from Beef cow-calf weekly ezine (2/28/03)

Wal-Mart is revolutionizing retail food sales and, as is almost always the case with the retail giant, there's concern as to whether the change is good. When one of its stores' meat cutters voted to go union, Wal-Mart decided to go with case-ready meats. By dumping the meat cutters, the Fayetteville, AR, behemoth reduced its labor costs and allowed itself better stocking rates, less outdated product, less weight, etc. All these savings offset the additional cost of case-ready product. 

However, the real price advantage comes in the form of enhanced product, as these products are typically injected with a saline-type solution to improve longevity or tenderness. Wal-Mart's label on such products states that up to 12% of the weight of the product could be added moisture. This is a huge advantage since water is obviously less expensive than beef. 

Some retailers are moving to case-ready product in order to remain competitive with Wal-Mart on a price basis. But they're finding it difficult to impossible to compete with Wal-Mart on price. After all, who can compete with Wal-Mart's purchasing power? 

The battle has actually served to ally meat cutters and retailers, both of whom worry that the enhanced products will "water down" beef's taste advantages and ultimately will drive down demand. These folks are looking back to the meat cutter and other ways to differentiate their product from the one that Wal-Mart offers. 

After talking to numerous retailers, I don't believe it's possible to overstate how much Wal-Mart's drive into the grocery business will affect the retail industry and, ultimately, how our product is marketed. The exciting thing for producers who have visions of taking more control of the value creation aspect of their product is that the retail industry is probably more open to new ideas about marketing beef than at anytime in its history.