NEW DIRECTION PREDICTED FOR MEAT

LAURA KLEPACKI

MINNEAPOLIS -- The meat industry could be cutting a new direction for itself.

That is, if the future paths envisioned by some featured speakers at the American Meat Institute/Food Marketing Institute Meat Marketing Conference here two weeks ago are followed.

Supermarket beef sales have been slipping, and some industry leaders here said retailers must become more consumer-oriented and more willing to revamp their operations in order to maintain profitability.

In the keynote address, Al Flaten, president and chief operating officer of Nash Finch Co., a wholesaler that also operates 100 corporately owned stores, said he expects to see a major transformation begin to occur this decade.

"We will see more change in the '90s than we have seen in this industry over the last 20 years," said Flaten.

That will include, he said, "continued growth in closely trimmed meat, a growth of value-added products and more case-ready product."

"More and more meat packers in the fresh meat industry are experimenting in various ways to ship the product to the retail store cut, trayed, shelf-stable and packaged," he noted.

But along with that vision, he said, "we see a continuing expansion of the service meat case, where there will be a chef-trained meat cutter behind the counter to help the consumer.

"Today's customers need tips for the preparation of quick and easy-to-fix meals, and help to pick the correct side dishes."

The best scenario, said Flaten is "that the retail industry will adopt a meat department concept of case-ready meats plus service meats in a highly professional way, and that very few, if any, of these items will be prepared in the store."

As if offering a road map to reach Flaten's ideal, Ken Johnson, vice president of meat science for the National Livestock and Meat Board, at a separate session announced the establishment of the board's new training program for retailers to manage their meat departments better.

Johnson told SN in an interview: "A lot of things are happening inside the industry and outside the industry, and we need to change the business and be more responsive to consumers." Additionally, a consultant to the Meat Board discussed the ongoing development of a computer program that will assist retailers in pricing and promoting meat items. "We must know the pricing structure of the meat case," said Dick Shulman, president of Richard Shulman Associates. "Otherwise we can't evaluate bringing case-ready to the meat department."

Both efforts are designed to increase retailers' knowledge of their business to improve marketing efforts and pricing policies, and ultimately lay the groundwork for an expansion of case-ready products, said Shulman and Johnson.

Case-ready meats could help improve the poor performance of meat departments, Flaten suggested.

Meat industry sales have fallen from about 25% of total store sales in the early '80s to 18% in the mid-1980s to between 14% and 16.5% today, he said.

To turn that around and make the department more profitable, Flaten expects to see U.S. retail meat marketers follow the lead of the some French retailers that have almost exclusively gone to case-ready departments.

"While the jury is still out on case-ready meats being a viable alternative to store-prepared meats," in the United States, said Flaten, "we [Nash Finch] believe they make economic sense."

He said over the last few years, U.S. supermarket retailers have increased costs by adding food preparation departments such as service delis, sausage kitchens, smokehouses and expanded seafood counters.

"The food retail industry cannot economically continue to have small meat processing plants in each and every store," he said.

Flaten said in some European markets where case-ready meats were readily available, meat tons sold per butcher increased considerably, allowing retailers to operate with fewer people in the preparation area.

In one hypermarket, he said, "the average cost per man-hour was reduced 34% due to the transfer of the labor needs from meat cutting to meat wrapping and case filling, which require less skilled labor."

In the same unit, case assortment grew from 130 cuts to 200 cuts or varieties, and out-of-stocks fell from an average 14% to 4.1%, which he said, "automatically raised sales by 2%."