Ensuring High-Quality Beef in North America Required a New Farm to Fork Supply Chain
Steve Banker, Contributor, Forbes
May 8, 2019
It is not very often you hear about a big company building a new supply chain from scratch. But that is the story ARC heard when Steve Sands, Vice President of Protein at Performance Food Group (PFG), came into brief us at our headquarters. Mr. Sands, an experienced pro in the beef industry, explained how meat has been transitioning from a commodity to a product where consumers do not just want the lowest price for a limited set of grades of meat; they increasingly care about the attributes of the meat they are buying. There is an increasing number of consumers that care about how the animal was treated and how ecofriendly the farm production was. Others care about the attributes of the food including marbling, or whether it is organic, grass fed, and so on.
But the meat industry in the US has been built to support low cost interchangeable products at scale. Virtually all the agricultural research at land grant colleges, for example, has been focused on producing high yield meat, animals that put on more weight and do it more quickly. It has not been built to support more consumer choices. Consumer choices demand an infrastructure that can process segregated meat products in smaller batches with robust traceability.
PFG is the third largest foodservice distributor in the US with $17.6 billion in annual sales. As a foodservice distributor, they primarily deliver products to restaurants and institutions that serve food to their customers. PFG, like their competitors, has also created private brands. PFG's private brands generate $2.6 billion in annual revenue. But in this industry, Mr. Sands asserts that differentiating brands is challenging. . PFG's meat brands are designed to be authentic and to tell a story. As a result, its protein brands are driving significant growth for the company.
For example, Braveheart Black Angus Beef, the fastest growing brand in the company, speaks of a "fearless commitment to quality." This is not just rhetoric. The company has set up distinct product procurement, traceability, and supply chain processes to make sure that the beef is beautifully marbled and produces superior flavor and tenderness. But if you make these kinds of claims, Mr. Sands points out, "you inherit risks. You better do what you say you are doing." That means traceability and ensuring that suppliers are doing what they say they are doing.
Mr. Sands points out that authentic brands in this industry are particularly important because the USDA label definitions, such as "natural," are so broad that they lose their validity. The labeling issues, and the difficulty of tracking distinct types of products, puts the US at risk of losing market share to more nimble foreign competitors that can. The animal agriculture industry represents 5.6% of our GDP and generates over a trillion dollars annually. Losing market share could have significant consequences for our economy...
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