An item or the item for the retail meat case?
Should retailers get with the program? Proponents say that using a case-ready ground beef program makes sense. Retailers can prevent out-of-stocks, extend product shelf life, eliminate or reduce labor at the store level, and provide a safer food product by adopting the plan.
Case-ready ground beef is gaining retail and consumer acceptance, but ultimate trust may have to be gained through education and advertising.
In this special report, the editors of Meat Marketing & Technology report on the status of case-ready ground beef as it pertains to packers, retailers and processing/packaging technologies.
While there is agreement about case-ready ground beef's status, there is disagreement on how to market the product
by Ken Krizner, senior editor
Preventing out-of-stocks. Improved shelf life. Fear of contaminated product. Meeting the needs of consumers.
Meat processors generally disagree as to the reasons why case-ready ground beef products are beginning to have an impact on the retail meat case.
But on one point, there is agreement: Case-ready ground beef's time has come. Processors are producing it; retailers want it; and consumers are purchasing it.
If processors agree on that point, the question becomes not of case-ready, but how much case-ready? There is disagreement over whether case-ready ground beef should be an item for the meat case, or should it be the item of the meat case.
This is a question that has haunted the entire case-ready category for the past decade. Meat department employees, suspicious that case-ready products equaled loss of their jobs, resisted efforts to put the products in the meat case. That mind-set has stunted the growth of case-ready products to the point that only now-late 1995-can meat processors confidently say case-ready's time has come.
"There are a few leaders in the retail industry who are over their suspicions and are looking to build case-ready programs," notes Bill O'Neill, executive vice president and chief operating officer of Ashville, N.Y.-based Fairbank Farms Inc. "Of course, there are still some 'meat heads' in the industry. They will only be brought to the table kicking and screaming."
Fairbank Farms' case-ready program, including ground beef, has a certain philosophy. And if a retailer doesn't adopt that philosophy, the company would just assume move on to the next company.
"Case-ready is a program, not a product, and we are looking for meat directors who understand that differentiation. That is an important distinction," O'Neill stresses. "Case-ready is a way of life; it is a company making a commitment for long-term profitability.
"We do not have the attitude that case-ready is for out of stocks," he adds. "And if a retailer does have that attitude, we are not the company to provide him with the product."
At Cargill Inc., which has been on the leading edge of case-ready products for a decade, the philosophy tends to gravitate toward "being designed toward incremental sales," according to Mark Klein, spokesman for the Minneapolis-based packer.
Perhaps the difference in philosophy between Fairbank Farms and Cargill stems from Cargill's initial foray into case-ready. The company's Excel unit launched ground beef, as part of an overall case-ready line in 1986, placing it in about 1,500 retail stores. But among the problems the company found was that its marketing ploy as replacing store-cut product was not working. Eventually, the product was pulled from the shelves.
So, when Excel redesigned the product and re-released as Double Diamond in 1993, it was not promoted as the savior of the meat case.
"It is a more convenient, value-added line," points out Steve Petersen, case-ready business manager for Excel.
"[Case-ready ground beef] has to fit in with the needs of particular stores; not all stores need it," Klein adds. "It is not being designed-like the last time-as a total replacement for the meat department.
"Case-ready ground beef helps retailers meet the needs of the consumer," he says.
O'Neill agrees, but also believes case-ready ground beef helps retailers meet the needs of retailers.
"Retailers need to shift their thinking from gross margin to net profit," he points out. "The top management needs to make the decision: 'OK, let's go with case-ready ground beef.' And we have to convince retailers that if they do not adopt the entire program, it will not work.
"It is simply not just pulling their product off the shelves and replacing it with ours," he stresses. "It is a different way of life and different way of thinking. Not a lot of retailers are willing to make that shift in thinking."
Dick Waggoner, lamb manager for Cincinnati-based John Morrell & Co., which produces ground lamb among its case-ready products, believes case-ready fulfills a niche.
"It is the only way [John Morrell] can achieve a niche in the marketplace," he cautions. "We pay a little more attention to quality and value-added products than a retailer does."
Since lamb is not as heavily consumed as other red meat items (1.2 pounds annual per capita consumption), case-ready ground lamb can be extremely successful, Waggoner believes.
"Lamb is always the last item to be cut [in a meat department]," he notes. "In smaller areas, where there is not a lot of volume being done, case-ready ground lamb can be a big advantage."
The regional advantage
John Morrell ships 400 straight loads of processed beef, pork and lamb a week from its Sioux City, S.D., plant. Therein lies the advantage over its big brother competitors, according to Waggoner.
"Our advantage is we are the only multi-specie packer," he says. "With 400 trays [of different products] going out every week, I could put 100 pounds of case-ready ground lamb onto one tray and ship it out immediately. On the other hand, other companies are saddled with straight loads [products of one specie]."
Fairbank Farms targets retailers in a 300-mile radius of its Ashville, N.Y., plant, and "services the hell out of these retailers," O'Neill says. He adds this is very similar to what Fairbank Farms officials saw in Europe when they began debating whether to begin a case-ready program.
"We decided not to reinvent the wheel when we began case-ready," he points out. "With this philosophy, we can out-service anyone coming into the Midwest."
Of course, when talking about the top packers, Cargill does come to mind. But in essence, "we are all regional packers," Klein says.
"Some of [Cargill's] plants are just a few hours from Omaha, Neb.," he points out. "Plus, our sanitation program is such that we guarantee our [case-ready products] for 18 days from packing. Once they work their way through the store system, there is still several days of shelf life for that product."
When asked if Cargill is at a disadvantage in case-ready ground beef because of its size, Klein says: "We will try to eke out a modest living."
One official for a top packaging systems company does believe, however, that regional packers will have the advantage over packers such as Cargill or IBP inc. in case-ready ground beef.
"The opportunities for cow killers and regional beef packers are definitely trends that will develop out of [case-ready ground beef]," he says. "The films are available, and the packaging is available to easily print for a number of different chain stores."
Safer, but not fail-safe
Case-ready ground beef has arrived. Of that, there is little disagreement. Processors are left quibbling over why it has arrived.
One disagreement stems from the influence of food-borne outbreaks. Theoretically, case-ready ground beef will be safer because it will be handled by less people.
"The greatest benefit is that the product is as clean as possible," O'Neill stresses. "It can't be messed up in the back room because someone will not be able to add some bacteria-filled trim."
However, there is no evidence that case-ready ground beef is the answer to reduce levels of E. coli 0157:H7. Whether the product is contaminated with the pathogen would likely be determined before the product is packaged-either in a processing plant or in a supermarket meat department.
"E. coli 0157:H7 has no bearing on case-ready ground beef," Klein says, echoing a point made by retailers.
But as Waggoner points out: "Case-ready is here to stay; that is true."
The credence factor:
Retailers must convince consumers to trust case-ready ground beef
by Larry Aylward, managing editor
If trayed case-ready ground beef could talk, it would be hollering from the meat case to consumers: "Trust me!"
"Consumers have to learn to trust this product," says John Story, senior director of meat and deli for Minneapolis-based Fairway Foods, a wholesaler and retailer that sells IBP inc.'s case-ready ground beef.
However, such trust may have to be bought, points out Bill Curtis, meat department manager of a Bloomington, Ill.-based Cub Foods.
"It's going to take a lot of advertising on part of the packers and a lot of couponing to get people to try it," Curtis claims. "They are going to have to spend some money to educate consumers."
Many industry experts agree that case-ready ground beef is a finer quality product than ground beef produced in-store. Case-ready ground beef has a more consistent blend, it is safer to eat, and some will say it is better tasting, proponents say.
Problem is, case-ready ground beef can't talk. So, it remains somewhat of a meat-case mystery.
"If the customer doesn't buy it, we won't carry it," Curtis adds. "We won't take that loss."
Proper in-store merchandising is critical to consumer acceptance of case-ready ground beef sales, points out Jack Allen, professor of the Food Industry Institute at Michigan State University. An ingenious-looking package will not solely guarantee the product retail success.
Indeed, the package may look distinct and stand out among others, but many food shoppers are resistant to change, Allen points out.
Too many retailers tend to let a new product, such as case-ready ground beef, sell itself. "There is nothing [in the meat case] that communicates the inherent value-added benefits of the product," Allen claims.
Jacksonville, Fla.-based Winn-Dixie Stores has been selling case-ready ground beef for about eight years. To build trust, Winn-Dixie advertised the product heavily and sold it at bargain prices, says Hugh Minshew, Winn-Dixie's vice president and director of meat merchandising.
"We did a lot of advertising in the newspaper, telling customers all the good points of the product," Minshew says.
In-store sampling would greatly enhance the image of case-ready ground beef, and most merchants would agree the strategy would help sales, Allen points out. There is just one problem, though: cost.
"Sampling is good, but it's expensive," Allen notes. "I know it's not cheap, but the payoff would be enormous. The meat manager would agree, but he is under pressure to cut back [costs]."
Brochures detailing case-ready ground beef could be useful at the retail level. But many shoppers don't have time to read brochures. "[Passing out] brochures is worth doing, but I would not rely on that as the total vehicle," Allen says.
As is, consumers have many questions regarding case-ready ground beef. Grand Rapids, Mich.-based Spartan Stores began offering case-ready ground beef in May at 25 of its stores. Joe Gordon, brand manager of the product line, says the retailer is in the process of conducting a bounce-back survey to obtain consumers' opinions of the product.
But at Spartan outlets, consumers are asking questions, such as: What is different about case-ready ground beef? Why is it different? And what is better about the product?
If you ask Fairway Foods' Story, he will say case-ready ground beef is superior to in-store product. And he is echoing the feedback of Fairway Foods' customers, Story claims.
Fairway Foods offers three grinds of case-ready ground beef: 81-19 lean-to-fat ratio, 91-9 and 93-7. The leaner blends are more expensive, but the regular blend's price compares well to in-store ground beef prices.
"All of that may come to a screeching halt when we use up the current surplus of beef," Story points out.
Spartan Stores hooked up with Kalamazoo, Mich.-based Hoekstra Meats to sell case-ready ground beef. Spartan's specifications include seven grinds, featuring ground round, ground sirloin and ground chuck.
"We are giving the stores approximately five days shelf life on the product," Gordon notes. "The home owner has three days shelf life."
The specifications of the grind were implemented to achieve and maintain a bright red product color, Gordon points out.
Pricing does reflect leanness of the product, but it is not and should not be premium priced, Allen notes. Nor should it be sold at a cheap price.
"People associate quality with price," Allen says. "[Case-ready ground beef] is a superior product."
Allen suggests case-ready ground beef command a price comparable to retail-originated product as part of a merchandising strategy.
Manufacturer and location also have plenty to do with trust of the product. Fairway Foods sells case-ready ground beef in cities such as Fargo, N.D., and Mason City, Iowa. "People [in those areas] recognize IBP and we advertise it as IBP," Story says. "These people have a lot faith in IBP."
Another benefit of marketing case-ready ground beef is that retailers can virtually eliminate out-of-stocks. That aspect of case-ready ground beef is significant to Spartan Stores, which operates 24-hour stores.
"We can keep the case full all of the time," Gordon claims.
What about packaging? Do consumers need to see product in its tray? Most retail experts agree it is important to see product through its package, but Minshew says that case-ready ground beef could be an exception.
"Everybody knows what ground beef looks like," Minshew says. "If it's a T-bone steak or a chuck roast, a consumer may want to see it. [Case-ready ground beef] should be easier to sell."
The package should contain more information on cooking and product applications, Allen notes. "There are optimum uses for the different grinds," he adds. "Some of the meat has less fat, which would be good for products such as spaghetti sauce. [That information] should be on the package."
The grinds of case-ready ground beef may also be safer to eat, Minshew points out. The product is less handled because it is ground and packaged at the plant level.
"You are using the same meat and doing everything the same, but you are probably eliminating a certain amount of bacteria," Minshew says. "The more you handle product, the more chances you have for bacteria to develop," Minshew says.
But less handling does not ease the threat of E. coli 0157:H7, which originates earlier in the food chain, Minshew is quick to point out.
Still, some retailers seemingly believe that if they implement case-ready ground beef programs, they do not have to worry about being responsible for possible E. coli outbreaks. Whether these retailers sell case-ready ground beef or product ground in-store, they could track the origins of contaminated meat. But in either case, retailers should not point fingers at suppliers if an E. coli outbreak did occur, Allen states.
"We have a system and we are all part of the system," Allen notes. As part of that system, a retailer may have a golden opportunity on its hands. If the retailer learns to aptly merchandise case-ready ground beef, it will be improving its ground beef operation, which probably comprises 30 percent to 40 percent of its business.
"If a retailer can develop a superior ground beef program, it would create a halo effect over the whole meat department," Allen states.
Even though his store does not offer trayed case-ready ground beef, Cub Foods' Curtis says it's the next logical step. The radiance of a halo over his department sounds mighty nice.
"I see it coming," he says. "It is a smart way to go."
Technology fueling the evolution of case-ready ground beef
by Bryan Salvage, editor
Ground beef, also called the fifth primal, is a growing meat industry segment. Some experts say that the percentage of U.S. beef consumed in ground beef form is approaching the 50 percent mark.
"Ground beef is a very important part of the business," says Fred Mogilefsky, Monfort Inc.'s vice president of retail marketing. "Those who neglect [ground beef] aren't successful. We feel that case-ready programs are the future of the meat industry."
Case-ready technologies
There are many reasons case-ready ground beef's popularity is growing. ItÉ
Éfeatures improved sanitation and product consistency.
Éprevents out-of-stocks.
Éeliminates or reduces meat-cutting labor at store level.
Élimits product handling and liability.
Éavoids the need for re-packs.
Élimits product shrink.
Éoffers extended shelf life.
Various technologies, systems, equipment and packaging materials are available for packers developing case-ready ground beef programs. Harry Rubbright, president of Minneapolis-based Rubbright & Associates, lists three options for case-ready beef, in general:
-- Vacuum skin packaging.
-- High-oxygen content modified atmosphere packaging (80 percent oxygen and 20 percent carbon dioxide, for example).
-- Controlled atmosphere packaging, which includes carbon dioxide and nitrogen, and which also requires a passive or active atmosphere exchange at the retail store.
"A passive system is when you remove the product from a protective pouch-or remove a dome cover or a film layer-and allow normal atmosphere to access the product through a breathable, permeable film," Rubbright says. "You let the oxygen permeate through the film to change the color of the meat from purple to red; it replaces the transportation atmosphere.
"An active system is where you puncture the package in some way. There's not a peelable structure but there's a barrier structure, and you exchange atmosphere in the package by removing the carbon dioxide/nitrogen and putting a high content of oxygen/carbon dioxide back into the package," he adds.
Regardless of the technologies used, case-ready ground beef must look familiar to shoppers.
"Supermarkets are telling suppliers: 'Send us a [case-ready ground beef] package that looks like it was made in the back room of the supermarket,' " the director of market and press relations for one major packaging systems manufacturer/supplier claims. "Generally, they want the product in a foam tray, and they want it overwrapped.
"The consumer's first impression must be that it's fresh ground beef; that's absolutely critical," he adds. "If shoppers think the ground beef was made a week ago at a plant 800 miles away-or that it has been frozen-they will shy away from it."
Since ground beef is sensitive because of expanded surfaces exposed to the air, most case-ready foam trays are laminated with a barrier film to prevent air that's locked into the foam from entering the case-ready package. A modified atmosphere-usually a high-oxygen concentrate (80 percent oxygen and 20 percent carbon dioxide or nitrogen on the gas flush)-is pumped into the package.
"If you want to ship a lot of meat in a master pack [cardboard carton that's lined with a barrier-type film or bag], another option is to put ground beef into a standard foam tray, and over-wrap the foam tray with something similar to our shrink film," he adds. "Next, you put these packages of case-ready ground beef into a master pack. Once you fill the box with packages, you'll back-flush the bag and seal it.
"Once at the supermarket, they cut open the master pack, which immediately releases the modified atmosphere, and put the meat into the case," he adds.
Supermarket meat managers are demanding three days or more in assured shelf life after the case-ready ground beef arrives at the store, claim case-ready proponents.
"If you can't sell ground beef within a couple days after it arrives at the store, you are probably ordering too much," says the market and press relations executive.
The general manager of another packaging systems company agrees there is a lot of interest in case-ready ground beef.
"We installed a complete ground beef line with a stuffer/grinder, an automatic tray de-nester, and a portion-to-pack system for automatic loading of ground beef portions into the tray," he says. "The meat then automatically goes to a packaging channelizer and then into another machine for MAP. This complete system runs automatically at 75 packages a minute."
The MAP technical manager for a leading supplier of vacuum stuffing and packaging equipment tells MM&T: "Case-ready ground beef is here to stay, but it's still trying to untangle itself."
The technical manager's company has taken its traditional meat stuffer, which has been offered for 30 years, and modified it so it can extrude ground beef.
"We have made a combination stuffer/grinder," he adds. "We have a system that automatically de-nests trays; a machine that portions the ground beef and automatically puts it into the tray; conveys that to a four-lane divider where it's automatically loaded into a packing machine where it's vacuumed, gas flushed, sealed and out the door. It's fully automated and [product is] untouched by human hands."
The national sales manager for a packaging systems manufacturer says: "Our company now offers a tray-based system [foam/plastic or ovenable] for high-lofted products such as ground beef. We are moving into the total systems phase.
"We can take product trays, de-nest them, start running the trays down the line, automatically insert the pads, run the trays either through standard conventional meat packaging situations where they're substantially over-wrapped or take other types of trays and run them into lidding equipment, which pulls a vacuum and lids the meat after gas has been flushed in," he adds.
"Other equipment we represent extrudes a loaf, portions a loaf into exact weight, runs it across check weighers through metal detectors, and automatically positions that same meat-ground beef, for example-on a tray," he continues. "With something as specialized as the nice, high-lofted designer burger packs or designer ground pork packs, it has been acceptable to sell these in a tray-lidded concept. So you maintain a high-profile item, almost like a designer burger, designer bulk ground beef or pork."
Retrofit or total systems?
Packers wanting to get into case-ready ground beef may need only to retrofit existing equipment, claims the market and press relations director. And retrofitting to MAP is inexpensive,
"You can buy gas for pennies a ton," he adds. "If you're already using one of our packaging machines and you decide you want a gas flush, we can retrofit that for two or three thousand dollars."
The major components of a retrofit kit are a nozzle and a bottle of gas. "It's real simple and efficient," he adds.
Most experts contacted by MM&T, however, say that a successful case-ready ground beef program requires a total systems approach vs. simple retrofitting.
"When you enter case-ready manufacturing, it's almost like starting a small company within your company," said the director of marketing/fresh red meat for a major packaging systems firm. "Packaging equipment and the cutting rooms are different. Usually, when a packer starts case-ready, it sets up a completely different room, almost a satellite operation.
"It's a different production environment from the standpoint of temperature and sanitation. Both become even more critical," he adds. "There's also a level of superior workmanship you must accomplish and a level of consistency that's expected."
The MAP technical manager points out: "In order to make the whole system work, it's going to require partnerships throughout the chain; and agreements between the packing house, supermarket, machine and material suppliers."
In Rubbright's opinion, case-ready production goes all the way back to the boning process. "You might be able to bone on-rail to accommodate your slicing at the same time you're doing microbial checks," he notes. "Then that sliced or ground product is packaged in a pre-formed tray-or a smaller operation may use a form/fill/seal tray-but all of it's barrier packaging."
The MAP technical manager says case-ready production and partnerships can go even further back in the meat chain.
"We're discussing with a client the possibility of feeding vitamin E to feedlot cattle, which is a natural antioxidant," he adds. "This will enhance the case-ready ground beef program. When we run high-oxygen packaging, the enemy is oxygen because you create an oxidative rancidity before bacterial growth and that gives you the off-flavor and odor."
But at an extra $9 a head, who should pay for feeding vitamin E to the cattle: the packer or producer? And there are other capital investment considerations when starting up a case-ready manufacturing room or plant.
"You're talking at least $500,000 to start up an operation to supply 100,000 pounds [of case-ready ground beef] a week, which is nothing to a [major supermarket] chain," the MAP technical director notes. "So, will the packing house make that investment-which it didn't make before- without a commitment from a supermarket?"
The future
Many supplier sources agree that case-ready ground beef programs will continue to grow because they will be pulled through the system.
"In the past, we had equipment suppliers, material suppliers and packing houses pushing the supermarkets," the MAP technical director says. "This movement has reversed. The only way case-ready can work is if it is pulled through the system by the supermarket.
"If [supermarkets] want it, they will be more agreeable to partnerships," he adds. "If packing houses agree to invest $1 million or $2 million in capital goods, they will be guaranteed some sort of tonnage. All the ingredients for case-ready success are here. In the past, the only missing ingredient was the supermarket."
The vice president of marketing for a packaging systems manufacturer says to expect a lot of movement in case-ready ground beef during the next several years.
"There are companies testing the market right now with simple tray sealers, but I don't see tray sealers as the long-term solution," he adds. "The form/fill/seal machine will be the final solution."
Not everyone, however, is upbeat on the future of case-ready ground beef. One veteran national coordinator for a packaging systems manufacturer disagrees with those who see movement in case-ready ground beef accelerating-particularly because of evolving close-trim programs being offered by major packers.
"I don't think the retailers are looking that much right now for case-ready ground beef programs," he adds. "The Economy, Choice or Select beef has been cheap enough that the retailer can take chucks and grind them and have beautiful ground beef.
"We will have to see some of the major packers really stick their necks out and get into case-ready meat before we see it in retail stores in big quantities," he predicts.