• U.S. consumers purchase more than 67 pounds (retail weight) of beef per capita per year. (Source: USDA)
• According to the American Farm Bureau Federation, moving the beef from the producer’s gate to the consumer’s plate will facilitate more than one million nonfarm jobs in addition to the 186,000 jobs supported on the farms and ranches where it was grown.

• Most mergers are motivated largely by the need to reduce transportation costs and lower the cost of goods sold. In other words, most mergers are designed to lead to economies of scale. Large corporations have greater bargaining power with manufacturers, use more efficient transportation and ordering systems, and utilize information technology effectively to manage inventory throughout the entire fooddistribution chain. Industry estimates, for example, show that [grocery] retail mergers can reduce the cost of goods by 0.5 percent and save another 2.5 percent in the cost of operating the food-distribution chain.
• Efficiencies of scale driven by information technology are leading to vertical integration in all segments of the food supply industry. For example, in 1990 the four leading grocery chains accounted for only 16 percent of the nation’s food sales. Today the market leaders Kroger, Albertsons, Wal-Mart, Safeway, and Ahold are responsible for fully 40 percent of all retail food sales.

*Slaughtering for their own account or on a contract basis for the trade.
** Best and Worst figures for Grocery stores before tax profits are for the years from 1994 to 1997 and represent average of profits for all items sold in the sampled stores.
Source: RMA Annual Statement Studies 1999-2000, RMA, Philadelphia, PA

The situation at the beginning of the 21st century promises to bring a variety of challenges and opportunities for all links in the chain that delivers beef to the consumer.

• Beef is no longer consumed in the same quantities as in the past. Much of this can be attributed to beef’s higher price, relative to other meats. As a result, beef’s share of consumer expenditures has changed little in the past 30 years.
• Domestic markets are affected by prices of competing products, as well as the socio-economic changes occurring in the economy at large. Multi-income households, for example, will not pay as much for fresh beef because of the time required in preparation. Hence, processed beef products in consumer-convenient form will be a growing share of the beef market.
• In combination, these market changes suggest that U.S. producers must increasingly become product marketers rather than commodity sellers. They must produce specific products for specific market requirements.
• Despite the emerging market changes and rising input prices, U.S. producers must increase their cost efficiency. Beef may not reach the degree of integration pressure facing poultry and pork, but will need to capture the efficiency gains such integration may promote. Beef faces the same pressures to improve technology in both management and production.

(Source: Huffman, W. E. and R. E. Evenson, Science for Agriculture: A Long-term Perspective; Iowa State University Press, Ames, IA.; 1994. Jensen, H. and J. Schroeter. Melton, B. E. and W. E. Huffman, “Implications of the NAFTA for Long-term Adjustments in U.S.-Mexico Beef Production and Trade,” CARD Working Paper 93-118; CARD, Iowa State University, Ames, IA, 1994. Melton, B. E., Huffman, W. E., and Shogren, J. R., “Consumer preferences for fresh food items with multiple quality attributes: Evidence from an experimental auction of pork chops,” Am. J. of Ag. Econ. (in review); 1995. USDA, Agricultural Statistics (various annual issues).

The beef market is rapidly shifting from a commodity market to a value added market. Changing consumer purchasing patterns are moving beef markets away from the commodity market paradigm, which suggests the product is homogenous to a market that facilitates price enhancement and product differentiation. There is a consumer revolution underway whereby the demand for products with special attributes is becoming ever greater.

The most obvious and widespread impact of these changes is the rising pressure on time and the increasing demand for convenience in how we buy, prepare and eat food. For many occasions people want a meal to eat, not food to prepare. Fewer people eat three traditional meals each day. There is more grazing or snacking, with smaller amounts eaten throughout the day. People combine eating with something else, like working at their desk or driving their car.

The increasing value of time is the most important factor behind the steady rise in the portion of food expenditures which are classified as “away from” versus “at home.” The share of income spent for food at home fell from about 14 percent in 1960 to only 6.6 percent in 1997, whereas the share spent on food away from home rose from about 3.5 percent in 1960 to 4.1 percent in 1997 (Putnam and Allshouse, 1999). At some time, perhaps in the next decade, the two will cross and more will be spent on food other than at home. (Source: Benjamin Senauer, Professor, University of Minnesota, 2000.)

Current consumption trends show that Americans eat more foods at home that have been prepared elsewhere and increasingly rely on convenience items in foods eaten at home. Recent data collected from checkout scanners shows that 89 percent of U.S. household’s purchase prepared frozen meals at grocery stores. (Source: Mojduszka, Caswell, Harris, 2000.)

Experts in the field and repeated surveys agree that ground beef and steaks are the first choice for consumers when purchasing fresh beef products for home preparation. Other cuts that require special preparation or lengthy roasting are less likely to find favor with today’s grocery shoppers.

Evidence that key purveyors are responding to these value demands is provided by taking a look at their various modes of operation and how they are shaping themselves to meet the perceived needs of their customers.

Following is a brief overview of several of the leading competitors in the beef packing and processing business.


Meat Processors

The four largest meatpackers – ConAgra Beef Companies, Excel, Farmland National Beef and IBP, Inc. – accounted for 82 percent of U.S. steer and heifer slaughter in 1994.

In terms of beef packing plants, 25 of the 43 largest and most intensively used U.S. beef packing plants are owned by: ConAgra (six plants), Excel (six6), IBP (11) and Farmland National Beef (two).

Today’s “big four” packers represent the largest concentration of the beef packing industry since 1920. Although the pros and cons of this level of business concentration offer any number of points for lively debate, having so few in control of so much surely makes for a quick study on the dominant trends in the industry. (Source: http://www.usda.gov/gipsa/newsinfo/packers/conc-rpt.htm.)

The following information is not intended to be an endorsement or statement of opinion for or regarding the companies that are mentioned. Instead, the material has been compiled from various sources in an attempt to present a limited overview of how the leading companies evolved to their present status, the general size and scope of their operations, and the methods and means by which they are addressing the needs of today’s marketplace. The order in which the material is represented is in no way connected to the size or performance of the company depicted. Because of the rapidly changing environment in which these companies operate, all material is subject to
update.

Beef consigned to the four major beef packers, as well as most of the other packers, is mainly destined for the commodity unbranded market. That is, the cattle are usually purchased “on the average” for each lot and then individually adjusted on the rail at the slaughterhouse according to USDA grades and yields on each packer’s matrix.

The packer then cuts the carcass into primal cuts such as fore quarter and hind quarter and then further processes them into sub-primals such as rounds, loins, chucks, etc. At this point the ownership or traceability of the cattle is lost. They have lost their identity and now become part of the commodity beef pool. Although there are many variations of this scheme, this is the model most commonly used for commodity cattle that result in commodity unbranded beef.

Commodity meat is typically sold in a vacuum packaged sub-primal form in catch-weight cardboard boxes segregated by USDA quality and yield grades as well as individual sub primals. These are shipped to supermarkets or to the food service industry (hotels, restaurants and other institutions). Some of this beef does carry a breed identification in an attempt to convey to the consumer a particular quality message.

ConAgra, Inc.
ConAgra is a diversified food company that operates across the food chain. About half of its sales come from its Refrigerated Foods segment, which includes companies that produce and market branded processed meats, beef, pork, chicken, turkey and cheese products to retail and foodservice markets. Approximately one-fourth of ConAgra’s sales originate from its Grocery & Diversified Products division, which includes companies that produce shelf-stable and frozen foods. About one-fourth of its sales come from its Agricultural Products segment which is made up of companies involved in distribution of agricultural inputs – crop protection chemicals, fertilizers and seeds – and procurement, processing, trading and distribution of commodity food ingredients.

Late in 1999, ConAgra integrated its U.S. beef companies - Armour Fresh Meats, E.A. Miller, Monfort, Northern States Beef and Signature Ground Beef - into a single organization called ConAgra Beef Cos. The new company markets products under the Armour, Four Star Beef, Miller Blue Ribbon Beef, Monfort and Signature brand lines. Restructuring is expected to increase the efficiency of ConAgra’s meat division and provide greater opportunity for expansion into value added meat products that are marinated, pre-seasoned, pre-cooked, ready-to-cook and oven-ready.

The roots of ConAgra go back to 1919 and four flour mills incorporated as Nebraska Consolidated Mills headquartered in Grand Island, NE. Until the 1960s, the company expanded its business primarily along the lines of the flour and animal feed milling business. By 1970, Consolidated Mills had poultry processing plants in three southern states and had expanded into the fertilizer, catfish and pet accessory business. In 1971, the company changed its name to ConAgra, which is a derivative of the Latin term for “in partnership with the land.”

Based in Omaha, NE, ConAgra is ranked as the second leading U.S. food processor, after Philip Morris. Better known by its brands than its name, ConAgra markets products under 70+ different names, including: Act II, Armour, Banquet, Blue Bonnet, Butterball, Chiffon, Cook’s, Country Pride, County Line, Decker, Eckrich, Egg Beaters, Fleischmann’s, Healthy Choice, Hebrew National, Hunt’s, Hunt’s Snack Pack, Kid Cuisine, La Choy, Lamb-
Weston, Marie Callender’s, Meridian Products, Morton, Move Over Butter, O’Donnell- Ulsen USA, Orville Redenbacher’s, Parkay, Peter Pan, Pierce Foods, Reddi-Whip, Rosarita/Gebhardt, Slim Jim, Swift Premium, Swiss Miss, Touch of Butter, Van Camp’s and Wesson.

ConAgra first moved into the food products in the 1980s by purchasing Banquet (frozen food) from RCA, Singleton Seafood and RJR Nabisco’s frozen food business. In 1983, ConAgra became a major marketer in the meat business when it acquired Armour Food Company. In 1987, it acquired E.A. Miller, Monfort of Colorado and a major interest in Swift Independent Packing Company (SIPCO).

At the end of fiscal 1997, ConAgra had 83,000 employees in 32 countries.

ConAgra, Inc.
1 ConAgra Drive
Omaha, NE 68102
Phone: (402) 595-4000
www.ConAgra.com
 
ConAgra Beef Companies
1918 AA Street
Greeley, CO 80631
Phone: (970) 353-2311

(Sources: ConAgra, Inc. http://www.conagra.com/index.html; Moody’s Industrial Manual 1999; Hoover’s Handbook of American Business 1999; The MEATing Place, http://www.mtgplace.com/articles/m559.asp.)

Excel Corporation
Excel Corporation is a wholly owned subsidiary of Cargill, Inc.

On average, about one out of every five cattle raised in the U.S. will be processed by Excel Corporation. As a subsidiary of Cargill, it is part of an organization that ranks third among the nation’s top food companies, bested only by Philip Morris and ConAgra.

For administrative and customer service purposes, Cargill’s market segments are organized into five product areas. They include: Food, Agricultural, Commodity Trading, Animal Nutrition & Poultry, and Steel. Together, these businesses comprise more than 40 product lines.

In the Food sector, the company buys, processes, stores, transports and sells a wide variety of food products worldwide, ranging from basic ingredients used in food production to consumer products. Cargill ingredients and products include refined vegetable oils, corn and flour milling products, juice, cocoa and chocolate products, rice and malt, salt, soy proteins, egg products, beef, pork, chicken, turkey and many others.

In its Animal Nutrition & Meat sector, Cargill produces a wide range of animal feeds and feed ingredients. Within this division, the company also produces, processes and markets poultry, beef, pork and further-processed meat products to retail, foodservice and processing customers. Beef and pork products are marketed under the Excel brand. Turkey and turkey products are marketed under the Honeysuckle White and Riverside brands. Cargill also markets a complete line of fresh, frozen, ready-to-cook and fullycooked chicken products.

Excel’s story is one of business combinations dating back to 1936, when Excel Packing Company was formed in Chicago. In 1941, the business moved to Wichita, KS. In 1970, Excel was incorporated as Kansas Beef Industries, a company whose primary area of expertise was cutting sides of beef into wholesale cuts of meat. In 1974, Kansas Beef Industries merged with Missouri Beef Packers. Missouri Beef was incorporated in 1964 and had developed its expertise in cattle slaughter.

The name for the newly merged company became MBPXL. “MBP” for Missouri Beef Packers and “XL” for Kansas Beef Industries’ original name of Excel.

In 1979, MBPXL was acquired by Cargill, Inc. In 1982 the MBPXL name was changed to Excel. In 1987, Excel entered the pork processing business with the acquisition of plants from Hormel and Oscar Mayer.

Excel markets a complete line of beef products to both retail and foodservice customers. Product offerings include: Excel® boxed beef U.S.D.A. Prime, Choice, Select and No-Roll traditionally-trimmed products; Excel’s Smart Choice™ U.S.D.A. Prime, Choice and Select close-trimmed boxed beef; Sterling Silver® Certified Premium U.S.D.A. Choice beef; Certified Angus Beef® ; Sunflower™ specially selected lean cow products; and Morton’s of Omaha® corned beef. In addition, Excel also offers 45 cuts of case-ready beef plus a range of further-processed beef products such as ground beef patties, portion control steaks and fresh and frozen variety meats.

Excel has processing facilities and sales offices in the United States, Canada and Australia, and international business offices in Australia, China, Honduras, Japan, Korea and Taiwan.

Cargill, Inc., is estimated to have more than 80,000 employees in 65 countries with business activities in an additional 130.

Excel Corporation employs about 20,000 people in eight countries.

Excel Corporation
151 North Main Street,
Suite 900
Wichita, KS 67202
Phone: (316) 291-2500
www.excelmeats.com
 
Cargill Incorporated
P.O. Box 5636, MS 36
Minneapolis, MN 55440
Phone: (612) 742-7575
www.cargill.com

(Sources: http://www.1800miti.com/Companies/US/profit/page83cgif.html; http://hoovers.com/co/capsule/9/0,2163,40079,00.html;http://www.excelmeats.com/index.htm; http://worldfood.cargillfoods.com/2Q00/2Qbeef.htm; http://www.cargillfoods.com/products/beef.htm.)


Farmland National Beef
Farmland National Beef is owned jointly by Farmland Industries and U.S. Premium Beef, LTD.

Farmland National Beef is the fourth largest beef processor in the U.S., providing nearly 10 percent of the domestic beef supply.

With production facilities in Dodge City and Liberal, KS, the company claims to be the only farmer-rancher held beef processor in the U.S. through ownership that is shared between Farmland Industries and U.S. Premium Beef.

Farmland Industries is owned by 1,500 local cooperatives representing an estimated 600,000 farmers in the U.S., Canada and Mexico. In addition to processing members’ crops, the coop’s operations include fertilizer plants, a petroleum refinery, grain elevators, feed mills, barges, railcars and an extensive fleet of trucks. Farmland has more than 60 joint ventures and alliances similar to its relationship with Farmland National Beef, including Country Energy (petroleum distribution) and Farmland Hydro (phosphate
production).

Farmland’s roots go back to 1929 and Union Oil Company, a farmer held cooperative involved with petroleum distribution. In 1935, Union Oil increased its range of activities and became Consumers Cooperative Association. In 1959, Consumers Cooperative purchased a pork processing plant in Denison, IA and began making Farmbest meat products; in 1963 it opened another plant in Iowa Falls, IA. In 1966, Consumers Cooperative became Farmland, and in the 1970s, it expanded into beef processing. However, when beef prices and consumption declined, it exited the field and did not get back into beef processing until 1993. It was announced in July of 1997 that Farmland Industries and U.S. Premium Beef had signed a letter of intent to form a partnership and share up to 50 percent of the ownership of Farmland National Beef Packing Company.

U.S. Premium Beef, a closed cooperative, originated in a meeting held in November of 1995 when 21 cow-calf producers met to discuss the concept of forming a marketing cooperative that would vertically integrate the beef industry for its members. The producers wanted a production and marketing system that would enable them to own their beef all the way through value-added processing.

In July of 1996, U.S. Premium Beef was officially formed and the effort to establish a partnership with an existing beef processor began. At the same time, meetings were conducted to recruit beef producers who wanted to buy into the new company. In July of 1997, U.S. Premium Beef signed a letter of intent to form a partnership with Farmland Industries to purchase up to one-half of Farmland National Beef packing company.

U.S. Premium Beef’s stock offering closed on January 23, 1998. Presently, the cooperative accepts only applications for associate membership from cattle producers who desire to deliver and market cattle with the cooperative pursuant to an agreement with an existing member-shareholder of the cooperative for the lease of delivery slots from the member-shareholder.

Farmland National Beef serves the retail and food service product sectors with Farmland branded products including; Farmland Certified Premium Beef ‚ U.S.D.A. Certified upper choice, 1/4" trim, non-breed specific; Farmland Black Angus Beef ‚ U.S.D.A. Certified upper choice Black Angus Beef, 1/4" trim; Black Canyon‰ Cattle Company Angus Beef, offered in either Choice or Upper Select based on marbling scores. In addition to branded products, it also offers a full line of commodity products: Prime, Certified Angus Beef, Choice, Select, No Roll, Trim, Ground Beef and Fresh Chilled Variety Meats.

Farmland Industries conducts business throughout the U.S. and in more than 90 other countries. In 1999, the company had 17,700 employees.

Farmland National Beef has approximately 2,700 workers in Liberal, KS and 1,450 workers at its Dodge City facility.

Farmland National Beef
10100 NW Executive Hills,
Suite 400
Kansas City, MO 64153
Phone: (800) 449-BEEF
www.nationalbeef.com

Farmland Industries
3315 N. Oak Trafficway
Kansas City, MO 64116-0005
Phone: (816) 459-6000
www.farmland.com

U.S. Premium Beef, LTD
10100 NW Executive Hills,
Suite 105
Kansas City, MO 64153
Phone: (816) 891-2300
www.uspremiumbeef.com

(Sources: Hoover’s Handbook of Private Companies 1999; http://www.farmland.com/agoperat/nationalbeef.html;http://www.nationalbeef.com/default.htm http://www.hoovers.com/co/capsule/9/0,2163,40149,00.html; http://www.nationalbeef.com/Trans_productsMain.htm.)


IBP, Inc.
IBP, Inc., started operations in 1961 as Iowa Beef Packers, Inc., at Denison, IA. At the time of this publication’s editing, the purchase of IBP by another major U.S. meat processing firm was expected.

In 1967, IBP essentially changed the industry when it presented boxed beef and pork to the marketplace. Vacuum-packed and in smaller portions, the boxed product provided a
new option to the traditional method of shipping product in whole carcass form. In
addition, boxed meat saved energy and transportation costs by eliminating the shipment
of fat, bones and trimmings.

In 1970, to reflect a widening scope of operations, the company’s name was changed
from Iowa Beef Packers, Inc. to Iowa Beef Processors, Inc. In 1982, because of IBP’s
movement into pork and other value added areas, Iowa Beef Processors, Inc., became
IBP, Inc.

IBP took a major step into value-added food production in 1990 with the opening of a
cooked meats plant which processed beef and pork trimmings into specialty products for
the retail and foodservice industry. In 1994, IBP expanded its prepared meats business
further with the purchase of an existing cooked meats company.

In 1997, IBP began to diversify its business into a wide range of higher-margin food items
with the purchase of Foodbrands America. Presently, IBP markets everything from
soups, sauces and side dishes to processed steaks, hors d’oeuvres, Mexican and Italian
foods and prepared meals through a variety of regional brand names and private labels.

Acquisitions by IBP that are now integrated into the Foodbrands system include
companies and operations that market under the brand names of Restauranic, Fayes,
Cohen’s Famous, Casino Chef, H&M Foods Systems, Russer Foods, Wilton Foods, Thorn
Apple Valley, Corn King, Colonial, Wilson Certified, Cavanaugh Lake View Farms,
Jordan’s, Wright Brand and Jac Pac.

In the spring of 2000, IBP unveiled Thomas E. Wilson as the name of its new consumer
brand intended to cover a variety of fresh, frozen and cooked steaks, chops, roasts and
ribs.

In 2001, as part of the Thomas E. Wilson marketing effort, IBP plans a national launch of a new line of pre-weighed, packaged and priced, fully cooked, case-ready beef and pork
products designed as a full meat case replacement for retail grocery and club stores.

IBP has two business segments, Fresh Meats and Enterprises.

Fresh Meats produces beef and processed beef and pork products which are marketed
to grocery chains, meat distributors, wholesalers, retailers, restaurant and hotel chains,
and processors who produce cured and smoked products. Fresh Meats also produces
inedible allied products, such as hides and other items used to manufacture products,
such as photographic film and pharmaceuticals, and edible allied products, which
include meat items. IBP has become one of the world’s largest hide tanners and is the
nation’s largest source of raw materials for pet foods and animal feeds.

Enterprises produces frozen and refrigerated food products for the food service industry.

In North America, IBP serves its customers from seven regional service centers located
in Atlanta, GA; Los Angeles, CA; Brooks, Alberta; Gloucester, Ontario; Dakota City, NE;
Greensboro, NC; Lyndhurst, NJ; Chicago, IL; and Vancouver, WA.

Through its export company, IBP International, Inc., IBP moves finished product into the
world marketplace. Presently, the company is the largest U.S. exporter of red meat and
related allied products and operates the largest beef plant in Canada. IBP International
coordinates the marketing of products for both IBP Fresh Meats and Foodbrands
America. It operates sales offices in the U.S., England, Japan, Taiwan, China, Korea,
Russia and Mexico.

IBP employed 45,000 people in 1999.

IBP, Inc.
800 Stevens Port Drive
Dakota Dunes, SD 57049
Phone: (605) 235-2061
www.ibpinc.com

(Sources: The IBP Story (http://www.ibpinc.com/About/IBPNewHistory.stm). Moody’s
Industrial Manual 1999. Hoover’s Online.)

Institutional Suppliers and Specialty Products
The suppliers/distributors of specialty food and related products to the restaurant,
institutional and private household door-to-door trade own a special position in the
marketing chain. Although this link does not grow any food items or take raw products
and process them into a consumer items, the supplier/distributor has opportunities to
add value and influence next-consumer purchasing patterns.

A look at how several of these businesses evolved and some of the innovative methods
used by leaders in this part of the chain is also a look at some possible new ways to add
value to other links.

Harker’s
Harker’s Distribution, Inc., claims to be the largest center-of-the-plate specialty
foodservice distributor in the U.S.A., servicing more than 24,000 customers in 18 states.
Harker’s operates 3 manufacturing facilities, producing Signature of Iowa™ Steaks and
providing custom cut capabilities to its customers.

In 1906, George Harker, a LeMars farmer, opened a meat market in downtown LeMars. In
1954, the company entered the foodservice distribution business with its first route truck,
selling fresh red meat products to schools, hospitals and restaurants within a 50-mile
radius of LeMars. In 1968, Harker’s production facilities became USDA certified and the
company expanded distribution outside of Iowa. In 1972, a second production facility
was built in Orange City, IA, and in 1982, a third production facility was opened in Sioux
Center, IA.

In 1986, the Harker family sold the business to Federal Company of Memphis, TN. Federal Company later changed its name to Holly Farms Corporation and was then purchased by Tyson Foods in 1989. In 1990, local management completed a buyout of the sales and distribution business and operated it under the name of Harker’s Distribution. Tyson retained ownership of the production facilities until 1995, when the Board of Directors for Harker’s Distribution approved an agreement to purchase Tyson Foods Office and plant facility in LeMars.

In 1998, Harker’s re-established beef steak production in the LeMars plant facility, added
a second facility in Minneapolis, MN, to add custom-cut capabilities and launched the
Signature of Iowa™ Brand. Today, Harker’s Distribution operates 194 routes in 18 states.

In expressing advantages provided to the customer through its route sales delivery
system, the company promotional materials state the following:

• No Minimum Order-Efficient in servicing you one box or one-hundred.
• Higher Service Level-Anticipation of your needs, not just service for them. With our route sales system, your product is warehoused on our truck. Extra quantities, new items are available immediately.
• Samples Right Off the Truck-Try it before you buy it!

Along with red meats, Harker’s distributes a full line of specialty products aimed at
satisfying the special needs of school food service, healthcare, restaurants/commercial
and group fundraising markets. Beef, poultry, pork, seafood, appetizers, potatoes,
vegetables, hot dogs, soups and miscellaneous food items are all listed in Harker’s
product menu.

Harker’s Distribution, Inc.
801 6th St. SW
P.O. Box 1308
LeMars, IA 51031
Phone: (800) 798-9800
http://harkers.com/
e-mail: service@harkers.com

Schwan’s
In 1952, Marvin Schwan (1929-1993) and his parents were partners in a small dairy near
downtown Marshall, MN. Marvin discovered that ice cream was selling at a premium in
relation to other dairy products and seized the opportunity. After loading an old Dodge
panel truck with 14 gallons of ice cream, Schwan ventured out one March morning. By
sundown he had sold the entire supply. The Schwan’s home delivery system followed.

The younger Schwan’s vision for the company included growth, and the route system
added frozen pizza to its delivery trucks in 1965. Four years later, he jumped at a chance
to meet the needs of a changing society, one that had discovered convenience foods.
Tony’s Pizza of Salina, KS, became part of the company, selling frozen pizza directly to
retailers. The company took pizza into U.S. schools in the 1970s and now provides food
products for schools, hospitals, institutions, businesses and national chain restaurants.

Acquisitions and start-up divisions have become integral within a company dedicated to
continuing Marvin Schwan’s vision for growth. Schwan’s includes a wide range of food
production and marketing divisions in North America and Europe and a technology
integration business.

Schwan’s offers in-home consumers a choice of some 300 food items delivered to their
doorstep. Products are designed for freezer storage and rapid preparation. Presently,
consumers can shop Schwan’s MealTime® Online Web site, place their order, and have
it delivered to their home. Schwan’s advertising copy states:

Schwan’s convenient and timesaving home-delivery service still makes it possible for
you to serve the delicious, wholesome foods your family likes to eat for breakfast, lunch
or dinner - without all the hassle.

When you step through your door at the end of the day, you’ll feel good knowing that
Schwan’s will be waiting!

For institutional customers, Schwan’s marketing efforts still focus on convenience and
ease in preparation. Marketing materials designed for commercial customers depict
Schwan’s as “. . . a leading single-source foodservice supplier of multiple food
categories. Schwan’s® is the resource you have always relied on for a wide breadth of
popular and profitable food products.”

Schwan’s Sales
Enterprises, Inc.
115 West College Dr.
Marshall, MN 56258
Phone: (888) 724-9267
FAX: (507) 537-8226
http://www.schwans.com/
default.asp
http://www.schwansfood
service.com/

SYSCO
SYSCO claims to be the largest marketer and distributor of foodservice products in North
America. Operating from 105 distribution facilities, the company provides products and
services to an estimated 325,000 restaurants and other foodservice operations across
the contiguous United States and portions of Alaska and Canada.

In 1946, John F. Baugh left his job as a manager for the local A&P in Waco, TX, and
launched a food distribution company called Zero Foods. While his wife, Eula Mae,
managed the books, Baugh made deliveries and sales calls to the local cafeterias,
bakeries and hospitals who bought frozen produce from him.

Baugh envisioned a national presence for his Zero Foods company. In 1969, after sharing
his vision with eight distributors he admired and trusted, he cemented an agreement and
formed what is now known as SYSCO Corporation.

Beef products offered by SYSCO are categorized into four different levels, each
marketed with claims of the following advantages. Supreme Absolute top quality products to those entities who see themselves as the elite of foodservice. Imperial High quality products packed to high specifications. Classic SYSCO’s lead quality level and largest array of products. Reliance Economy-positioned products that are specified at a level equal to competitive labels for similar grades or quality.

The SYSCO Web site (http://www.sysco.com/index.htm) may be a source of further
information for the producer or processor who wants to learn more about creating a
product that will flow into a booming marketing system.

In Iowa, SYSCO headquarters
are located at:
SYSCO Food Services of
Iowa, Inc.
2420 Grand Ave.
West Des Moines, IA 50265
Phone: (515) 223-5757

Direct Marketing and Small Processors
Selling directly to the consumer is another option for food industry participants who want
to gather in more links of the marketing chain. This method is most closely associated
with the activities of small processors and producer’s actually presenting their product
to the customer on a one-on-one basis.

WIC Farmers Market Nutrition Program
USDA’s Women, Infants and Children (WIC) Farmers Market Nutrition Program was
established in 1992 to provide fresh, nutritious, unprepared foods, such as fruit and
vegetables, from farmers markets to women, infants and children who are nutritionally at
risk and to expand the awareness and use of farmers markets by consumers. Federal
funding for the WIC Farmers Market Nutrition Program for this year has doubled
nationwide to $12 million (with an increase to $15 million requested in 2001). Iowa is part
of this program.

Food stamps
The use of food stamps at farmers markets nationwide is huge — estimates range from
$75 million to $100 million annually. (Source: Agricultural Marketing Service, USDA
http://www.ams.usda.gov/directmarketing/.)

Excellent sources for more information about Farmers Markets are:

Iowa Department of Agriculture and Land Stewardship
Iowa Department of Agriculture and Land Stewardship, Henry A. Wallace Building,
Des Moines, IA 50319
Phone: (515) 281-5321
www2.state.ia.us/agriculture/

Iowa Farmers Market Nutrition Program
Iowa Farmers Market Nutrition Program, Margaret Long, Program Administrator
Phone: (515) 242-6239
e-mail: Margaret.Long@idals.state.ia.us

Agricultural Marketing Service
Agricultural Marketing Service, U.S. Department of Agriculture
Farmers Market Hotline
Phone: (800) 384-8704

For news and announcements, publications, resources and links, AMS Farmer Direct
Marketing Action Plan, Farmers Market Directory or a listing of direct marketing
resources by state, access http://www.ams.usda.gov/directmarketing/.

Small Processors
The 1998 Iowa Manufacturers Directory* lists 85 Iowa manufacturing establishment
classified as meat packing plants (SIC 2011) and 78 establishments that produce
sausages and/or assorted meat products (SIC 2013).
*Harris InfoSource in conjunction with the Iowa Department of Economic Development

Because of varied size of operations and geographical distribution, it is difficult to
estimate the level of competition any of Iowa’s meat processors tend to experience with
one another. The one sure thing is that each of the enterprises must successfully
negotiate the needs of their customers.