020602 “Case-Ready” Could Leave Butchers in the Cold

Chicago - In the supermarket of the not-so-distant future, the shopper who goes looking for the butcher in the back of the store may find a florist, a rack of greeting cards or a cash machine instead.

The major players in the $80 billion U.S. red meat packing and processing business are pushing into "case-ready" meat products that come to the store prepackaged for retail sale.

In the traditional supermarket meat department, large chunks of beef and pork have to be ground or sliced into steaks, chops and roasts, then wrapped, weighed, priced and labeled.

"You've got a little miniature production shop in the back room of each store," said Huston Keith of Keymark Associates, a market research and development company that has studied the case-ready trend.

When that work is done at the slaughterhouse instead, retailers stand to save both space and labor costs.

"All that labor in the back really adds very little value," Joel Johnson, chief executive of meatpacker Hormel Foods Corp., told an investment conference this month.

"Butchers are high-paid and they're hard to find," he said. "It's very hard for a retailer who is building new stores or going through a massive renovation program to justify the amount of space that's historically been allocated in the back of the supermarket to stainless steel tables, saws and knives."

Keith estimated that case-ready meats now account for about 15% of the market, a share that should rise to 30% within five years.

FOLLOWING WAL-MART'S LEAD

"The market for case-ready meats should improve as supermarkets seek to save money on in-store meat cutting," Joseph Luter, chief executive of Smithfield Foods Inc., the nation's largest pork producer, told the same conference.

"The one big reason is Wal-Mart has embraced it enthusiastically," Luter said. "The stores they are building are going 100% case-ready. We expect other people will follow."

Tom Williams, a spokesman for Wal-Mart Stores Inc., the world's largest retailer, confirmed that virtually all the company's Supercenters -- discount stores with full grocery departments -- now sell only case-ready meat.

"It gives us good quality control because the product leaves the inspected plant in a sealed package that isn't opened until the customer takes it home," Williams said. "We like the cleanliness aspect, and the tamper-evident packaging gives confidence to the consumer."

Case-ready meats may also appeal to consumers who shop at odd hours, said Gary Rhodes, a spokesman for Kroger Co., the nation's No. 1 supermarket chain.

"Having case-ready meat ensures that the meat case is always fully stocked," he said. "In the middle of the night there wouldn't be a meat cutter working."

With some products, meatpackers do much of the cooking before the package gets to the store. For a roast, 10 minutes in the microwave can take the place of four hours in the oven.

"Fewer and fewer people, especially working women, are cooking from scratch," said Gene Grabowski of the Grocery Manufacturers of America.

KEEPING A COMPETITIVE EDGE

Despite the steady advance of case-ready products, however, talk of the butcher's imminent demise may be premature. Greg Denier, a spokesman for the United Food and Commercial Workers Union, whose members include meat cutters, said supermarket chains may see a competitive advantage in keeping a butcher at the store.

"They have to distinguish themselves from discounters," Denier said. "If you're going to run a full- service supermarket, your customer base expects to be able to get custom-cut meat, and you ignore that customer base at your peril."

A recent study of consumer attitudes issued by the Food Marketing Institute, a grocery trade group, found most supermarket shoppers still want to find a butcher on duty.

"The vast majority of shoppers (83%) say a fresh meat department with a butcher is very or somewhat important, and half (51%) claim this is a very important feature," the survey said.

Retailers have to be aware of consumer sensitivities, Keith said. "Consumers still in their heart of hearts want to believe that you're leading cows into the back of the store and butchering them right there," he said.

Supermarket designers are keeping an eye on the case-ready phenomenon.

"We're seeing a definite gear-up toward it," said Scott Reagles, a store planner for Design Services Group, a Minnesota-based unit of Supervalu Inc., parent of several chains such as Cub Foods and Save-A- Lot.

"We look at alternatives," Reagles said.

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