RETAILERS, SUPPLIERS TOUT BENEFITS OF CASE-READY MEAT

ROSEANNE HARPER

SECAUCUS, N.J. -- Leading retailers in the Northeast and suppliers say they believe in the idea that case-ready meat can maximize sales by eliminating out-of-stocks, among other benefits.

During a recent seminar here, they also explained packaging options, and other facets of the fast-growing case-ready trend. It was the Eastern Perishable Products Association's first seminar devoted to meat and it was held during the annual EPPA Taste Show & Exposition here last month.

Moderators were Mark Greenberg, vice president, meats, Wakefern Food Corp., Elizabeth, N.J., and Charles Nuara, vice president, meats and seafood, Pathmark Stores, Woodbridge, N.J. The panelists: Joe Schmidt, sales manager, Robert Reiser Packaging Corp.; Jerry Romanoff, president Nebraska Meat Corp.; Mike Queen, president, Pinnacle Foods; Clint McCrank, assistant vice president, retail development, Excel Corp.; and Charles Mostek, executive vice president, fresh meat sales & marketing, IBP.

"We're happy with the sales increases we've attained by having no out-of-stocks and we've dramatically reduced shrink, too," said moderator Greenberg, whose meat department mix at Wakefern's ShopRite stores includes case-ready product.

Co-moderator Nuara concurred that Pathmark has increased meat sales and lowered shrink significantly with its own case-ready program, which includes pork and ground beef.

"You control the dollars. The percentage of gross profit decreases, but sales and contribution of dollars increases. And equipment costs and supply costs are lower," he said.

Out-of-stocks can be eliminated altogether with case-ready, said Robert Reiser Packaging's Schmidt. He pointed out that out-of-stocks undoubtedly figured into Wal-Mart's recent decision to roll out case-ready meat.

Prior to its decision to launch a case-ready program (which is now in 250 some Wal-Mart Supercenters), the retail giant did a study that showed just how serious its out-of-stock situation was.

"They found that at 4 p.m. on weekdays, their meat cases were 26% bare," Schmidt said.

As part of their research before launching case-ready ground beef in 1998, Schmidt pointed out that Wal-Mart visited Tesco, the largest food retailer in the United Kingdom, which had already adopted case-ready meats with great success. Schmidt said the retailer overtook competitor Sainsbury in meat share-of-market sales two years after going to its CPM (centrally prepared meat) program. Prior to that, Tesco had held 13.5% of the market compared to Sainsbury's 19.5%, Schmidt said.

Matching supply to demand quickly is one of the attributes of case-ready programs that has been widely touted, but that benefit takes on extra importance with promotions, Schmidt said.

"Under the old-style [store-level] promotions, stores would order carcasses and part of them would be oversold and some undersold. If you only have 20 beef filets, you can only sell 20 beef filets," Schmidt said, underscoring the fact that these types of promotions could yield costly out-of-stocks.

"Stores ordering primals can be creating lost sales or wastage. Since case-ready meat allows greater focused stocks, the total promotion can be maximized."

Another speaker cited the importance of packaging in making the most of case-ready products.

"Kroger did a study to see how its customers would react to [modified atmosphere packaging] and found that 70% of them said they would buy it, but 30% said they wouldn't," said Romanoff of Nebraska Meat Corp.

"As a result, Kroger decided to overwrap, not even using a pillow pack."

The retailer's Excel facility, in Atlanta, is packing the overwrap meat for Kroger's Atlanta Marketing Area. Excel's McCrank said the company is gearing up at other of its facilities across the country to serve other Kroger marketing areas. But in most cases, focus groups or some sort of feedback from customers -- and this is true of other retailers, too -- is sought before the decision is made on what type of packaging to use for case-ready product.

Charles Mostek, IBP, emphasized that the processor went through extensive experimentation in a years-long test with selected retailers, to determine what would be the best method of packaging for its Thomas E. Wilson brand case-ready beef and pork. The final verdict favored high-oxygen MAP because it provides outstanding bloom as well as satisfactory shelf life and other benefits, Mostek said.

Pinnacle Foods' McQueen said the retailer should make the decision about which type of packaging to use, and then support it, but he emphasized that a full-blown program with top-down commitment from the retailer and the supplier is necessary to make a case-ready program work.

The panelists also discussed the history of case-ready, and the bright future for it in the wake of consolidations and a dwindling labor force. Many large chains are implementing the programs, they said. Options will grow as suppliers gear up with more regional facilities and capacity to meet the demand, they said.

The seminar was repeated both days of the EPPA show and retailer response was excellent, said EPPA Executive Director Marvin Spira. Even some independents who aren't planning to launch case-ready programs in the near future found the seminar useful.

"It's eventually going to happen -- just about everybody will be using case-ready with the labor situation like it is. But right now, especially with all the big chains going that way, I have an edge by not having case-ready," said Frank DeCicco, owner of four DeCicco Marketplace stores in the New York suburbs.

This, EPPA's first meat seminar, was organized by Foodtown's Steve Migliara, who is chairman of EPPA's seminar and education committee, and EPPA's meat committee, which was formed earlier this year [see "EPPA Adds Fresh Meat Product Category," SN, Sept. 11, 2000]. The location for the show was new, too, this year. For the past three years, it had been held at the New Jersey Convention Center in Edison. The new location is likewise getting some of the credit for a 7% boost in show attendance this year, Spira said.

"The location is just 10 minutes from New York City. It's easier to get to. I recognized people from Connecticut and upstate New York whom I know hadn't attended in previous years," Spira said.