Omaha Steaks CEO Talks Beef Prices, Demand
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Hello and welcome. This is The Michelle Hussein Show. I'm Michelle Hussein. I speak with people like Elon Musk. I think I've done enough. And Shonda Rhimes. That's so cute. This will be a place where every weekend you can count on one essential conversation to help make sense of the world. So please join me, listen and subscribe to The Michelle Hussein Show from Bloomberg Weekend, wherever you get your podcasts.
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All right, we're just two days out from Thanksgiving, but forget the turkey because Americans can't get enough of beef. The U.S. is the world's largest consumer of red meat, but inflation, tariff pressures, and shrinking cattle herds have sent prices soaring. Despite this, though, our next guest says that American demand for beef Remain strong. I'm pleased to welcome Nate Rempe. He is the CEO of Omaha Steaks. Nate, great to have you with us. And we just had that chart up of beef prices. Talk us through what you're seeing in your seat when it comes to the cost of your steaks. Yeah, I mean, the demand is really high and the supply is low. So my business focuses a lot on the power that we built over 100 years to leverage flash freezing where we can buy in the commodities market when we see little breaks in the market.
build that inventory, and then leverage some of our supply chain, leverage our processes and automations to hold our prices pretty static. In fact, America is going to be, I think, pleasantly surprised when they come to omahasteaks.com. They're going to find that our premier gift package, that perfect gift, is going to be $89.99 again this year. And I told my teams internally, this is one of the the great moments for Omaha Steaks to really step forward and shine and leverage and flex our muscle that is that vertical integration and that ability to play that commodities market. But, you know, watching the beef market now has been just fascinating for my seat, seeing what it's doing, particularly in grocery stores across the country.
Well, talking about the beef market more broadly outside of just your business, I mean, when it comes to matching supply and demand, how does the U.S. necessarily boost supply? Or is it just inevitable that you're going to have to try to source beef from overseas? Yeah, I think there's a lot to be learned about the supply chain of beef in America. Only about 13% to 14% of the total beef consumed in America is imported. And of that percentage, about 80% is lean trim that goes into ground beef. So in particular, portions, steaks and roasts and that largely come from the domestic supply. And those percentages really give you a sense for how important building the domestic herd is to meeting the demand of America's desire for red meat.
And so imports are an important part of the overall picture, but it's not the solve. It's not the silver bullet to addressing the cost of beef in America. Rebuilding that herd is the inevitable requirement uh for bringing supply up and that is not a fast process katie that's you know that's a six to eight year process to kind of get back to uh what would be considered a surplus in the size of the herd i am curious though nate how we do that and by how i mean is there a real push to do that beyond just yourself meaning a more coordinated push Yeah, it's a decision that ranchers and feedlot owners make.
What factors are driving beef prices up in the U.S.?
It's called heifer retention. It's an industry term that describes holding back the female animal to build the herd as opposed to sending it to market. Now, as you might imagine, when demand is high, there's a lot of motivation for ranchers and feedlot operators to send those female animals to market and take advantage of the optimal live price. But that comes at a cost. And over the last number of years, because of the demand for beef, those female animals have gone to market and have not calved. And the end result is the lowest herd size in 70 years. And so to change that is to make that decision to hold that animal back to build the herd.
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