Changing foodservice market is causing purveyors to rethink business strategies and consider alliances
by Bryan Salvage, editor
Change is accelerating in all sectors of the American meat industry. It is particularly affecting the meat purveying segment, which consists primarily of smaller, independent, family-owned businesses.
Some purveyors may feel like the walls are closing in on them as they struggle to deal with changing markets, changing consumer and customer needs, increasing consolidation and competition, learning and utilizing new business technology and the never-ending, spiraling operational costs. These are just some of the challenges that are driving purveyors to rethink their short- and long-term business strategies.
"The real challenge is how are purveyors going to position themselves in order to stay competitive in the market in view of these many changes that are taking place?" said Deven Scott, executive vice president and secretary of the National Association of Meat Purveyors. NAMP has more than 300 members from the United States, Canada and other parts of the world who process and market meat products for the foodservice industry.
'Voyage to discovery'
Scott's question was asked again and again by several purveyors during NAMP's 1994 Management Conference in Orlando, Fla. Although many topics were covered during mini-sessions-including a state-of-the-foodservice industry report, crisis management, grade and nutrition labeling, animal rights, evolving processing and packaging technology, Hazard Analysis and Critical Control Point, internal business security and team building-considering future alliances with other industry associations seemed to be on the minds of many attendees.
"Voyage to Discovery," NAMP's conference theme, was particularly relevant since the meeting was held for the first time in conjunction with the annual meeting of the National-American Wholesale Grocers' Association/International Foodservice Distributors Association. This joint meeting was the result of NAMP's board of directors' decision to set a course to forge new alliances with coordinating trade associations in an effort to strengthen its own network.
"Part of NAMP's long-range plan includes looking into the feasibility of a closer liaison with other associations," Scott told MM&T during a conference break. "We think there is merit to talking to other associations about combining our resources-whatever that may be and to whatever extent that might be.
"We're keeping an open mind and not ruling out anything," he added. "A merger with another association may be possible-or we may continue to operate autonomously as we are now. We're looking to the future and asking ourselves: Can we do it better?"
John Block, president of NAWGA and former USDA secretary, emphasized during one breakfast meeting that NAWGA's meeting was dedicated to partnering.
"If manufacturers, wholesalers and retailers can find new ways to cooperate, even as they compete to clearly define their role in the food marketing process, why can't the trade associations representing these players do the same?" he asked. "Why can't we clearly define our roles to minimize duplication and maximize support and services to our membership?
"We'll see more economic alliances in the future. Countries, businesses and associations are finding a need for partnering. We reached out to them [NAMP] and they to us. What kind of formal relationship will we establish? I don't know, but we're closer together than ever before."
During NAMP's conference critique, purveyors were split on the idea of possibly merging NAMP with another association. Some NAMP members were for closer working relationships with other associations citing economic and competitive reasons. Other members, however, were not as keen on the idea.
"I'm not as interested in forming NAWGA/IFDA relationships," said one Canadian purveyor. "I'm worried that we [purveyors] would lose our closeness and our own identity."
Another purveyor added, "Our business is not just a 'numbers' business. It's far more personal than other segments in the American meat industry."
Donald "Bud" Matheson, president and CEO of Woburn, Mass.-based Dole & Bailey Inc., wants to see NAMP remain autonomous. "My heart is with NAMP-and it always will be," he said.
Matheson's wife, Ellie, added, "My grandfather was one of the founders of NAMP. NAMP must either remain on its own or as its own independent group [if ties are formed with another organization]."
Foodservice forecast
Ron Paul, president of Technomic Inc., a foodservice consulting firm, told attendees that the general improvement in the overall economy, disposable personal income and employment will continue to positively affect foodservice. Technomic forecasts a 2.5 percent real growth for 1994.
Fast food and supermarket delis will remain the fastest growing segments, leading to an overall commercial segment real growth of 3 percent. However, real growth in the restaurant segment is forecasted to remain sluggish, and the recreation segment will be negatively impacted by new deductibility laws, which took affect Jan. 1.
This year should bring improved growth in the business and industry, vending, and school segments, while base closures will cause a sharp drop in the military segment. Overall, the non-commercial group is forecasted to have a 1.1 percent real growth in 1994.
Regarding future directions in menu trends, Paul said that more ethnic orientations and "old favorites revisited" will be popular in the breakfast category. In the area of appetizers, more appetizer-size portions of entrees will be featured, and new ethnic bites and designer toppings will also shine in the appetizer segment.
Spicy products; leaner, smaller cuts of meat (with more grilling, roasting and a major accent on flavors); marinades; protein as an ingredient in salads; and wider vegetarian offerings will be prominent in the center-of-the-plate arena.
"Foodservice growth won't return to the double-digit pace of the early 1980s," Paul told attendees. "Intense competition is here to stay. Conventional management approaches are no longer applicable. And foodservice growth will depend on exploitation of profitable niches."
The changing purveyor
At the end of the conference, MM&T asked NAMP's Scott if he had a message for packers and processors relating to working with purveyors in the future.
"Many packers and processors may look upon purveyors, in general, as the old, traditional purveyors-and there are still some of them out there who are doing a great job," Scott pointed out. "But the purveying industry is changing. Many meat purveyors are very forward in their thinking, and they're looking for opportunities.
"My message to packers and processors is continue to look for opportunities to make your product safer and better," he added. "Food safety is a very hot issue. Consumers expect the meat industry to do its very best to provide a safe, wholesome product."
In looking to the future of meat purveying, Scott said NAMP will keep abreast of technological advancements and business opportunities for its members.
"We're going to help purveyors take advantage of opportunities presented by the North American Free Trade Agreement," Scott stressed. "Some purveyors have never considered export opportunities up until now. Better executive and management training, with a lot more emphasis on the young executives in our industry, is a part of our long-range plan. I feel very good about the direction we're heading."