READY TO BLOOM

DAVID MERREFIELD

DUNCAN, S.C. -- Why did cellular telephone technology penetrate Asia so rapidly that in many places there are more cellular phones than hard-wired phones?

The reason is that cellular technology arrived at just the right time, ahead of the time when there was a fully wired infrastructure, so wireless technology didn't need to compete with a highly capital-intensive predecessor.

Much the same logic will apply as the supermarket industry in the United States and elsewhere looks at the innovative technology of case-ready meat packaging developed by Cryovac, J. Gary Kaenzig Jr., president of Cryovac, told SN in an interview.

Cryovac provides value-added packaging systems, including materials, equipment and technical support, for a global customer base in the food, consumer goods and industrial-products industries.

Joining Kaenzig for the interview at the company's offices here was Hugh L. Sargant, Cryovac's Hong Kong-based vice president and general manager for the Asia-Pacific region.

As Sargant pointed out, "in a spot such as Shanghai, it's not impossible to think of moving from cutting and packaging subprimals in a store's back room to a central facility that uses case-ready technology. It's conceivable, and maybe quite likely, that we'll move to that central facility, skipping all the intermediate steps. For instance, there were never many dial telephones in China. Now everyone has a cellular phone. Somehow, they just jumped over all the earlier technology and went right to the current one."

Cryovac's innovation, now moving onto world markets with varying degrees of speed, is peelable vacuum skin packaging. It offers meat processors the chance to centrally produce consumer cuts of meat and package them in a case-ready tray that's actually two packages in one.

An exterior barrier package keeps oxygen out, stabilizing the meat product for 14 days or so. In the absence of oxygen, the meat assumes a bluish hue that consumers don't associate with fresh meat. However, once VSP product arrives at the point of sale, supermarket personnel peel away the external barrier film just before placing it in the display case. With the barrier peeled away, a remaining breathable film layer allows oxygen to permeate and the meat to "bloom"; that is, return to the red color consumers expect. Once the bloom returns, the product then has two or three days of shelf life in the meat case.

Kaenzig said acceptance of the technology by processors, distributors and retailers is developing both domestically and abroad, but there are "pockets" of enterprise outside this country where acceptance has been especially swift.

"Here's a technology with which the U.S. is leading the way. But, in fact, it's already penetrated other parts of the world ahead of the U.S., places such as Western Europe, in particular the United Kingdom and Holland. There is also a lot of movement in Australia and South America.

"In Argentina, processors actually send people, in uniforms, into the supermarket to explain the process to store customers. The same type of programs have been very helpful in Brazil too. This kind of partnership is very valuable and helps the process along."

As for the situation in the United States, Kaenzig said, there is good acceptance of case-ready being seen, but existing systems and practices are standing in the way to some degree.

"Cryovac's part was to be sure we could get a product into the case in excellent condition, just as fresh as when it was prepared or processed.

"The next barrier to be overcome is the perceived economics and how the benefits are shared. We have a lot of fragmentation in this country. It's not like Australia or the U.K. where there are only two supermarkets and where if you convince one, it is easier to convince the other. In the U.S., the sales effort is into a lot of different supermarkets, and our supermarkets like to differentiate products. And, at the same time, meat processors want to have their identity going into the supermarket. They have to work that through. These are barriers and if people don't understand the true potential then the barriers become higher than they should be.

"It's possible to have someone produce a private label, or a store label or a packer label. It all comes down to what's needed in different situations. Also, the name of the store can be printed on the packaging by the processor, or it can be added at store level by means of another overwrap. But it's more efficient to do everything at the processor level, including pricing.

"Solutions of these types are already happening in poultry. That's because there are fewer producers and it doesn't represent quite the challenge of working through the back room that beef does -- this is the labor issue. We saw something similar in boxed beef, and processors had to deal with that.

"But the issue I'm most concerned with is that of 'accurate economics.' What are the benefits and costs of case-ready all through the system? This is interesting because we seem to have gotten hung up on this a lot more in the fresh red-meat area than we ever did in poultry. With red meat, this raises questions about who is going to realize what from the new profitability split between the processor and the retailer and whether retailers will see the issue in terms of profit contribution or margin."

According to Sargant: "Another barrier is that processors need to line up enough of a retail base to make a go of it. That's a very difficult thing to do since there's a start-up cost before the volume starts flowing. And who is going to pay the processor? He has to risk a fair bit to start the process flowing, but the premium is really high. It's an issue to negotiate a retailer-processor partnership that brings enough immediate or short-term critical mass to get these efficiencies. Getting to that first step can be very difficult."

Kaenzig said that what's needed are two major parties who want to work together on a product that stands a special chance for success, perhaps ground beef.

"The first out of the chute is ground beef, which makes sense for a lot of reasons but especially because of safety issues. Through case-ready, you have the opportunity to have an audit trail that's much better than you would any other way. This will help, particularly in the U.S. It's already happening in some parts of Europe."

There are also developing opportunities elsewhere, Kaenzig pointed out, although it could be necessary to redefine the program because the demands on case-ready may be different. "It's a pork business in China, as opposed to the U.S., which is beef and pork."

As Cryovac packaging technology moves into domestic and world markets, it will likely do so under new corporate ownership. As previously reported, W.R. Grace, Boca Raton, Fla., Cryovac's parent company, agreed last August to combine Grace's packaging business with that of Sealed Air, Saddle Brook, N.J.

The transaction is expected to be completed early this year and would result in the formation of a company with annual sales of more than $2.5 billion.