MEAT VENDORS URGED TO AID FIGHT VS. FAST-FOOD CHAINS

PAMELA BLAMEY

TORONTO -- A retail executive addressing the annual American Meat Institute conference here called for greater participation on the part of meat suppliers in the heated competition for consumer food dollars.

"One of the challenges of supermarket business today is the [reduction of preparation time], and we cannot compete realistically doing the same tasks in-store as fast-food chains," said Douglas Stewart, president and chief executive officer of Sobeys, a 125-store chain and wholesaler based in Stellarton, Nova Scotia.

"In order to survive, we will require help from our suppliers, whether we get it from you -- our existing suppliers -- or new suppliers that we have to develop on our own, if we can't get satisfaction from you.

"My sense is that the meat business is a little behind, and you're going to have to pick up the pace if you're going to help [us] succeed in our goals."

Echoing the sentiments of U.S. retailers, Stewart urged meat suppliers to become more proactive in helping retailers to cut costs and redefine the supplier-retailer relationship.

"I have to say I believe that meat suppliers generally have to look at what's happening to the rest of our business," Stewart continued. "Both food service and supermarket business are looking at new ways to wring costs out of our systems. I haven't seen as much movement in the meat area compared to our other suppliers in areas such as category management, electronic data interchange or continuous replenishment.

"I believe if we do this together we'll have a much more efficient system in future."

Stewart expressed his concern and shared some recent statistics regarding the ever-increasing threat posed by home meal replacement alternatives.

"I believe the [need] for us to change at the supermarket and for you, our suppliers, to change the meat business is urgent. The focus must be on what our customers say they want.

"I believe our successful future will require us to work very, very hard in two distinct areas for our meat departments."

The first of these, he said, is to create competitive options that are just as attractive to consumers as the offerings at food-service establishments and even at the deli counter.

"I think it's fair to say that [for] the meat business, both in our stores and [for] our suppliers, center of the plate has really been our focus. And I believe in the year 2000 we will have to broaden this focus and provide more and more of the total meal solution. This is a nice buzzword being used in the industry today, but let me share with you the impact it will have on the meat department."

Stewart then related figures from a "recent food distributors conference" where a supplier of case-ready meats told attendees that prepared foods were running between 15% and 19% of sales.

"But what was staggering to me, was the impact on their meat departments, which dropped from 18% of sales to 10% of sales. In other words, if we stay the way we are in the meat business today we could see our share of supermarket business decline almost in half, unless we aggressively attack the meal solution business.

"The meat department of the future must be able to . . . supply meals that are ready to cook [and] ready to eat -- and I use the words 'meat department' in the broadest sense [since] in the future we will have breakfast departments, lunch departments, dinner departments and snack departments -- and you are required to help us make this move.

"One way you can help us is to move toward taking the labor out of our stores."

Stewart then used the example of chains in the United Kingdom that have established successful ready-to-serve meals in their meat departments.

"The way they achieved this in the United Kingdom was to go to smaller producers and bring them into the marketplace. Many of [them] have limited geography but nonetheless could make products for retailers, [such as the] Marks & Spencer group, according to their specifications. Supermarkets there outsource their whole offerings and their offerings are very successful."

Stewart indicated that North American operators could benefit from the same situation if suppliers are willing to meet the challenge.

"There is a growing buzzword that has become a bit tired and that's 'partnership,' but I think this is a case where we really have to work together, and we really have to worry a little less about the lowest cost per pound.

Case-ready is on its way to becoming as important to the meat business in Canada as it is in the United States, Stewart said.

"By and large our counters [Sobeys] are not as liberally supplied with counter-ready products -- however, there are other stores where almost the whole [section] is counter-ready, and I believe this could prove vital to us to succeed in competition.

"In fact, I really believe that the supermarket preparation on meat and poultry will become as dead as the dodo in the next five years."

There are other ways in which the Canadian market is mirroring trends in the United States, he pointed out, such as the growing ethnicity of customers and resulting demand for variety.

"Just as in the United States, the demographics are pushing our population toward change. In this city, less than half the population that lives here today was born here -- the rest have brought to the country their own eating habits and tastes.

"We have many immigrants from Hong Kong, Southeast Asia, the Caribbean, and of course many from different parts of Europe, so for example Taco Bell doesn't go down too well, because we don't have a high indigenous Spanish-American population."

Another similar trend is the growing concern about food safety.

"I believe that this is a potential volcano that could erupt at any time. It really doesn't take a rocket scientist to see what happens to consumption when issues start to [get to the public]. You only have to look at the example of mad cow disease in Europe and Britain to see just what a health scare can do to consumption of a particular product."

In a nod to the recent efforts of Arlington, Va.-based AMI, the U.S. government and other American entities, Stewart advocated a farm-to-table strategy. "I think we must reach all the way through our supply chain to ensure that nothing but the highest standards exist from our raw materials right through [to the product in the stores]."

New technology will be indispensable in this effort, he said.

"Food safety is going to become the focus of all of our businesses, yours and mine, and we must be prepared to embrace the technology that will eliminate the issue of bacteria control and ensure that all of our current handling methods are geared to giving our customers the safest possible products.

"Even scary things like irradiation will have to become positive solutions rather than [threats]. I believe the issues will grow rather than diminish with ready-to-eat foods -- our responsibility will increase even more as a result.

Outbreaks such as mad cow disease in England and the recent e. coli incident in Japan must now be regarded with concern by everyone, no matter how far away, he said.

"Food safety is not local anymore. If there's a problem in Idaho, it will be felt here in Toronto and vice versa."