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Glad Cow When the mad cow scare hit, Maverick Ranch's sales actually rose. Its secret? Building customer trust.
By Brandon Copple

(FORTUNE Small Business) – The portrait of John Wayne at the entrance to Roy Moore Jr.'s office shows the Duke with his usual cowboy hat and don't-tread-on-me glare. Inside, Moore is on the phone, also wearing a cowboy hat but sounding anything but defiant. "This is Roy Moore with Maverick Ranch," he says softly. "I understand you had a problem with some of our beef." Moore, 69, is the founder, chairman, and paterfamilias at Maverick, a small Colorado natural-beef company, and he's talking to a woman in Florida who thinks her father contracted strep throat after eating Maverick's hamburger. The guy almost certainly didn't get his ailment from eating a hamburger, but Moore makes the call anyway to smooth things over. "I think people want a relationship with their beef producer," he says a few minutes after hanging up. "Especially nowadays."

Nowadays being, of course, the weeks since Dec. 23, when news broke that a cow in Washington State had tested positive for bovine spongiform encephalopathy--or mad cow disease. The deadly sickness, which can spread to humans, has giant beef producers like Excel, Swift, and Tyson reeling. At Creighton University in Omaha, economics professor Ernie Goss estimates that the mad cow scare could lead to 55,000 industry job cuts. At Tyson, which controls 27% of the $27-billion-a-year domestic beef business, analysts expect its beef sales to stay flat this year in the wake of the scare.

What's bad news for big beef just may be a godsend to the dozens of small natural-beef producers like Maverick. More and more consumers want to know where their beef is coming from, and they are turning to niche producers like Maverick that can ensure that their cattle aren't fed animal byproducts, the main cause of mad cow. Since the disease first surfaced in the U.S., Maverick's sales have been rising at a 40% rate, up from 15% last year. "Life is about timing, and maybe the time is now for natural beef," says Dan Vogel, editor of Meat and Seafood Merchandising magazine.

Natural beef--from cattle generally fed only grass and grain with no hormones or steroids--accounts for only 4% of the U.S. beef market. And no one thinks that small producers like Maverick will carve out big slices of market share from Swift, Tyson, and the other major players, which are already scrambling to make their beef safer. After all, Maverick's meat--its 96%-lean hamburger sells for about $3.80 a pound, 20% more than the price of lean ground beef from the giant producers--is too expensive to go mass market. But if Maverick can capitalize on the mad cow scare and grab just a point or so of market share, it would be a bonanza.

Maverick Ranch, which Moore founded in 1985 with the four sons (Rex, Charlie, Lance, and Monte) he had raised on the family spread in Idaho, produces what it calls "natural lean" beef, which is leaner overall and in theory safer than the boxed beef produced by giant processors. Last year the company, which distributes solely in the U.S., sold $90 million worth of beef, chicken, and pork, all bearing the Maverick label, at 2,000 stores in 33 states, making it one of the nation's largest branded beef producers. Moore won't release earnings numbers but says his business is profitable.

What makes Maverick tick? It not only raises healthy cows but has earned a high level of consumer trust, which the Moore family has been building with beef eaters for almost 20 years.

Maverick's beef comes from cattle born on Western ranches. The company contracts with some 300 ranchers and 36 feedlots to raise and fatten its beef. Each time the cattle change hands, from rancher to feeder and feeder to processor, the seller signs an affidavit swearing that the animals haven't been fed animal byproducts--a practice prohibited in the U.S. cattle industry since 1997--that can cause the spread of BSE.

After being weaned from their mothers, the cattle spend a few months grazing on pastures, then move to feedlots, where they're fed grain--mostly corn, with oats, barley, alfalfa, and some vitamins, but no artificial hormones or steroids. And just like humans--and unlike many mass-produced cattle--Maverick cattle aren't given antibiotics unless they're sick.

Last year Maverick implemented a new tracking system that gives each animal a digital history to go along with its trail of affidavits. The company now uses a device called Optibrand to scan the retina of every animal it has contracted to buy, at every point in its life. The retinal scan gives it an identity in Maverick's database. Using a global positioning system, the company can also tell exactly where each animal is.

The chances of a bovine in Maverick's system contracting mad cow are immeasurably small. If the disease did turn up, the company could use the retinal scan data to find out exactly where and how it happened (for more on tracking, see the box above).

Furthermore, there's almost no chance that Maverick will sell BSE-infected beef. All the company's beef products come from whole muscle meats--chuck, round, and sirloin. Mad cow most often spreads to humans when the meat is mixed with trace amounts of cattle brains and nerve tissue along the spinal cord.

Moore works hard to make sure his customers know what goes into raising a Maverick cow. At upscale markets like Chicago's Treasure Island grocery chain, every package of Maverick meat is labeled with a guarantee that its hamburger has been tested for antibiotics, steroids, and pesticides and contains a pamphlet describing the testing process and a picture of the Moore family. Jimmy Ashley, the stores' meat manager, has a rackful of Maverick's glossy blue-and-pink brochures next to the meat case. Since the mad cow scare, he's noticed that Maverick's sales have been rising and the brochures dwindling. "If anybody was reading them before, they were putting them right back," Ashley says.

The brochures should make good reading for anybody concerned about the purity of his food. They describe Maverick's extensive laboratory testing for nutritional value, bacterial microbes like E. coli, and residue from steroids, antibiotics, and pesticides. Maverick calls itself a "natural" beef producer and says its beef is free of chemical additives and harmful bacteria. But such a claim means only as much as the company says it does. The USDA has no rules defining what "natural" means, so producers can use the label as long as they can back up specific claims about the quality and safety of their beef.

To support those claims, the company formed its own laboratory, Guarantek Analytical Labs, which tests Maverick's beef. Once it passes the test, the beef is admitted to Maverick's processing plant, where it is welcomed with a rinse of citric acid, sodium chloride, and cold water--a natural cocktail that kills 99% of the bacteria living on the meat (that other 1% is good for you).

In an industry that contends with as many as 80 recalls a year, Maverick has never had even one. And yet, while the Guarantek lab is USDA-certified, the government doesn't monitor Maverick's testing or the claims it makes on its labels. "Producers can say a lot of things on their labels," says Ruth Kava, director of nutrition at the American Council on Science and Health. "The only way to know what most of it means is to pick up the phone and call them."

With its phone number on every package, Maverick gets lots of those calls. Since Dec. 23 it has been taking 40 to 50 inquiries a day from consumers, 90% of them calling with questions about mad cow. Many of the calls are answered by one of the Moores. "Customers believe the science," says Rex Moore, 39, Maverick's operations chief. "But what they really like is talking to somebody whose name is on the product. That's our picture in the brochure. People can trust us." The food retailers concur. "Natural doesn't mean a helluva lot to me," says Treasure Island's Ashley, "but those guys at Maverick say it is, and I believe them."

Charlie Moore, 34, the company's marketing chief, is creating more in-store literature detailing the procedures that ensure that the cattle entering Maverick's food chain are fed pure vegetarian diets and explaining the tracking system.

Many of Maverick's safeguards will be adopted by the rest of the industry in response to the mad cow scare. Within two years even the big players expect to be tracing their product as effectively as Maverick from calf to meat case. "We will see more competition because of this," says Charlie Moore. But the industry will also see more shoppers willing to pay a premium for beef they can trust to be free not only of disease but of artificial chemicals--a trend that should keep Maverick's sales sizzling.