Decades ago, beef jerky was a special treat that only a few of the gas stations at the time carried. It wasn’t as plentiful or popular as it is now. One big, dominant beef jerky producer from Wisconsin changed all that…good for them, seriously, that’s the American dream.
But much in the same way that big adult beverage companies streamlined processes and created adult beverages that would appeal to the masses to accomplish massive sales goals, it left a big gap in the market for traditional American quality, hand made products – old fashioned stuff that REALLY is better. This economic model repeats across many boundaries. But what, exactly, does it have to do with the cost of beef jerky?? The answer is…just about everything.
In the process of creating a beef jerky empire, one of the only ways to beat the competition and gain a decisive edge in sales is to continually drive down cost, while maintaining or slightly increasing cost to the consumer so both manufacturer and distributor may flourish. While scale of economy – a fancy phrase for “mass production” – is the best way to reduce cost, the easiest gains are always reducing raw material costs. What’s the best way to reduce material costs without sacrificing quality? Get as close to the source as one can. Vertical integration. Beef is big global business and while quality is a factor that is considered in the equation, it’s darn sure not the only one. Cost is always the lowest common denominator in the mass production model.
For us little guys, it’s not all that different, but on a much, much smaller scale. The more jerky we sell, the better we can make the price…to a point. We made a conscious decision early on to not go have an arm wrestling match with a Wookie – “Star Wars” reference – and let the guys that are really big go lead the charge on the lowest priced, volume manufactured beef jerky. At Nebraska Star® Beef / Lucky® Beef Jerky we put quality in the crosshairs and keep our focus right there.
We’ll cut to the chase… Jerky is expensive stuff. The reason…shrink. Historically, beef has always been sold by the pound as a raw material. This price fluctuates a fair bit, but for the sake of this blog, let’s say “beef rounds” (the part of the carcass most commonly used for traditional jerky) is $4.50 per pound which is well within the actual pricing bell curve.
To illustrate, let’s follow a 100 lb batch of jerky through the jerky making process. The rounds cost $4.50/lb, but $.15/lb was added in freight and storage costs. So when these rounds hit the production floor, they are worth $465.00. Now we add labor to trim any excess fat, then slice, season, tumble and lay it out on drying racks, by hand. For the sake of simplicity, we’ll call production cost $2.00/lb (to include seasoning blend, all labor, and cooking) and the total weight of the rounds was reduced by 10 lbs due to trimming, so now we have 90 lbs of finished, ready to cook jerky that now carries $665.00 cost.
The cooking process will reduce the 90 lbs of jerky to approximately 40 lbs of finished jerky that will be packaged and sold. 40 lbs of finished jerky is now carrying a cost of $665.00 works out to $16.63/pound, or $1.04/ounce. Now, we must package the jerky. The cost for the individual package, labor, case pack and labels, for simplicity, we’ll call $.25/package for a 1.5oz package.
To arrive at a cost for our 1.5oz bags, we take the finished jerky cost $1.04 X 1.5oz = $1.56. We then add the packaging cost to the meat cost: $1.56 + $.25 = $1.81. On average, it’ll cost at least $.10-.12 per bag to transport it to our distribution center. So the final cost to put a 1.5oz bag of very high quality beef jerky on the shelf in the warehouse comes in just under $2.00/bag. This does not factor in cost for shipping, aging or a myriad of other overhead costs that most folks don’t consider unless they run a small business. We sell this bag of jerky for a whopping $2.80, when purchased in case quantities…and we pay the shipping.
If you made it this far, feel free to call us crazy, unrealistic, or a variety of other names we’ve probably already called ourselves… We already know we’re not going to get rich selling beef jerky, but we are committed to delivering the absolute best beef jerky we can make to customers that we value greatly, for a very fair price.
If you love jerky and haven’t given Lucky® Beef Jerky a try, please do, you can taste the difference.