Beef industry cuts the fat out, as new marketing takes off
| Sioux Falls, S.D.
Your grocer's meat case is on the verge of dramatic change. New products are coming in. Years of hidebound company thinking are headed out.
``It's probably the most dynamic period in the meat industry in the last 50 years,'' Russell Cross of Texas A&M University says.
Adds John Francis of the Beef Industry Council, ``I think 1986 is going to be a landmark year for the beef industry.''
Although pork and other nonpoultry meats are involved in the change, the most dynamic shift is in beef. Falling sales and a consumer survey in January have prodded just about everyone in the beef industry into action. The industry's focus is shifting from producing to marketing. The result is an explosion of new products and innovations.
Here's a sampling of what's coming:
Leaner meat. When Jim and Nancy Stukel grill beef these days, there's barely any sizzle because the meat has barely any fat. The Stukels and other South Dakota investors have formed Dakota Lean Meats, a company that produces and markets lean beef. The cattle is genetically controlled and the meat carefully processed and packaged. Since mid-September, Dakota Lean has sold its special product door to door in Sioux Falls. ``We don't know if people are ready for it,'' Mrs. Stukel says.
Similar ventures are springing up around the country and big companies are also moving to leaner meat. In January, Kroger announced it was reducing the fat trimming around its meat from a standard 1/2-inch to 1/4-inch. ``That is 13 million pounds of fat that we won't sell this year,'' says William D. Parker, vice-president of meat merchandising for the 1,103-store chain, the nation's second-largest grocer. Retailers and a few packers, led by Excel Corporation, have followed suit.
Precooked beef. The industry is starting to imitate the poultry companies, which several years ago introduced precooked chicken packaged in individual portions. Like its poultry cousins, the new convenience-beef products can be heated up in a microwave oven. ``They're aimed toward the single person or the two-person family or the elderly,'' says Bob Parris of Monfort of Colorado, which started marketing six precooked beef products this summer. Other companies are also entering this niche.
Case-ready beef. A supermarket's meat department has always been something of a factory. Butchers cut, package, and price the beef they buy from the meat packer. But 14 Kroger stores in Charlotte, N.C., are now selling beef already packaged and priced by the packer Excel. Because it's vacuum-packed, the beef has a purplish tint, long considered a marketing no-no in the industry. But sales in North Carolina have been successful enough that Kroger recently expanded the product test to Columbus, Ohio, where it has some 50 stores.
Natural beef. The story goes that when Colorado rancher Mel Coleman was looking for a beef product to market, his daughter-in-law suggested raising cattle without feed-additives or other growth stimulants. Since 1979, Coleman Natural Beef has moved into the meat case, first in health-food stores and now in some 1,500 stores nationwide. ``At this point we're picking some upscale markets,'' says sales administration director Sue Daily. The beef typically commands a 25 percent premium over regular beef, and other companies, such as Maverick Ranch Brand, are moving into this arena.
All these moves involve more brand names for beef. Long content to sell generic cuts and let the retailer market them, beef packers will likely put their name on the product and their marketing skills behind it, says Dr. Cross of Texas A&M. That means more dollars will be spent on promotion and consumer research.
The strategy isn't new to the rest of the food industry. Even some beef companies have been longtime marketers, such as Omaha Steaks International, which sells meat products by mail. ``We've made our livelihood by being niche marketers,'' executive vice-president Fred Simon says.
Still, the current experimentation is unprecedented, and many specialists hope it will reverse the long slide in beef consumption. ``In 1986 we saw the industry really start to change,'' says Tom Pierson, a food-marketing professor at Michigan State University.
The 1985 farm program requires that for every head of cattle producers sell, they contribute $1 toward promotion programs such as the Beef Industry Council, which could see its $4.5 million advertising budget increase fivefold. ``That puts us in a whole new league,'' Mr. Francis says.