Niche Pork Profits
September 1, 2005
Niche Pork Profits
By Bryan Salvage
Dedicated pork processors continue doing their best to help niche items evolve into the mainstream.
When it comes to buying pork products at retail or on the foodservice menu, consumers have an increasing variety at their disposal. Forward-thinking pork processors, regardless of their size, recognize that one way to grow business and increase sales potential is to offer high-quality, value-added, unique niche pork products that stand out from the rest of the pack.
Sounds good, but just what exactly is niche pork? Based on a recent study funded by the National Pork Board supported by additional funds from the Pork Niche Market Working Group using money from a grant by the W.K. Kellogg Foundation, niche pork attributes include:
Raised without antibiotics
Raised without growth promotants
Raised without animal by-products in the feed
If you’re a processor of traditional pork products who’s sitting on the fence trying to decide whether or not to offer niche pork, consider this. Findings show that consumers are willing to pay a premium – in some cases up to 40 percent above conventional pork prices—for niche pork products. This bodes particularly well for smaller regional players because 46 percent of surveyed consumers indicated they are “much more” or “somewhat more” likely to buy pork if it is locally grown, and 69 percent to 74 percent said they would “definitely” or “probably” buy locally grown meat in the future.
Here’s a little background on this study. It was conducted by an independent research firm that interviewed 200 pork consumers online. Respondents were all primary food shoppers, women ages 21 to 54, who had purchased fresh pork in the previous month. Their average age was 37 and the mean average annual household income was $49,000, with an average household consisting of 3.1 people. Using a research technique known as conjoint analysis, the study asked respondents to rate the importance of 18 combinations of niche pork attributes and price level attributes.
In order to further gauge the market for fresh niche pork products, three companies offering niche pork were contacted. Each company is unique from the others.
Carlton Farms, Carlton, OR, for example, has been in business since 1956. The company focuses on high-quality products that are featured in fine restaurants, grocery stores, and custom meat shops. Its niche pork products are featured by name – Carlton Farms Fresh & Natural Pork.
Its range of niche pork products are fresh and natural, which means they contain no artificial ingredients, artificial coloring, chemical preservatives, or added moisture. Its natural pork products include thick-cut pork chops, wood-smoked ham; Old-World Sausage, such as spicy Andouille and smoked bratwurst; and dry cured bacon (with no water or curing accelerators added). Other products include Rib Eye, New York, and Filet Mignon steak; as well as smoked turkey.
“Carlton Farms is an Oregon producer that believes in quality safe products,” says John G. Duyn, president and chief executive officer. “Carlton Farms pork is a natural product, meaning it is raised without antibiotics or growth hormones. Our pork is much more tender and flavorful than other pork you might buy elsewhere because the animals are raised for quality, not quantity, and we pay particular attention to quality.”
Of all the company’s niche-pork products, its Carlton Farms bacon is perhaps the most popular. It has been featured in the New York Times, in the Chicago Tribune food section, and as Bacon of the Month on Grateful Palate’s Web site.
“We have also been rated one of the Top-10 bacons in the United States,” Duyn says. “It seems to be one of the favorites.”
Demand for niche pork is increasing, Duyn points out.
“People enjoy entertaining and featuring quality products when they entertain,” he adds, “as well as having healthy, tasty products for all family meals.”
The greatest challenge facing Carlton Farms’ niche pork business is finding producers to supply the high-quality hogs it needs to grow its business, and to satisfy the demand for quality products.
“The opportunities to get our product out there, however, seem to be endless,” Duyn says. “We get continuous calls from businesses that want to buy our products and list them by name in their stores and restaurants.”
The Missouri connection
Alma Meats Inc., Alma, MO, is a “new generation” farm cooperative owned by 198 Missouri farmers and livestock producers. It cuts and packages private-label, smoked, and processed specialty meats. It markets high-quality pork products to restaurants, country clubs, high-end institutional businesses, and the grocery sectors. More than 75 items are included in its product roster.
The cooperative was originally organized in 1944, but was re-organized and re-capitalized as “new gen” in 2003 in order to build a new multi-million-dollar processing plant in Alma, MO – 60 miles east of Kansas City. The cooperative slaughters livestock and fabricates more than 50 value-added meat products. Its primary market is high-end restaurants, delis, country clubs, and institutional users. It also operates two retail stores of its own, along with selected product in various high-end grocery stores and supermarkets throughout the Midwest. Most products that are consumer-labeled are sold under the Alma’s Farm Fresh Meats label.
“We pride ourselves on the premium quality of the products we make along with the old-fashioned attention to detail that goes into making them,” says Jerry Bublitz, chief executive officer. “Although our prices are not the cheapest on the market, our customers still know that there is real value in these premium-quality products.”
Many company products are based on the Old-World recipes that require a lot of attention to detail in order to produce. Other products play to segments of the marketplace that large meat packers are either under-serving or have chosen to bypass due to either a perceived lack of tonnage or complexities in manufacturing the product itself.
When asked if consumer demand is increasing for niche pork, Bublitz replies: “First we need to make a distinction between economically viable niche markets that are growing [there are but a few of these] and those niche markets that – while they are growing – are still not economically viable enough for us to devote significant production resources to meeting their needs. In this sense, we are no different than the large packers since we, too, need to make the most efficient use of the production resources we have available to us.”
His company’s focus is still on the mainstream consumer, but with an important difference.
“Our target is the family with a disposable household income in excess of $70,000 a year – a family that is looking for flavorful meat products that are easy to prepare but still give the impression that someone spent a lot of time in the kitchen preparing them,” he says. This is a family that is also looking for premium-quality products and perceives us as a crafter of fine products rather than as a manufacturer. Their primary concern is with purchasing safe meat products, and they are not too concerned at present with less-popular niche concepts such as grass-fed meat, free-range production of an all-organic product.
“In short, they want a safer, more flavorful, easy-to-prepare meat product that they can feel proud to put on the table — and they are willing to pay a premium price to obtain it,” Bublitz continues.
Alma Meats’ newest product is a ready-to-eat, smoked baby-back rib in its own proprietary barbecue sauce.
“There are a lot of ‘ready-to-eat’ rib products out there, but they all still take from seven to ten minutes to warm up,” Bublitz says. “This product takes no more than ninety seconds to microwave in its own packaging.”
The greatest challenge facing his company is to financially separate niche markets from the numerous “if-fier” niche markets that are out there, he says.
“We need to stay focused on our [previously defined] typical demographic family and continually try to understand the forces that lead them to make the buying decisions they make,” Bublitz says. “Right now those forces seemed to be focused more on food safety, quality, and ease-of-preparation issues as opposed to health and environmental or animal rights issues. The opportunities for us are almost unlimited — as long as we stay on task and continue to give these families what they need and want. This segment of our population continues to grow, and we plan on continuing to grow along with it.”
Specialty business prospers
Sioux-Preme Packing Co., Sioux Center, IA, specializes in serving niche markets, and it relays it has the flexibility to produce many pork products including custom cuts. In business since 1969, it operates a harvest plant with capabilities of 800,000 head annually in Sioux Center, IA, and a breaking and fabrication plant in Sioux City, IA.
“We diversified our company into three areas,” says Gary Malenke, president. “One is our specialty business, represented by the branding and co-packing we do for customers such as Niman Ranch, Organic Valley, Beeler’s Naturally Pure Pork, Coleman Natural Foods, Premium Gold Angus Beef, and Berkridge Pork. Those marketing companies represent anything from Berkshire animals to organic animals to all-natural animals that carry some level of variation and definition ranging from outdoor-raised pigs to straw-bedded to no antibiotics to no growth hormones and more. This makes up fifty percent of our business, with twenty percent being on the commodity side and thirty percent representing the carcass business.”
Sioux-Preme’s niche pork business incorporates Berkshire, natural, and organic pork.
“In Berkshire, marbling, color, water-holding capability, and taste are its strong attributes.” Malenke says. “It has been well known in Japan for years.”
On the natural and organic side, it really boils down to the attributes these companies are bringing to the table, he continues.
“They obviously carry value to a customer,” he adds. “Some people in this world are passionate about organic products, and they’re willing to spend the extra money getting these products. It’s similar in the natural world. Both are attractive segments of the marketplace, and organic and natural customers believe these items are better and healthier. At the end of the day, it’s what the customer is demanding.”
And consumer demand for niche pork is increasing, Malenke says.
“Two or three major retailers are driving this,” he adds. “Whole Foods continues growing at a very rapid pace, and it is adding additional stores. There are also Wild Oats and Trader Joe’s, as well. Plus, there’s a segment in the restaurant business that is fairly strong but probably less defined by certain players – probably more on an individual restaurant basis versus a broad-line distributor.”
For the most part, Sioux-Preme is producing fairly standard products in the industry, Malenke says, but the bar on product quality and diversity keeps raising up.
“We now produce some very upscale items like French Racks, which I never thought we’d ever produce,” he adds.
When asked about the greatest challenge in supplying niche pork products for his customers, Malenke replies quickly: “That’s very easy for me to answer. The challenge and the opportunity is to connect the livestock supply to the customer in a way that we know what’s coming into the pipeline for livestock so that we can set the correct expectations for product availability to customers. It’s not like a commodity item where brand X shorts some shipment on pork lines, for example, and you can go to brand Y to get it covered. You can’t do that in these niche deals because [the raw materials are] simply not there.
“The challenge is to make sure you have the right expectations, as far as supply in the chain, and matching what’s going to be in the marketplace,” he continues. “This is tough because you have a one-year time lag. We breed pigs today, and for all practical purposes its ten or eleven months from now before the meat comes to town. Those who can effectively manage the supply chain and the marketing chain so that they’re on the same page will have the best opportunity for success.” NP
Editor’s note: For more information on niche pork, visit www.nichepork.org