Classic Culinary Collection
November 1, 2006
Classic Culinary Collection
Story By Barbara Young, Editor-In-Chief
Photos by Marta Garcia
Photos by Marta Garcia
With more than 100 years of staying power, John Morrell’s Kretschmar deli line is an ideal fit in a world obsessed with what’s new and what’s next.
John Morrell & Co., the 179-year-old business of Smithfield Foods, created a separate business unit to concentrate on marketing deli products with its Kretschmar brand as the linchpin. After nearly five years, the line has grown from a regional pursuit to a national endeavor with double-digit annual sales increases.
Although Kretschmar products star in the venerable meat company’s relatively new deli division, the brand itself is only slightly younger — at 123 years of age — than the firm that owns it.
German-born Ernest Kretschmar brought his ham recipe to America and established a legendary brand in St. Louis in 1883. The Kretschmar brand has always stood for superior quality and legendary taste, notes John Pashea, John Morrell’s vice president of deli sales.
“The logo has not changed because it has a longstanding heritage,” he adds. “We keep the look because of its established image, which says premium with ageless appeal.”
John Morrell acquired the Kretschmar business in June of 1990. Pashea joined John Morrell with the purchase and assumed sales and marketing responsibilities for the Kretschmar brand.
Powerful linageJohn Morrell brings heritage and history to its pork business.
Founded in England in 1827 with no operating interruptions even during its acquisition history, John Morrell & Co. is the senior citizen among U.S. operating meat manufacturers.
Based in Cincinnati, Ohio, the company currently produces more than 3,000 products, operates eight USDA-approved facilities that each specialize in specific product categories, generates approximately $2 billion in annual sales, employs more than 6,700 people across the United States, and offers a wide variety of fresh pork and processed meats including hams, hot dogs, bacon, lunchmeats and smoked sausage.
Joseph Sebring, John Morrell president since 1994, is a proven industry leader with a track record of more than 30 years. The company’s growth is complemented by strategic acquisitions and new marketing initiatives, among other programs.
Smithfield Foods, John Morrell’s parent company, recently acquired the Armour Swift-Eckrich (ASE) division from ConAgra Foods. ASE products are now managed under the John Morrell family of brands.
John Morrell’s deli division, born in 2001, represents an offshoot that promises significant increases to the company’s bottom line (see “Classic culinary collection”).
John Morrell production facilities are fit and efficient, thanks to constant technological updates and plant-modernization programs. The largest facility in Sioux Falls, S.D., built in 1909 and the production site for fresh pork and a full line of processed meats, is being upgraded in a 232,000-square-foot expansion project with a $100 million price tag. Completion is set for October 2007.
The company, whose fresh pork products reach customers in the United States and the international arena, is among America’s largest producers of private-label processed-meat products. John Morrell supplies major U.S. retail chains and foodservice distributors with a broad array of fresh and processed private-label products.
John Morrell products began life under a new logo this year. New products include several precooked and pre-sliced ham cuts in resealable packaging. Premium hardwood smoked bacon now is packaged in a resealable tub.
Smithfield Foods acquired John Morrell & Co. from Chiquita Brands International for $58 million in 1995, a move that vaulted the Virginia-based company to No. 2 among the nation’s pork processors by nearly doubling its size and bringing its sales to more than $3 billion.
Today, Smithfield Foods is the world’s largest pork processor and hog producer with revenues exceeding $11 billion in fiscal 2006. The company raises 14 million hogs domestically each year for a 13 percent U.S. market share, and annually processes 27 million hogs representing 26 percent of the U.S. market. Smithfield, which processes about 2 million cattle annually for a 6 percent market share, also is the fifth-largest U.S. beef processor and a 50-percent partner to Five Rivers Branch Cattle Feeding JV, the U.S. largest cattle feeder.
Independent operating companies such as John Morrell define Smithfield’s operating strategy. The corporation’s decentralized structure allows subsidiary companies to operate under self-government, which means they sometimes compete against each other in the marketplace. Such is the case for the John Morrell deli division, which is one among others operating in sister divisions.
The John Morrell acquisition — which followed Chiquita’s two-and-a-half year struggle to sell the venerable business after 25 years of ownership — also extended Smithfield’s presence in the mid-Atlantic and Southeast to include John Morrell’s longstanding business in the Midwest.
It came amid tough times for the pork industry, which faced high hog prices cutting into profits on processed pork products; but for Smithfield, known for expanding its grasp during down times in the industry, the timing was ideal and the target was ripe for the picking.
Slightly more than a decade later, Pashea’s sales success — especially concerning Kretschmar products — positioned him as the ideal candidate to run John Morrell’s deli division as defined by Joseph Sebring, company president. Sebring perceived the Kretschmar brand as the company’s key to deli category growth linked to national distribution.
To that end, Pashea and team began building the deli division as a separate business with its own staff, aspirations and goals.
“The beauty of the concept is that we started from scratch with a couple ham items and then developed the brand across all the proteins,” Pashea recalls. “The new team members soon saw a challenge and wanted to take the products into national distribution.”
Erik Waterkotte, director of marketing, is one of the newest additions to the team. He brings extensive experience to his position, in part from sales positions at American Greetings and Hewlett-Packard.
“We have a line of quality products and we are looking to grow the deli market in general,” Waterkotte says. “Growing the deli category means growth for our Kretschmar business and its full line of options. That can be the customer’s own sandwich concept or we can design a sandwich for their specific needs”
Cliff Gaddy was in the starting lineup of regional sales managers on the Kretschmar team. His territory is the East Coast and his customers include major supermarket chains as well as smaller operations. This North Carolina native, who earned his stripes as a store manager for Winn-Dixie Stores in his home state, understands the nature of retail sales strategies — especially concerning the deli platform.
“My background gives me the understanding of what deli people go through because I can talk about being a store manager and pitfalls tied to not paying attention to the deli department,” Gaddy confirms.
Well-trained deli-department operators add a competitive edge in marketing the Kretschmar line of meats and cheeses, Gaddy notes. The company added a cheese line this past June.
“I like for deli merchandisers to have a chance to taste the products in the training sessions,” Gaddy says. “Once they taste the product and understand that if they get it in the customer’s mouth, it is a done deal. [Deli merchandisers] have to be the experts to make it work. Giving them information makes them more powerful.”
Gaddy talks about a sophisticated deli department as a destination for retail food-store shoppers rather than a pass-by spot on their way to other store destinations. To that end, his ideal deli department features such accoutrements as seating areas with inviting umbrellas. The deli merchandiser is friendly and knowledgeable about the meat he slices and is eager to share that knowledge in an effort to build a loyal customer following.
“It can be something as simple as handing out a sample,” Gaddy advises. “When you are back there slicing something and somebody else walks up, put a slice on a piece of paper and say, ‘Try this and I will be right with you.’”
Enlightened deli operators understand and appreciate the opportunity to create excitement in their departments. “You stagnate when you keep doing the same thing, such as running cooked ham at $1.99 pound to get people there,” Gaddy says. “Much of our business comes from customers looking for premium quality items. They come to the deli for a premium meat line, meaning gluten free and no MSG.”
To be sure, Pashea and his sales and marketing team share responsibility for marketshare gains of John Morrell’s deli products under the Kretschmar brand that target retail-food store service-deli operations. Products include varieties of premium ham, roast beef, poultry products, sausage, cheese and fully cooked deli products.
“We started with limited regional distribution and it was not long before we were at 25 million pounds,” Pashea reports. “We are now producing and selling substantially more pounds, and we continue to achieve growth along with our customers. Moreover, customers who switched to Kretschmar products for their deli operations are seeing their programs grow by up to 20 percent.”
The business formula for John Morrell deli products is a recipe for success thanks to sales and marketing innovations characterized by an in-field training and support program, the John Morrell vertical integration strategy that assures consistent raw material supplies and a sophisticated food-safety system.
“We have good and diverse plants,” Waterkotte points out. “The majority of our products are produced at three of them. Our food-safety measures are beyond comparison. The way we manufacture our products gives us complete control. That means a comfort level for our customers who can trust that we bring outstanding Kretschmar products to them from quality and safety standpoints.”
The Kretschmar deli program is about more than turning sales. It is about teaching deli operators how to sell more products. To that end, John Morrell deli group tools include new proprietary software that enables deli departments to design their own sandwich recipes, in addition to an in-store training program conducted by regional sales managers. Called the “Sandwich Den,” the turnkey program breaks down total financing concerning raw material pricing, ideal price points for sandwiches and gross profit potential.
“Our research showed that store managers did not realize how much cost they invested in sandwich making,” Pashea says. “We hope to eliminate lost revenue related to shrink.”
Pashea says food safety is the cornerstone of the deli division’s program, however.
Warren Dorsa, vice president of food safety, is in charge of the John Morrell food-safety program companywide.
“My job is assuring that products produced by John Morrell are as safe as possible,” Dorsa says. “We have, if not the best record, at least one of them when gauged by recalls.”
Decentralization defines the John Morrell approach to food safety at the plant level, reports Dorsa, a food microbiologist and former USDA research microbiologist.
“It is not that our programs are better than others, it is how they are run that sets us apart,” he says. “We put a great deal of responsibility on the shoulders of our quality assurance managers. They are independent thinkers, and we expect them to take our corporate policies and individualize them by molding them into something that works in their specific facilities.”
That is exactly what happened concerning the company’s allergen policy, which needed to change to fit applications at specific plants. Dorsa convened a “summit” attended by key HACCP coordinators and quality assurance managers, who dissected the existing policy and developed user-friendly guidelines.
“They were able to identify what does and does not work,” Dorsa explains. “Making sure allergens are controlled in the plants is crucial. If those ingredients end up in products accidentally or through mislabeling, there is a problem and an instant recall.”
As Pashea says, quality products depend upon a sound food-safety philosophy and quality ingredients.
Kretschmar primary production operationsGreat Bend, Kan.
Size: 159,000 square feet
Product line: Smoked meats
(ham and bacon)
76.5 million pounds
Employees: 300 production and other staff members
Sioux Falls, S.D.
Size: 2 million square feet
Product line: deli products
(smoked and processed meats)
Production capacity: 320 million pounds
Other operations: hog kill
(18,000 hogs per day) and fabrication
Employees: 3,200 production
and other staff members