Case-Ready... Willing and Eager
Packers, retailers and suppliers are banking on the concept. But can consumers be sold Packers Shed Their Case-Ready Skepticism
by Ken Krizner, senior editor
Meat Marketing & Technology examines the status of fresh, case-ready meat programs in the United States and abroad.
Packers, processors, retailers, suppliers, and consultants express their views on the case-ready market products, technology, and sales potential.
Although it is still early in the game, many insiders report that interest and activity in case-ready is growing daily. Most are convinced that the time is finally right for fresh, case-ready meat, but there are some fundamentals that packers need to address to ensure success.
Case-ready was not in the meat industry's lexicon 14 years ago when Stan Fittenger was seeking new ways to market and sell his product.
He wanted a product that was more attractive and more cost-beneficial, both to consumers and to his company.
Fittenger decided that his Los Angeles-based company, Alpha Meat Packing Inc., and not the retailers, would package a portion of its beef and pork products.
Fresh, case-ready meat was born.
It was a radical and unheard-of concept in 1981. And there were problems to work out, most notably packaging, shelf life and the reluctance on the part of retailers to accept the idea that they would not be cutting the meat.
More than a few people were skeptical.
"I had to buy two partners out," Fittenger notes. "They thought I was foolish."
The problems were solved, and when one examines Alpha's balance sheet-from $2 million in sales in 1981 to $20 million in sales in 1994 based largely on its 48-item case-ready beef, pork and lamb product line-it isn't hard to see who was foolish.
Alpha's success story, however, is the exception, not the rule. As case-ready reaches an adolescent age, its growth has been measured in spurts-rather than sprints.
On more than one occasion in the past decade, some of the industry's heavy hitters-Excel Corp. and Monfort Inc. particularly-boldly proclaimed that fresh case-ready meat is ready to occupy a significant portion of the retail meat case.
But each time the proclamation was made, problems arose: Retailers priced case-ready meat too high; unions complained it was taking work away from meatcutters; and packaging, appearance and positioning were poor.
The industry now believes it has overcome those early problems. Packaging has been improved, which has led to improved shelf life and the product maintaining its bloom and color.
The hope is case-ready has gone beyond its formative years, and will soon become a consistent presence in the meat case and consistent profit-maker for processors.
Despite the advancements, however, other problems remain:
-- A lack of understanding continues to exist between retailers and packers. As soon as retailers and packers begin to share information, one pork executive says, then each will begin to see what the benefit of case-ready is to the other.
-- Packers have yet to convince consumers why they should buy case-ready meat over retail cuts. Until that happens, sales will lag and packers may find it more difficult to keep producing case-ready products.
-- The ultimate consideration for consumers will be the price of case-ready, which continues to be a problem in many instances. Case-ready cuts are typically priced more per pound than traditional retail cuts, and consumers have yet to be convinced that the premium price is worth paying.
But hope springs eternal. Non-meat personnel are increasingly running retail meat departments, putting a new attitude behind the meat case. When the old guard leaves, so do old philosophies, including the time-honored idea that meat should be cut behind the counter.
"There are new [meat] players on the retail side," points out Joe Leathers, director of merchandising for the National Pork Producers Council. "They are grocery people, not meat people. This is causing the supermarket industry to wake up to new ideas. This can only help case-ready products."
Of course when veteran meatcutters leave, they take with them a wealth of experience that is not being replaced.
The shortage of meatcutters will continue to mount, leaving case-ready products open to cut a wide swath across the meat case.
At least that's what packers hope.
Steve Petersen, case-ready business manager for Minneapolis-based Excel, an early case-ready beef explorer, best sums up the thoughts and hopes of the red meat industry when he says: "Timing is everything. I think the timing is right for case-ready."
If the timing is right, then the benefits are immense.
Packers could achieve brand-name recognition for a product that is consistently cut, packaged and labeled.
"The key is workmanship," cautions Ken Cupples, who as director of branded fresh pork for Premium Standards Farms is helping to establish the Princeton, Mo.-based company's case-ready program. "The product has to be better than what consumers already see in the meat case. If it is not, then consumers will not buy case-ready."
Farmland Foods is an example of how workmanship can help. In a test of case-ready pork in Florida, Farmland branded products outsold conventional product by a 2-to-1 margin. Surveys showed that workmanship was a factor in consumers choosing Farmland's brand.
No longer us vs. them
If case-ready is to reach its maximum efficiency, more work must be done to change the packer-retailer relationship, according to Leathers. It begins with sharing information.
"There is a lack of understanding on the part of retailers about what it takes to be a processor," he notes. "And there is a lack of understanding on the part of processors about what it takes to be a retailer. As soon as each side understands each other, then case-ready meat will take off."
It doesn't appear that an exchange of information is imminent.
Leathers points to a lack of attendance on the part of meat packers at a recent Efficient Consumer Response conference. The conference united executives from across the food industry spectrum. "It was very disappointing," he says in reference to the small number of meat industry executives.
"Until both parties wake up and realize [that they have to share information,] case-ready will be a struggle," Leathers warns. "There are some people who are willing to share, willing to enter into partnerships. Those people will be the driving forces behind case-ready for years to come."
What each party has to understand is how case-ready meats will help the other. A food industry consultant says the key is to remember who the ultimate buyer is-the consumer.
"What we are seeing in the food industry is a move toward strategic alliances between suppliers and retailers where the concentration is on consumers," says Bill Bishop, president of Bishop Consulting, a Barrington, Ill.-based consulting firm. "If case-ready is to become a success, knowledge alone is not enough. What is needed is a shared objective between processors and retailers of serving consumers.
"Retailers and poultry processors have an alignment to serve consumers," he stresses. "In pork, there is a contractual integration where everybody works together to grow the hogs, cut the pork, package the pork and ship it so that it hits a particular price point. You are also beginning to see that in the beef industry.
"Now, it has to be done [between red meat packers and retailers]," Bishop adds.
Jeff Neil, retail pork product manager at Springdale, Ark.-based Tyson Foods Corp., says packers must convince retailers that case-ready products will not replace retail cut meat.
The company has just finished testing 16 Tyson case-ready boneless and bone-in pork products in Indianapolis and hopes to have the program in supermarkets across the country by summer.
"Our program is a supplement to what retailers already have in the case," Neil stresses. "It allows [retailers] to fully merchandise the meat case at all hours of the day and night, and on weekends-whenever meatcutters may be off duty. That has been our selling point."
Learning curve
Excel's initial case-ready beef entries were taken off the shelf in 1991 and re-examined for packaging and marketing. Its new Double Diamond brand is being tested in stores within a 500-mile radius of Wichita, Kan.
Excel's early venture into case-ready beef was the program's most significant and visible lack-of-success story. After a five-year run, Excel took the line of more than 30 products out of the meat case because of a "purplish" color linked to vacuum packaging for shelf life, a "squishy" feeling consumers felt when picking up the product, and meat-case positioning.
One change is that Excel doesn't market Double Diamond to conquer the meat case, Petersen notes. The number of items was reduced to 23, including six in a new lean line.
"It is more of a convenient, value-added line this time," he admits.
Double Diamond brands include flank steaks, beef tenderloins and New York strips, items that are frequently out-of-stock.
"Consumers can go into a store 24 hours a day and pick one of these items," Petersen points out. "Our goal is to help retailers with their out-of-stock items. All they have to do is price [the product] and put it in the meat case."
Petersen notes that consumer acceptance of Double Diamond has been favorable. Neil echoes that sentiment about Tyson's case-ready program. Both companies are using extensive point-of-purchase materials to sell their products.
But everyone agrees that the jury remains out as to whether consumers will totally accept case-ready and make it feasible for packers.
"I don't think you have to convince consumers that case-ready is better than a retail cut," Premium Standard Farms' Cupples says. "What you try to convince them of is that there is no difference. The difference is case-ready products will prevent out-of-stocks."
Tyson's Neil disagrees. He points out that the strength of case-ready is that packers can control all aspects of production-from slaughter to the packaged product. With retail cuts, prackers eventually cede control to meatcutters.
"We control everything from farrow to finish," Neil says in reference to Tyson's vertically integrated plant in Marshall, Mo., where its case-ready products are made. "We provide consumers with a more lean, more tender end product because of this."
Petersen agrees with this assessment. "We emphasize our product's consistency," he points out. "All we do [at Excel's product development center in Wichita where Double Diamond is produced] is cut our product. Not that retailers are inconsistent, but they have so many other things to do other than cut meat. We believe we can be more consistent with our product and guarantee to the consumer great tasting beef that is consistent in nature."
But consumers also look at price, which has been an ongoing hindrance for the program.
Case-ready costs more per pound than retail cuts, and consumers have yet to be convinced that the premium price is worth paying. Double Diamond, for example, is priced about 20 cents a pound higher than retail cuts. Meat Marketing & Technology did find, however, that some retailers price case-ready the same as retail cuts.
Packers cannot control price, but they can control product reputation.
"If a processor differentiated case-ready products, advertised the product, and made people want it above and beyond [retail cuts], then case-ready will hold more value for the consumer," Bishop notes.
If packers do not make case-ready products stand above the meat case, then Bishop says consumers will ask: "Why should I pay more?"
Very beneficial
If packers can persuade consumers to pay a premium price for case-ready, then all agree that beef and pork packers, as well as the industries themselves, will greatly benefit.
When asked about the benefits, Leathers points to the poultry industry.
"If everything was case-ready, the [pork] industry could have consistency, just like poultry," he says. "Right now, we have different trim on products, different color trays, different wraps and different labels. Consumers are left shaking their heads and asking: 'What is this?' That does not happen in poultry because of product consistency."
As for individual packers, Leathers notes: "It's brand recognition. It's tying down a retailer to buy product from one brand, which has always been difficult."
Everybody agrees that by the end of the decade, case-ready pork and beef will be commonplace.
Back at Alpha Meat Packing Inc., Stan Fittenger says he believes case-ready is ready. "We have worked out some of the problems," he says. "I think the time has come for case-ready."
Only time will tell.