Beef Industry Must Focus On
Developing Meal Solutions

By Colleen Schreiber

HOUSTON — The five most common ways of making a dinner are opening a bag, a can, a box, a carton or the phone book — and that phone book is by far the most common today.

Richard Bond, president of IBP Fresh Meats, used that piece of trivia to tell participants in the recent International Livestock Congress here that the

beef industry is behind in terms of meeting consumers’ needs and expectations.

"We don’t have convenient products because they don’t meet the criteria of today’s consumer," Bond said. "They’re not convenient and they’re not time-effective. It’s going to be incumbent upon us to head in that direction. I firmly believe that the way we will regain value of the chuck and round is for it to be in a form where the consumer will be able to take it home or have it at home and be able to put it on the table in less than 30 minutes."

Bond said it is important for all segments of the industry to work together to get to this end point. Alliances, he said, are a positive step in that direction, and he believes they will continue to grow.

That said, Bond doesn’t believe putting fresh products into the retail case under a brand name is the way to go.

"I’ve watched chickens go from a whole chicken to cut up to now what some might call branded fresh chicken. Purdue might have a brand that has some equity. Tyson has no equity in their fresh chicken. Their equity is in the further value-added products," Bond said. "It’s in their chicken nuggets, the meals, in the frozen category. You don’t see Tyson advertising fresh chicken breasts. They advertise what they have in terms of value-added products, which again is what is convenient and saves the consumer time," he pointed out.

"I’m not saying that a fresh branded product is wrong, I’m just saying that the next major step will get us to some cooked products, and the retail case will have to be willing to change."

He noted that some major obstacles still must be overcome, including union resistance to fully case-ready products.

"There are some obstacles, but there is a commitment, I believe, on the part of the packing and processing industries to take us to the next step in terms of adding value. I won’t say necessarily that it’s 100 percent branded that will get us there. There will be branded products, but they won’t all be fresh products, they’ll be in different forms."

Bond offered an overview of where the packing industry has been, where it is today and where it must go in the future to be competitive.

In the 1950s there was no such thing as boxed beef, he reminded listeners. Primals, the chuck, rib, round and loin, and carcass beef were the name of the game. Boxed beef became a reality in the mid-1960s. IBP, Bond said, started making the shift in 1967, though other large packing companies like Armour and Swift made the change before IBP did.

Bond called the shift a "major evolutionary process," not a "revolutionary process."

"It took a lot of years to take boxed beef from something that was not very welcome at most retail and food service areas into something that was accepted," he noted.

Over a 15 year timeframe from 1982 through 1997, average carcass weight climbed from 697 pounds to 747 pounds. During the same period, the percentage of beef sold in primal form dropped from 62 percent in 1982 to 60 percent in 1987, and to 53 percent by 1997.

In the late 1970s, however, chuck was still one of the main items that was going out in primal form. The loin and rib were the first two primals that went to the box, Bond said, mainly because they were more foodservice-driven, and food service was more attuned to boxed beef than retail.

When packers began putting the chuck in the box, they produced cuts that were mostly bone-in. The same thing went for the round; most were bone-in. Though those kinds of cuts can no longer be found, they were prevalent, the packer said, until the mid to late-1980s.

About the same time, ground beef came on line and rapidly became a major force in a packer’s product line. Today ground beef represents almost 40 percent of retail and foodservice sales in terms of pounds, though not in dollars, Bond said.

After boxed beef, the next evolutionary process was what IBP refers to as "user friendly" products. Other companies, Bond said, refer to them as "close trim." They first entered the market in 1991.

The consumer friendly era meant a shift from commodity beef in the box with an inch of outside fat to cuts with little to no exterior fat. Packers felt they could do a better job of producing those products in shop than retail butchers could, so they began adding close-trim product to their lines.

IBP was the first to introduce a full line of user friendly products. Today these products represent about 65 to 70 percent of IBP’s sales.

That leaves the 30 to 35 percent, sometimes as high as 40 percent, of the beef carcass that is still sold as commodity one-inch trim, a product which existed more than 15 years ago. Why haven’t the packers’ customers, the retailers or food service people, gone to 100 percent close trim? Bond asked.

"The same reason that all people don’t sell cattle on averages and all people don’t sell cattle on value-based marketing systems. You can’t tell someone what to do. We still have a lot of retailers who want a full round because they can merchandise it the way they want," he noted.

IBP recently introduced a new line of consumer friendly products. Of the 21 items, 18 are beef items and the remaining three are pork. The beef items include such products as London broil, beef brisket, beef for fajitas, and sirloin cap roast. This year, Bond said, IBP expects these products to account for $340 to $400 million in sales against a total of $8.5 or $9 billion in sales.

"It isn’t a major factor yet, but we do see it growing. We usually can’t get customers to take all 18, but we try to get them to take at least six items and make a display with them."

Bond said the new products have seen more success in the club stores like Sams and Koskos than in traditional retail stores.

In an effort to address food safety issues, Bond continued, IBP will introduce in the next 45 days a new line of specially packaged ground beef.

The package will have two films. The outer layer is meant to be a barrier bag which does not allow oxygen to permeate the meat. When the retailer is ready to put the product in the case, he peels the top layer off. The whole idea, Bond explained, is to extend shelf life.

"This is the next generation for ground beef," he told listeners.

The product has been tested in several stores in Amarillo and Oklahoma City for four months, Bond said, and sales are doing extremely well.

Boxed patties and another new idea, resealable bags, are further value-added processes in which IBP is involved.

"I would tell you that we have made some progress, but we have a long ways to go," Bond admitted. "As a company, we continue to try and add value to our products. We’ve made a couple of acquisitions to try and do just that. In May we bought a company called Food Brands America. We acquired it for one reason: they were further down the value chain. About 70 percent of their products are beef and pork related.

"This has been a long time in coming," Bond admitted. "The industry built plants to do certain things, to take an animal to carcass form and then to boxed beef as quickly and efficiently as it could. The days of just doing that are passed," he said.

Dr. John Allen, director of the Food Industry Alliance at Michigan State University, agreed with Bond, saying the future for the beef industry involves "meal solutions." A "meal solution," he explained, is a complete meal or all the ingredients of a meal brought together or bundled together for ease of menu selection.

He noted that the food dollar is now almost evenly divided between restaurants and supermarkets.

"We’re seeing less food shopping and more meal shopping. People are looking for us to make some decisions for them. That’s what meal solutions are about," Allen said.

He noted that in the 35,000 supermarkets in this country the meat department often lags behind other departments in terms of becoming consumer friendly. He recited data gathered in a consumer packaging study conducted by one of his graduate level classes. Students went into the marketplace to ask consumers about package color, but what they took away was a great deal more knowledge about how consumers think.

"We asked them about package color, but here’s what they told us," Allen said. "On grades: they don’t understand them; on cuts of meat: they’re a mystery, the round, chuck and burger — what’s that supposed to signify? Packaging: ‘there’s stickers all over these packages, we can’t see the meat;’ they’re poorly wrapped; the size of the package often misses the need; the color of the meat: ‘I want pink, but I often get pink and gray or all gray;’ thickness: ‘I like thin and boneless;’ fat trim: ‘I don’t want any waste. I don’t want to see the fat or think about it.’

As for preference, most of the consumers questioned indicated they usually buy chicken. Other comments were that there were too many decisions to make, and many times they couldn’t see the meat case for all the signs.

That, he said, indicated the importance of setting the proper stage in the marketplace. "We not only have to reegineer the industry, we have to reegineer the marketplace," Allen told listeners.

While focusing on reducing food preparation time, he continued, the beef industry has vastly underestimated the importance of reducing shopping time. Statistics show that people spend, on average, 20 minutes in the supermarket.

"People are under tremendous pressure, and anything we can do to reduce shopping time will be helpful."

Tradition has had it that most meat markets are at the very back of the store, he notes, and there was once good reason for that. It was necessary to have access to docks and coolers. That may not be so necessary in the future, however.

"Meal solutions don’t require saws, people and shipping docks," Allen explained, "so the meat market could be anywhere in the store."

He said the channels of distribution between supermarkets, fast foods, restaurants and gas stations are all blurring. HEB stores realized this some time ago and they’re stepping up to the plate to meet the challenges head on. One of their stores in Austin is a pioneer in developing and implementing new concepts to become more consumer friendly. They have the Cooking Connection, in which chefs are preparing meals for customers to sample or even carry out. They have recipes of the meals being prepared to give to customers. They also have what is called the Greats Section, which has a wide variety of completely ready to go foods in portion-controlled sizes. Though fast and convenient, it’s totally different from traditional fast foods.

"You’re going to hear the phrase, ‘food’s moment of value,’" Allen told listeners. "If our product is to be acceptable in the next era, it’s going to have to be where the consumer wants it, when she wants it, in whatever form is needed."