food safety
Verde Farms relies on a network of producers and processors for finished products. The company’s partners are held to rigorous animal welfare and food safety standards, Ehrlich says. For example, all ground beef is subject to test-and-hold.
“We have a stringent set of requirements for folks throughout the supply chain,” Ehrlich explains, “and that goes down to the farm level in terms of animal welfare and raising protocols. We even go so far as not allowing any dairy or tropical breeds into the program to ensure good quality of the meat. We have other requirements such as SQF or BRC certifications of our plants. So, there’s a long list of protocols and certifications that we require of all of our partners within the chain.”
Growing on grass-fed
Verde Farms is on a growth trajectory but not only in sales and Ehrlich says all the pieces are in place to scale up the company for the next three years and beyond. The company recently expanded its executive team to include Paul Boulanger as CFO and COO; Joe Koch as vice president of sales and Pete Lewis as vice president of marketing. Pablo Garbarino, Verde Farms co-founder and Ehrlich’s classmate at Dartmouth, heads up South American operations.
“After 10 years and exponential growth, it was readily apparent that there were only so many hours in the day and so far that I could scale the organization,” Ehrlich said. “I saw a tremendous amount of potential still within the sector, not just for the next year or two, but far beyond. It was clear to me that bringing on both very talented individuals that could complement my own skill set with their own knowledge base that they bring, as well as just the horsepower to drive the various teams.”
Ehrlich adds that scaling up the Verde Farms brand has led to the addition of a marketing team and a sales department so that face-to-face meetings with customers can continue. “We’re also putting more time and attention on social media, including Facebook, on promotions and merchandising from the shelf out,” he explains. “So there are a lot of different things that we can bring to the table to make not only ourselves successful, but our customers and hopefully, consumers when they bring the product home and eat it at the kitchen table.”
Verde Farms also relocated to a new space that is double the size of the former office to accommodate the company’s growing staff; foster product development and enhance client services. “Even outside of our senior management team, our employee base has grown considerably over the last few years, and I expect that to increase,” Ehrlich says.
Eyes on feedlot-free
Verde Farms aspires to be the leading brand within the grass-fed beef category, Ehrlich says. But the company also is working toward a beef production system that doesn’t rely on feedlots for cattle. “We squarely have our eyes on the feedlot-based system, so it’s not really a particular competitor but really a farming-and-raising method and finishing method,” he says.
Verde Farms doesn’t expect the commodity beef sector to change overnight, but the transformation of the egg industry to cage-free production is a positive sign. “It certainly takes a lot longer to grow cattle; there’s a lot of implications for how that could happen, but our goal with Verde Farms is to help promote and educate on the benefits of grass-fed beef, and then let consumers make that choice,” Ehrlich says. “I think over time the more that consumers learn, the more they’ll be encouraged to move in our direction.”
