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CAB ENJOYS HIGHEST PRODUCT UTILIZATION EVER

Wooster, Ohio, December 15, 2006 – A continuous quest for high quality and value led the Certified Angus Beef ® (CAB®) brand to its highest product utilization ever in fiscal 2006, which ended Sept. 30.

While supplies of most U.S. cattle began a cyclical increase last year, the high-marbling kind required for the CAB brand did not keep pace. Despite a record high 13.1 million identified Angus cattle, the record low 14% acceptance rate called for ingenuity from licensees, Certified Angus Beef LLC president John Stika said.

The brand's 13,500 licensees worldwide sold more than 544 million pounds in 56 countries. That seventh consecutive year of sales greater than half a billion pounds was only possible by marketing nearly 300 pounds of boneless beef equivalent per carcass.

Producers may associate CAB with such items as prime rib and strip steak, but the chuck and round hold the key to higher premiums, said Stika, who served as CAB vice president for business development last year before accepting the top post in November.

“The high-quality steak cuts are easy to market because of well-established demand for such products,” he explained. “But our licensees must sell more of each carcass as premium quality if producers are to realize most of the dollar value of their cattle. That creates the pull-through demand and rewards for on-target producers.”

According to a survey of licensed packers last year, those rewards have piled up to more than $200 million in grid premiums over the last decade. “It's essential to satisfy consumers, but there is no future for a brand that cannot reward its producers,” said Jim Riemann, who recently retired as CAB president. “Consistency, integrity, quality and trust—in every sector of the industry—have always been vital parts of the CAB brand.”

The American Angus Association's AngusSource® program provided a new opportunity as the CAB board voted last June to allow CAB eligibility for all calves registered with that source- and age-verified program. That's in addition to the industry standard of Angus-influenced cattle with a predominantly black hide color.

A partnership with Tyson Foods Inc. that began in February spurred a five-fold increase in CAB Natural brand sales, which allowed large grocery chains to begin offering the natural line by summer. Cattle eligible for the Natural extension have never received antibiotics or hormones, and have been fed a 100 percent grass and grain diet.     

CAB's retail division remained the largest segment, marketing 52 percent, or 286 million pounds. Maximizing the value of CAB ground beef was a key strategy.

Foodservice division sales increased three percent to 187 million pounds, the second straight annual record for the division, despite high prices and tight supplies. Waitstaff training led the way, and more restaurants began to feature CAB Natural, CAB Prime, or the ultimate combination.

Strong sales of value-added CAB products reflect mainly foodservice demand, but that doesn't always mean restaurants. New venues in the last year have included NFL stadiums in Jacksonville, Fla., and Glendale, Ariz.

Continuing to lead the premium beef category worldwide, CAB brand international sales grew by 10 percent. Canada, Mexico and Puerto Rico increased business, while Vietnam, Guatemala and Singapore embraced CAB products for the first time. The brand's current and pending trademark registrations increased globally, reflecting widespread recognition of the brand. In fact, the 2005 National Beef Quality Audit (NBQA) confirmed that CAB is the brand most associated with high quality U.S. beef.

Marketing and educational efforts kept pace with the changing consumer and producer landscapes. On the consumer side, targeted campaigns concluded this year in Pittsburgh and Detroit, while CAB staff expanded promotions in Albany, N.Y., and in Sacramento, Calif. On the producer side, South Dakota and Texas received special attention. The brand's customer service team was incorporated into its brand assurance division, to increase proactive communications with licensees from the start.

Beef purveyors, restaurateurs and retailers identified insufficient marbling as their top concern in the 2005 NBQA. To help identify—and work to overcome—the issues preventing superior marbling, CAB's supply development team worked with academic and business leaders to produce a comprehensive paper that was widely circulated within the beef industry.

The CAB board voted in September to enhance brand uniformity by replacing its yield grade specification in 2007 with more specific limits on carcass weight, ribeye area and fat thickness. The decision will address retailers' and foodservice operators' growing concern with increasingly large ribeye steaks.

To consumers, the CAB brand is Angus beef at its best®. To producers, it is also the brand that pays®, a newly trademarked phrase that recognizes the millions of dollars paid to producers of CAB qualified cattle each year.

Only eight percent of beef can achieve the brand's benchmark standards that ensure mouthwatering flavor, juiciness and tenderness. Offered at more than 13,500 restaurants and retailers throughout the U.S. and internationally, annual brand sales top $2.5 billion. For more information, visit www.certifiedangusbeef.com.

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