FYI - this article ran in my local newspaper over the weekend and also appears on Quicken.com.
Regards,
Chris
<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR><font face="Verdana, Helvetica, Arial" size="2">
Buying Beef In The US: More Brand Names, Fewer Butchers
In a bid to boost profits and cut labor costs, giants of the meatpacking and grocery industries are trying to change the way consumers buy beef. It would no longer be cut and wrapped at the back of the store, instead arriving at supermarkets prepackaged and carrying brand names that packers hope will one day be as familiar to U.S. consumers as Kellogg's and Campbell's.
Packers can make an extra 60% profit on prepackaged, name-brand beef, said Christine McCracken, an analyst for Midwest Research. Beef that's sold in bulk to supermarkets for $1 per pound would go for $1.60 if it's sold with the brand.
Stores make up the difference in costs by eliminating the need for meat cutters, who are among the highest-paid employees.
For consumers, the pre-packaged beef will be handled less, reducing the risk of bacterial contamination, and it will be easier for stores and health officials to trace when there is a problem, say industry officials.
Special leak-proof, oxygen-rich plastic packages - a new development in the food industry - ensure that the meat has the bright red color of meat that's cut inside the store. Without that packaging, the beef would turn brown, a sure turnoff to shoppers.
"We really believe it's the way the industry is going to go," said Gene Leman, chief executive of fresh meats for beef industry leader IBP Inc., which introduced its Thomas E. Wilson line of beef last year.
Wal-Mart is switching all its beef sales nationwide to Thomas E. Wilson.
Consumers want "a name in the fresh meat case that they can trust time and time again," Leman said.
Poultry giant Tyson Foods Inc. is betting IBP is right. Tyson, whose brand name now dominates U.S. chicken sales, wants to do the same in beef and pork and recently won a bidding war with rival Smithfield Foods to buy IBP for $3.2 billion.
The deal will give Tyson "an unparalleled ability to develop innovative, branded food products and market them successfully," says Tyson chairman John Tyson.
Nearly 39% of all meat sold at retail last year was prepackaged, or "case-ready," compared with 23% in 1997, according to the Food Marketing Institute, the supermarket industry's trade association.
"The consumer pays about the same price and he gets a better product. It's a win-win for everybody," said McCracken.
Not everybody feels that way.
The United Food and Commercial Workers union, which represents supermarket butchers, predicts many consumers will reject the prepackaged meat in favor of beef that's cut in-store because they'll see it as fresher. Wal-Mart's real aim, according to union officials, is to prevent meat cutters from unionizing.
Packers are trying to "force-feed" consumers, said Gary O'Brien, a meat cutter at an upscale Dorothy Lane Market in Cincinnati that has no plans to stop cutting its own meat.
"There are so many people who want special cuts. They want a porterhouse that's cut an inch and a half thick," he said. "They're going to have to come to these smaller shops. It's like the old gas stations that work on cars. They are fewer and fewer but you still need them."
On the Net: National Cattlemen's Beef Association: www.beef.org
American Meat Institute: www.meatami.org </font> <HR></BLOCKQUOTE>
Regards,
Chris
<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR><font face="Verdana, Helvetica, Arial" size="2">
Buying Beef In The US: More Brand Names, Fewer Butchers
In a bid to boost profits and cut labor costs, giants of the meatpacking and grocery industries are trying to change the way consumers buy beef. It would no longer be cut and wrapped at the back of the store, instead arriving at supermarkets prepackaged and carrying brand names that packers hope will one day be as familiar to U.S. consumers as Kellogg's and Campbell's.
Packers can make an extra 60% profit on prepackaged, name-brand beef, said Christine McCracken, an analyst for Midwest Research. Beef that's sold in bulk to supermarkets for $1 per pound would go for $1.60 if it's sold with the brand.
Stores make up the difference in costs by eliminating the need for meat cutters, who are among the highest-paid employees.
For consumers, the pre-packaged beef will be handled less, reducing the risk of bacterial contamination, and it will be easier for stores and health officials to trace when there is a problem, say industry officials.
Special leak-proof, oxygen-rich plastic packages - a new development in the food industry - ensure that the meat has the bright red color of meat that's cut inside the store. Without that packaging, the beef would turn brown, a sure turnoff to shoppers.
"We really believe it's the way the industry is going to go," said Gene Leman, chief executive of fresh meats for beef industry leader IBP Inc., which introduced its Thomas E. Wilson line of beef last year.
Wal-Mart is switching all its beef sales nationwide to Thomas E. Wilson.
Consumers want "a name in the fresh meat case that they can trust time and time again," Leman said.
Poultry giant Tyson Foods Inc. is betting IBP is right. Tyson, whose brand name now dominates U.S. chicken sales, wants to do the same in beef and pork and recently won a bidding war with rival Smithfield Foods to buy IBP for $3.2 billion.
The deal will give Tyson "an unparalleled ability to develop innovative, branded food products and market them successfully," says Tyson chairman John Tyson.
Nearly 39% of all meat sold at retail last year was prepackaged, or "case-ready," compared with 23% in 1997, according to the Food Marketing Institute, the supermarket industry's trade association.
"The consumer pays about the same price and he gets a better product. It's a win-win for everybody," said McCracken.
Not everybody feels that way.
The United Food and Commercial Workers union, which represents supermarket butchers, predicts many consumers will reject the prepackaged meat in favor of beef that's cut in-store because they'll see it as fresher. Wal-Mart's real aim, according to union officials, is to prevent meat cutters from unionizing.
Packers are trying to "force-feed" consumers, said Gary O'Brien, a meat cutter at an upscale Dorothy Lane Market in Cincinnati that has no plans to stop cutting its own meat.
"There are so many people who want special cuts. They want a porterhouse that's cut an inch and a half thick," he said. "They're going to have to come to these smaller shops. It's like the old gas stations that work on cars. They are fewer and fewer but you still need them."
On the Net: National Cattlemen's Beef Association: www.beef.org
American Meat Institute: www.meatami.org </font> <HR></BLOCKQUOTE>
