red meat elite...2006 red meat elite 40 meatingplacemay 2006 rank company/headquarters sales bacon...

nThe year 2005: Dinner sausage siz-zled and breakfast sausage fizzled. Agreat year for burgers, but one thatfound hot dogs in the doghouse.Pork helped beat the blahs, but beefwas what was for dinner.Frozen entrees? Ice cold.

All in all a mixed year —and a mixed picturemarred by ongoing tradeproblems in Asian markets and slim profitmargins in markets closerto home.

To be sure, as the fol-lowing four pages illus-trate, red meat processorsare making money, butsome of the categoriesthey serve are more prof-itable than others.

With that in mind,Meatingplace has expandedits coverage of the nation’stop 100 processors to include high-lights of their performance in lead-ing retail categories. That coveragestarts on page 44, immediately fol-lowing the top 100 listing.

2006 RED MEAT ELITE

38 meatingplace May 2006

REDMEATELITE

About this year’sRed Meat Elite RankingsqRankings reflect red meat pro-

duction, and are based on sales.

qCompany information is self-

reported via survey. Should companies

elect not to participate, Meatingplace

consults third-party market research

to derive an estimate.

qFootnote: *estimate

qRankings for individual categories

beginning on page 44 likewise reflect

red meat production, and are limited

to activities involving retail sales.

Except where noted, figures were

obtained from market research firm

Information Resources Inc. Estimates

are based on additional third-party

market research.

Asso

ciat

edPr

ess

2006 RED MEAT ELITE

May 2006 meatingplace 39

Rank Company/Headquarters Sales Bacon Deli meat Fresh/frozen Ground Ham Hot dogs Pork Prepared Sausage(millions $) beef beef foods

1 Cargill Meat Solutions Wichita, KS 15,000.0 2 2 2 2 2 2

2 Tyson Fresh Meats Dakota Dunes, SD 14,865.0 2 2 2 2 2 2 2 2 2

3 Smithfield Foods Inc. Smithfield, VA 11,354.2 2 2 2 2 2 2 2 2 2

4 Swift & Co. Greeley, CO 9,669.1 2 2 2 2 2 2 2

5 Sysco Corp. Houston, TX 5,753.6* 2 2 2 2 2 2 2 2 2

6 Hormel Foods Corp. Austin, MN 4,325.7* 2 2 2 2 2 2 2

7 Sara Lee Corp. Chicago, IL 4,254.0 2 2 2 2 2 2 2

8 National Beef Packing Co. Kansas City, MO 4,000.0 2 2

9 OSI International Aurora, IL 3,200.0* 2 2 2 2 2

10 Boar's Head Provisions Co. Sarasota, FL 2,598.3* 2 2 2

11 American Foods Group Alexandria, MN 1,800.0 2 2 2 2 2 2

12 Oscar Mayer Foods Corp. Madison, WI 1,300.0* 2 2 2

13 Seaboard Foods Shawnee Mission, KS 1,024.0 2 2

14 Premium Standard Farms Inc. Kansas City, MO 927.6 2 2 2 2

15 Greater Omaha Packing Co. Omaha, NE 830.0 2

16 Empire Beef Co. Rochester, NY 703.0* 2 2 2 2

17 Indiana Packers Corp. Delphi, IN 600.0 2 2

17 Wolverine Packing Co. Detroit, MI 600.0* 2 2 2 2

19 Zartic Inc. Rome, GA 580.0* 2 2

20 Hatfield Quality Meats Inc. Hatfield, PA 500.0 2 2 2 2 2 2

21 Freshmark Inc. Massillon, OH 482.0 2 2 2 2 2 2

22 Colorado Boxed Beef Auburndale, FL 468.8* 2 2 2 2 2 2 2 2 2

23 Lopez Foods Inc. Oklahoma City, OK 454.9 2 2 2

24 Nebraska Beef Inc. Omaha, NE 450.0* 2

25 Advance Food Co. Enid, OK 443.0 2 2 2 2

*estimate

2006 RED MEAT ELITE



26 Bar-S Foods Co. Phoenix, AZ 425.0* 2 2 2 2 2

27 American Foodservice Corp. King of Prussia, PA 400.0 2

27 Brawley Beef Brawley, CA 400.0 2

27 Sam Kane Beef Processors Inc. Corpus Christi, TX 400.0 2 2

30 Washington Beef/AB Foods Toppenish, WA 394.0 2 2

31 United Food Grp./Service Pkg. Co. Los Angeles, CA 360.0* 2

32 Omaha Steaks International Omaha, NE 353.0* 2 2 2 2

33 Kenosha Beef International Kenosha, WI 300.0* 2 2

34 Dietz & Watson Philadelphia, PA 295.0 2 2 2 2 2

35 Harris Ranch Beef Co. Selma, CA 267.9* 2 2 2

36 L & H Packing Co./Surlean Foods San Antonio, TX 260.0 2 2 2

37 Specialty Foods Group Newport News, VA 241.9 2 2 2 2 2

38 Bob Evans Farms Inc. Columbus, OH 229.9 2 2 2 2 2

39 Superior Farms Davis, CA 217.8

40 PM Holdings Windom, MN 212.0* 2 2 2 2 2

41 Murry's Inc. Upper Marlboro, MD 200.0* 2 2 2 2

42 Stampede Meat Inc. Bridgeview, IL 189.0 2 2 2 2

43 Long Island Beef Co. New York, NY 180.9* 2 2 2 2 2

44 Atlantic Premium Brands Northbrook, IL 175.0* 2 2 2 2 2 2

45 Abbyland Foods Inc. Abbotsford, WI 174.1 2 2 2

46 Kayem Foods Inc. Chelsea, MA 160.0 2 2 2 2

47 Caviness Packing Co. Hereford, TX 150.0 2 2

47 Land O' Frost Inc. Lansing, IL 150.0* 2

47 Quality Sausage Dallas, TX 150.0 2 2

47 Siméus Foods International Mansfield, TX 150.0* 2 2

*estimate

2006 RED MEAT ELITE

May 2006 meatingplace 41


51 Rose Packing Co. Barrington, IL 146.0 2 2 2

52 Laura's Lean Beef Co. Lexington, KY 132.0 2 2

53 Bridgford Foods Corp. Anaheim, CA 130.8 2

54 J.H. Routh Packing Co. Sandusky, OH 130.0* 2 2 2 2

55 Ed Miniat Inc. Homewood, IL 128.2* 2 2 2

56 Kunzler & Co. Lancaster, PA 125.0 2 2 2 2 2

57 Cattleman's Meat Co. Detroit, MI 119.8* 2

58 Quantum Foods Bolingbrook, IL 117.0* 2 2 2

59 King's Deluxe Foods Minneapolis, MN 110.0* 2 2 2

59 Thumann Inc. Carlstadt, NJ 110.0 2

61 J&B Meats Corp. Coal Valley, IL 107.0* 2 2 2 2

62 Carl Buddig & Co. Homewood, IL 105.4 2

63 Fairbank Farms Ashville, NY 103.0 2

64 King Meats Inc. Los Angeles, CA 100.0 2

64 Loggins Meat Co. Tyler, TX 100.0 2 2 2

64 Peer Foods Chicago, IL 100.0 2 2 2

64 Strauss Veal and Lamb International Franklin, WI 100.0 2 2

68 Lincoln P’vision/Chgo. Gourmet Steaks Chicago, IL 93.0 2

69 Agri-Processors Inc. Postville, IA 84.9* 2 2

70 Martin's Abattoir & Wholesale Meats Godwin, NC 83.0* 2

71 Carmel Meat Co./Sierra Meat Co. Reno, NV 82.5 2 2 2 2 2 2 2 2 2

72 McFarling Foods Inc. Indianapolis, IN 82.0 2 2 2 2 2

73 Cumberland Gap Provision Middlesboro, KY 80.0 2 2

73 R.L. Zeigler Co. Tuscaloosa, AL 80.0* 2 2 2 2 2

75 Sioux-Preme Packing Co. Sioux Center, IA 77.0* 2

*estimate

2006 RED MEAT ELITE



76 Lone Star Beef Processors San Angelo, TX 76.5* 2

77 Center Meat Co. Brea, CA 75.0 2 2 2 2 2 2 2 2

77 Chicago Meat Authority Inc. Chicago, IL 75.0 2 2 2

77 Devault Foods Devault, PA 75.0 2 2

77 Keener's Inc. Renton, WA 75.0* 2 2 2 2 2 2

81 Michaels Finer Meats Inc. Columbus, OH 70.5 2 2 2 2 2 2 2

82 Custom Food Products Inc. Montebello, CA 70.0 2 2 2 2 2 2

83 Don Miguel Mexican Foods Inc. Anaheim, CA 66.6* 2

84 Premium Protein Products Lincoln, NE 65.0* 2 2 2 2 2

85 Coleman Natural Products Inc. Golden, CO 62.2* 2 2 2 2 2 2

86 John Soules Foods Inc. Tyler, TX 60.0 2 2 2

87 Cloverdale Foods Co. Mandan, ND 59.3* 2 2 2 2 2 2 2

88 Cambridge Packing Co. Boston, MA 58.0 2 2

89 Central Valley Meat Co. Hanford, CA 57.4* 2

90 Vienna Beef Ltd. Chicago, IL 55.6 2 2 2

91 H&H Meat Products Co. Mercedes, TX 52.0* 2 2 2 2

92 First Class Foods Inc. Hawthorne, CA 51.6* 2 2 2 2

93 John R. Morreale Meat Co. Chicago, IL 51.0* 2

94 Curtis Packing Co. Greensboro, NC 50.0* 2 2 2 2 2

94 Leidy's Inc. Souderton, PA 50.0* 2 2 2 2 2

94 Provimi Foods Inc. Seymour, WI 50.0 2

94 Schenk Packing Co. Stanwood, WA 50.0 2 2

94 Vincent Giordano Corp. Philadelphia, PA 50.0 2

99 Lay's Fine Foods/Lay Packing Co. Knoxville, TN 48.0* 2 2 2 2 2

100 Marathon Enterprises Inc. East Rutherford, NJ 45.4* 2

*estimate

2006 RED MEAT ELITE


iThe $3.3 billion retail deli meat

category has a clear leader: His first

name is O-S-C-A-R — never mind a sec-

ond name. Oscar Mayer’s sliced/non-

sliced deli meat dollar sales are more

than triple that of its closest brand-name

competitor, and nearly half of households

that use cold cuts buy them from the

Madison, Wis.-based deli deity, according

to research firm Mintel International.

Oscar Mayer’s success can be attrib-

uted to many of the same factors that

have helped revitalize the entire sliced

deli meat segment: high-quality, thinly

sliced meats that offer consumers ultra

important convenience, chiefly through

innovative packaging formats. Oscar

Mayer’s prepackaged Shaved Deli Fresh

Meats, for example, are designed to pro-

vide the taste and freshness of the service

deli in recloseable

plastic containers.

Similarly,

Hillshire Farm,

a division of

Sara Lee,

offers Deli

Select Combos,

a full line of thin-

sliced meats — including ham, roast

beef and pastrami — combined with

cheeses in one package. “Putting meat

and cheese in one package was just com-

mon sense,” says Hillshire Farm Vice

President Paul Stoffregen.

The numbers make sense as well.

According to Mintel, sales of refrigerated

sliced deli meat increased 15 percent

between 2000 and 2005, or 2 percent in

constant 2005 prices.

The story in the much smaller non-

sliced segment is quite different. While

non-sliced sales increased 2 percent

between

2000 and

2005, they declined 10

percent in constant 2005 prices, Mintel

reports. One bright spot is that the serv-

ice deli still appears to hold a certain

cachet. Sixty-four percent of respondents

to a Mintel survey prefer purchasing deli

meats from the deli counter rather than

the refrigerated section.

Like most meats, deli products benefited

from the low-carb diet craze, and while

that fad has fizzled, diet trends and

health issues will likely continue to prove

important to products’ success or failure.

ConAgra Foods knows that well — not

only does the Omaha, Neb.-based proces-

sor play up the American Heart

Association’s Heart Check seal on its

Healthy Choice deli products, it also has

updated the Hebrew National logo and

package to capitalize on consumers’

association of kosher food with health,

food safety and quality.

If the deli meat category wants to stay

ahead of the curve, though, it will need to

keep up its quick pace of innovation.

According to Mintel, sales of refrigerated

sliced deli meats are predicted to drop

4 percent at constant prices through

2010. But category leaders don’t seem too

worried, as long as they stay true to

what’s brought them success so far. “ The

formula is simple,” says Hillshire Farm’s

Stoffregen. “Put lean meats in convenient

packaging that helps maintain freshness,

and consumers will follow.”

DELI MEAT: Although the service deli is struggling, cutting-edge packaging providing fresh flavor and convenience hasgiven sliced deli meat a step up.

Company/Brand Dollar sales(sliced and non-sliced) (retail)

1. Kraft/Oscar Mayer $885,096,050

2. Private label $480,799,350

3. Hillshire Farm and Kahn’s $289,916,970

4. ConAgra Foods $264,490,430

5. Land O’ Frost $142,974,400

6. Carl Buddig $132,335,300

7. Hormel Foods $85,264,068

8. Bar-S Foods $81,561,590

9. Galileo Foods $53,600,716

10. Bryan Foods $49,471,160Source: Information Resources Inc. (52 weeks ended Feb. 19, 2006)

of U.S. households use some type of

deli meat.

89% 3

3

M

iIt shouldn’t come as a surprise that

the world’s largest pork processor,

Smithfield Foods, now accounts for no

fewer than four of the nation’s 10 best-

selling refrigerated bacon franchises,

including those of Smithfield-owned

Farmland Foods and John Morrell.Add in Kraft Foods’ Oscar Mayer and

Louis Rich brands, at No. 2 and No. 10,

respectively, and it becomes pretty clear,

pretty quickly who owns the category.

Private label notwithstanding, Oscar

Mayer continues to lead all retail brands,

though data from Chicago-based

Information Resources Inc. shows that

Hormel Foods, on the strength of its

Black Label premium brand, continues

to gain ground. The recently acquired

Clougherty Packing Co. added $40 mil-

lion to Hormel’s coffers last year, bringing

total category sales to $233 million for

the Austin, Minn.-based processor.

The year 2005 found many processors

wondering whether the demise of the

protein-rich Atkins craze would put

refrigerated retail bacon on ice, given

that Atkins-philes considered the product

a “new diet weapon.” That doesn’t appear

to be happening, though it’s undeniable

that category growth is slowing. Although

refrigerated bacon sales increased by 22

percent — or 8 percent in constant

prices — between 2000 and 2005,

growth slowed to 4 percent between

2003 and 2005, according to Chicago-

based research firm Mintel International.

The post-Atkins prognosis: “Low-carb

diet trends encouraged increased con-

sumption of protein-rich foods, regard-

less of their fat content,” Mintel finds,

“and bacon became a meal-time staple.”

Or more of a staple. Refrigerated

bacon is, was and probably will remain

the undisputed leader in breakfast

meats, followed by refrigerated sausage

and ham. Together, the latter two meats

racked up $874 million in sales between

2003 and 2005 — less than half of

bacon’s total sales for the same period.

More telling, ham and sausage sales grew

only a meager 1.1 percent between 2003

and 2005 — again, only a fraction of

bacon’s growth during that period.

One of the big question marks for the

retail bacon category is whether conven-

ient, shelf-stable bacon will erode its

sales. The short answer is, it’s too soon to

tell. True, the precooked category moved

some 6.6 million pounds of product last

year, but logged only a 2 percent increase

in sales, a rather anemic showing for a

“hot” new category. On the other hand,

sales aren’t slowing for precooked bacon,

as they have for refrigerated product.

No matter. Smart processors, Hormel

included, are working both sides of the

bacon equation. In Hormel’s case, pre-

cooked sales are clipping along at a 20

percent annual sales rate. “Low-carb

helped all protein,” Hormel Product

Manager Charlie Cruce says, “but its

demise hasn’t hurt precooked bacon.”

2006 RED MEAT ELITE


BACON: The post-Atkins blahs have slowed growth in refrigerated bacon, but the category still leads all other breakfast meats — by far.

Low-carb diet trends encouraged increased consumption

Company/Brand Dollar sales (retail)



3. Hormel Foods $192,932,000

4. Gwaltney of Smithfield $71,710,000

5. Bar-S Foods $71,120,000

6. Farmland Foods $70,697,000

7. Wright Brand Foods $64,609,000

8. John Morrell & Co. $62,438,000

9. Smithfield Pkg. Co. Div.$61,385,000

10. Kraft/Louis Rich $54,920,000

Source: Information Resources Inc. (52 weeks ended Feb. 19, 2006)

of protein-rich foods, regardless of their fat content,

and bacon became a meal-time staple.

Om

aha

Stea

ks

3

iGone are the days when a frozen

dinner’s biggest asset was that it

could be prepared quickly and easily.

Today, consumers expect convenience

from a frozen entrée, and instead make

their purchase decisions on factors such

as variety and quality.

Two players dominate the frozen meal

category: Glendale, Calif.-based Nestlé

USA, with an almost $1.7 billion chunk of

the $4.6 billion category, and Omaha,

Neb.-based ConAgra Foods,

which commands

nearly $1.2 billion in

sales. Together the two

companies are behind

the freezer case’s most

familiar brands —

Stouffer’s and Stouffer’s

Lean Cuisine for Nestlé,

and Healthy Choice, Marie

Callender’s and Banquet

for ConAgra, which has taken

pride in these lines even as it

sells off many others in the

meat sector.

Familiarity doesn’t always translate

into growth, however. Research firm

Mintel International calls the frozen meal

market “maturing,” and cites a Simmons

survey that found only about 60 percent

of respondents eat frozen dinners.

“Attracting some of the 40 percent of

consumers who do not eat frozen meals

would have substantial influence on both

dollar and unit sales in this market,”

Mintel reports. “ With

about 30 percent of

users reporting heavy

use (seven or more

days in a month),

encouraging increased

frequency of use

among users could

also substantially

influence sales.”

There’s no simple way to accomplish

that, but one approach is introducing

brand extensions or other new products.

Those products often focus on bold and

exotic flavors, which makes sense, since

“prepared meals give consumers the

opportunity to try new tastes without the

risks associated with purchasing exotic

ingredients and using untested recipes,”

Mintel notes.

Ethnic cuisine is the perfect vehicle for

the exotic; notably,

items such as Italian

Sausage and Rigatoni

from Unilever’s

Bertolli Dinner for

Two line. Consisting of

individually frozen

components, the din-

ner goes from freezer

to table in 10 minutes.

Just because a

product tastes good

doesn’t mean it can’t

be good for you too.

Healthfulness is now a

major driver of both

product development and purchase deci-

sions in the frozen category, the result

being new products that provide flavor

and figure-friendliness. Take Lean

Cuisine’s Steak Tips Portabello: Despite

rich touches that include a burgundy

wine sauce and portabello mushrooms, it

skimps on fat (7 grams) and calories

(180). The same is true of Healthy

Choice’s frozen entrées, such as Sweet

Bourbon Steak.

Perfecting the union between taste and

nutrition will likely hold the key to

whether the frozen dinner category

enjoys a happily-ever-after future. Mintel

says higher-than-expected sales growth

hinges on promotion of healthful frozen

meals that can be easily incorporated

into various diets.

The frozen entrée has changed a lot,

but perhaps its evolution is just begin-

ning. “Frozen meals have become sophis-

ticated, and growth opportunities are in

flavors that broaden the category’s

appeal,” says Rich Ferrington, marketing

vice president for Banquet. “It’s all about

protein breadth and flavor depth.”

2006 RED MEAT ELITE


PREPARED DINNERS:Today’s frozen meat entrées must combine quickness with quality —although exotic flavors and solid nutrition don’t hurt either.

Company Dollar sales (retail)

1. Nestlé USA $1,679,851,100

2. ConAgra Foods $1,195,131,790

3. Weight Watchers $315,520,200

4. Pinnacle Foods Group $261,919,060

5. Luigino’s $231,169,200


7. Unilever $94,524,760

8. Heinz Frozen Foods $77,027,380

9. On-Cor Frozen Foods $59,660,510

10. Amy’s Kitchen $55,388,390Source: Information Resources Inc. (52 weeks ended Feb. 19, 2006)

Prepared meals give consumers the opportunity

and using untested recipes.

to try new tastes without the risks

nassociated with purchasing exotic ingredients

3

ConA

gra

Food

s

iIt’s a good bet this will be the last

time Omaha, Neb.-based processor

ConAgra Foods sees its name among the

largest purveyors of retail sausage, now

that its Armour and Eckrich brands are

on the block. ConAgra cited “higher input

costs” and “ineffective pricing actions” as

the source of its woes in the refrigerated

meat case, but the advance of competing

premium brands also has taken a bite out

of earnings.

It’s not easy making a buck in the

moribund breakfast sausage category

these days. Between 2003 and 2005, cate-

gory sales grew a measly 1.1 percent, from

$874 million to $894 million, according

to research firm Mintel International.

As with bacon, retail sales of breakfast

sausage crested during the height of the

Atkins craze, but the go-go years of 2003

and 2004 are gone-gone, and, with them,

a substantial amount of the steam the

category gathered earlier in the decade.

Still, consumers who crave carbs also

crave convenience, a phenomenon that

not only has helped heat-and-serve

breakfast sausages, but also sausage-

based breakfast sandwiches, such as

Odom’s Tennessee Pride’s new Jumbo

Sausage Biscuits with Egg and Cheese.

While breakfast remains the preferred

meal occasion for sausage, refrigerated

dinner sausage is the industry’s fastest-

growing breakfast/sandwich meat, having

seen sales rise 5.1 percent between 2003

and 2005, Mintel reports. “Convenience

is the driver with dinner sausage,” says

Paul Stoffregen, vice president of SaraLee’s Hillshire Farm. “But it has to have

great taste, or people won’t buy it.”

Stoffregen should know. With more

than $309 million in sales last year,

Hillshire leads the dinner sausage cate-

gory. The brand recently married conven-

ience and flavor with its Recipe Ready

Slices, refrigerated, presliced sausages to

be tossed into pasta or a salad.

Other brands are following suit, be it

Eckrich, which now manufactures a

mesquite-flavored smoked sausage, or

Johnsonville, which introduced a New

Orleans-styled smoked product as well as

a Hispanic-oriented chorizo.

Look for the nation’s Hispanic popula-

tion to significantly reshape the sausage

category — specifically the lunch seg-

ment. Why? Hispanics are twice as likely

to eat sausage for lunch as Caucasians,

who still prefer the tried and true com-

forts of a burger or deli sandwich.

2006 RED MEAT ELITE


BREAKFAST/DINNER SAUSAGE: There’s more fizzlethan sizzle in the breakfast sausage segment, but convenience — andsome spice — are translating into hot returns for dinner sausage.


1. Sara Lee* $508,344,000

2. Johnsonville Foods $355,213,000



5. Bob Evans Farms $128,751,000

6. Hormel Foods** $67,800,000

7. Smithfield Foods*** $63,900,000

8. Odom’s Tennessee Pride$46,175,000

9. Bryan Foods $31,833,000

10. Bar-S Foods $26,800,000* Includes Hillshire Farm and Jimmy Dean **Includes Clougherty Packing Co.***Includes Farmland Foods and John Morrell & Co.Source: Information Resources Inc. (52 weeks ended Feb. 19, 2006)

nConvenience

is the driver with dinner sausage.

But it has to have greattaste, or people won’t buy it.

3

iIt would be fair to say the canned

ham has been thrown for a loop,

except for the fact the loop happens to be

a spiral.

True, the canned ham combines the

convenience of precooked product with

reasonable pricing and convenient por-

tion sizes, but it’s the fresh spiral-cut that

has almost single handedly revitalized

the industry.

It’s easy to see why. The fresh bone-in,

spiral-cut ham addresses the conven-

ience issue while arguably providing con-

sumers with superior quality and taste.

In some ways, it is the culmination of two

decades of thinking outside the can —

the result being a ready-to-eat product

with lower fat content, often at a signifi-

cant per pound discount.

Canned product may promise greater

longevity — up to two years — but it’s

unclear whether the same can be said for

the category. The problem? As a matter of

perception, the gelatinous canned ham

has come to be associated with

the likes of Spam — before

Hormel Foods rehabilitated the

legendary product with new

flavors, reduced fat content and

other innovations.

Can canned ham also be

saved? It’s a question that

ConAgra Foods probably won’t have to

answer, having put its falling star —

Armour Star — on the block. It’s likely

just as well. Sales for Armour’s refrigerated

ham plummeted 60 percent in 2005,

while its shelf-stable product saw sales

decline by an unstable 44 percent. On a

percentage basis, Armour took the worst

hit of any brand in the category.

The picture looks mixed for the

remaining players in the category. In the

refrigerated segment, which is roughly

four times the size of shelf-stable,

Smithfield’s Farmland Foods product

is in its second year of freefall, with sales

falling 8.5 percent — to $7.1 million — in

2004, and 15 percent — to $5.9 million —

in 2005, according to Information

Resources. Smithfield isn’t having much

luck with its Patrick Cudahy brand

either. In 2005, sales for the refrigerated

product fell by 14 percent.

In a segment awash in negatives,

Hormel’s two top refrigerated brands —

Dubuque and Black Label — have been

a big plus, having seen their 2005 sales

rise by 34 percent and 47 percent,

respectively, to $7.8 million and $6.6 mil-

lion. To its credit, Hormel has done an

expert job of positioning Black Label as a

premium product.

But what else would you expect from

the folks who brought you Spam Lite?

Spiral or no, there’s more than one way to

put a new twist on an old favorite.

2006 RED MEAT ELITE


CANNED HAMS: The category has seen better days.Question is whether processors are ready to kick the can.


1. Hormel Foods* $25,546,000


3. Smithfield Foods** $8,467,000


5. Agros Trading Co. $3,101,000

6. Stadler’s County Hams $1,843,000

7. Hatfield Quality Meats $1,610,000

8. Odom’s Tennessee Pride $1,271,000

9. Dinner Bell Foods $1,075,000

10. Field Packaging Co. $878,553*Includes Clougherty Packing Co.**Includes Farmland Foods, John Morrell & Co. and Patrick CudahySource: Information Resources Inc. (52 weeks ended Feb. 19, 2006)

3As a matter of PERCEPTION,the gelatinous canned ham has come to be associated

with the likes of Spam.

3

iHot dogs are as American as red,

white and blue, but when it comes

to retail sales in the category, most

processors are seeing only red. According

to research firm Mintel International,

sales of refrigerated and frozen hot dogs

declined 10 percent between 2000 and

2005 in constant prices; even the low-

carb boom proved to be a bit of a bust for

franks. And the forecast for the future

isn’t any brighter: Mintel predicts U.S.

hot dog sales will drop 14 percent at con-

stant prices through 2010.

The $1.6 billion category is dominated

by two players: Oscar Mayer, a division

of Kraft Foods, and Ball Park, a division

of Sara Lee, which together account for

more than $572 million in retail sales in

the category, according to Information

Resources. And according to Mintel,

almost half of all households that use hot

dogs buy one of the two brands.

However, Mintel

analysis indicates

that the only retail

brand to show a

sales gain in

food/drug/mass

channels

(excluding Wal-

Mart) between 2002 and 2004 was

Hebrew National, a ConAgra Foodsbrand. The research firm notes that 55

percent of those who purchase kosher

products don’t necessarily do so for reli-

gious reasons, but because they believe

kosher alternatives are safer or healthier

than non-kosher offerings.

Similarly, Mintel reports that sales of

hot dogs in the natural channel jumped

almost 31 percent between 2003 and

2005, compared with a 0.9 percent

decline in FDM channels during the

same period. “Although vegetarian alter-

natives (such as tofu

hot dogs) may be con-

sidered even more

healthful … their pop-

ularity is not as great

as that of ‘healthful

meat’ products,”

Mintel notes.

So it’s not surprising

that the market for

natural and organic

hot dogs is expanding.

One of the newest

players is ColemanNatural Foods, which

introduced Coleman

Natural Franks earlier

this year. The product

is made from hormone-

and antibiotic-free animals fed a vegetar-

ian diet, and is processed without

nitrates, nitrites, artificial colorings,

fillers or preservatives. The hot dogs are

aimed at health-conscious moms who

won’t mind paying up to $5.99 a pound

for them.

Another company in the natural/organic

channel is looking to capitalize on

Americans’ associa-

tion of hot dogs with

the national pastime.

Besides being sold at

specialty supermar-

kets such as Whole

Foods, Dakota Beef ’sCertified Organic All-

Beef Hot Dogs are

available at baseball

stadiums including

Jacobs Field in

Cleveland and Ameriquest Field in

Arlington, Texas. Likely not a bad path to

success — despite the hot dog’s sluggish

performance at the supermarket, it’s still

a grand slam at the game. The National

Hot Dog & Sausage Council estimates

that in 2006, fans will eat enough hot

dogs at Major League Baseball parks to

stretch more than 2,800 miles.

2006 RED MEAT ELITE


HOT DOGS: Tepid sales have cooled thehot dog category, but natural and organic products could be the next big thing to heat it up.

Company/Brand Dollar sales (retail)


2. Ball Park Brands $277,006,600

3. Bar-S Foods $133,853,100



6. Nathan’s Famous $74,934,480

7. John Morrell & Co. $50,627,940

8. Gwaltney of Smithfield $50,094,200

9. Hillshire Farm and Kahn’s $35,539,260

10. Bryan Foods $31,212,420Source: Information Resources Inc. (52 weeks ended Feb. 19, 2006)

between Memorial Day and Labor Day.bAmericans typically consume 7 billionhot dogs

3

Nat

iona

lHot

Dog

&Sa

usag

eC

ounc

il

2006 RED MEAT ELITE


iWhile demand for beef remains

high even at record prices, it’s not

just prime steaks and rib roasts on the

nation’s tables. The humble hamburger is

growing as well. Ground beef accounts

for about 36 percent of dollar sales in the

beef category (the percentage varies by

time of year, with a low of 32 percent

during the summer grilling season, when

promotions drive prices down), and the

category shows no signs of slowing down.

One reason might be quantity. The

restaurant world has its Thickburgers

and other monsters,

and, imitation being

the sincerest form of

flattery, the meat

industry is developing

a home version for

those who like bun-

busting burgers.

Called steakburgers

or low-pressure burg-

ers, these products are

mass-produced with a

handmade look and

mouthfeel. Dozens of

processors have

entered the market,

and it’s becoming evi-

dent at retail. Often

these burgers are sold frozen to retain

their shape, and perhaps not coinciden-

tally, the sale of frozen ground beef prod-

ucts increased sharply, up 23 percent in

2005 over 2004, according to the

National Cattlemen’s Beef Association.

The frozen ground beef category got

more juice from new

top-quality burgers,

such as sirloin tip

burgers from QuakerMaid, a Northeastern

processor best known

for Philly cheesesteaks.

The category has

also been given a

boost by improved

packaging, especially

lidded, modified

atmosphere packaging

that presents product

more attractively and avoids the leakage

and discoloration common with over-

wrap packaging. While some chains,

notably Wal-Mart supercenters, have

moved to MAP packaging for virtually all

products, most retailers have used

ground beef and some pork products to

move into the MAP game in

the red meat sector.

This has all been accom-

plished against a sometimes

discouraging backdrop, as

importation of live Canadian

cattle over 30 months of age,

the animals most likely to

become ground beef, is still

forbidden. Supplies of

cheap beef for burgers

remain tight and prices

relatively high.

Overall, ground beef

accounts for about 32 per-

cent to 36 percent of fresh,

minimally processed beef

sales at retail, or about $11 billion. That is

up about 2 percent from 2004, fairly

impressive for such a mature category.

However, the category’s share of pounds

sold is slipping slightly, about 0.5 percent

compared to 2004, while most other beef

products are gaining in pound share.

The average price of a pound of beef

has been rising steadily since the advent

of the low-carb diet craze, and the price

of ground beef has put profit back into

the category for retailers, who are now

promoting the more expensive grinds.

Retailers are once again investing in pro-

motions, and ground beef is one of the

major beneficiaries. Last year, beef fea-

tures accounted for about 40 percent of

all meat case feature ads, up 2.5 percent

from 2004. Increased advertising, pre-

sumably, was a major factor in the sales

increases last year.

Company 2005 retail sales (est.)

1. Cargill Meat Solutions $1.73 billion

2. Tyson Fresh Meats $1.72 billion

3. Swift & Co. $800 million

4. National Beef Packing Co. $755 million

5. Smithfield Foods $456 million

6. Greater Omaha Packing Co. $355 million

7. Lopez Foods $342 million

8. American Foods Group $325 million

9. Fairbank Farms $103 million

10. American Foodservice Corp. $100 million

Source: Meatingplace research

mGround beef accounts for about 36% of dollar sales in the beef category and shows no signs of slowing down.

GROUND BEEF: How many more burgerscan this nation eat? Evidently, quite a few.

3

Mar

ketF

are

Food

s

2006 RED MEAT ELITE


iPork processors are suffering. Even

perennial powerhouses such as

Smithfield Foods reported sharply

declining results in early 2006.

Meanwhile, retailers and further

processors, which had borne the brunt of

sky-high pork prices over the past several

years, have been exulting; the lower

prices for their raw materials meant they

could maintain retail pricing and pocket

the change.

The major processors had another card

left to play, however. With most of the

world’s largest export markets closed to

beef well into 2006, pork producers

found lucrative markets in Japan and

Korea, so increased prices abroad dulled

U.S. price deflation. According to the U.S.

Meat Export Federation, in 2006, exports

of some popular pork products added

over $20 in value to each carcass, based

on 2004 results. That added up to $270

million in sales, compared to selling pork

on the domestic market.

Premiums in 2005 were even higher,

and USMEF reported that the industry is

exporting $1 billion more per year than it

did as recently as 2003, up to $2.64 billion

and 1.16 metric tons.

Fresh pork maintained record-high

prices at retail in 2005, before showing

declines in early 2006. Retailers, ham-

mered by extremely high beef prices and

steadily eroding poultry prices, turned to

pork to maintain profitability. Pork, even

at high prices, became more attractive to

consumers, a trend that has continued.

The past year has also seen the intro-

duction of premium pork products.

Berkridge Farms, a venture by Iowa

firms Pro-Pork Inc. and SiouxPremePacking Co., is marketing products from

Berkshire hogs. This meatier, better mar-

bled meat has been gobbled up in Japan,

where the meat is prized for its flavor

and texture under the name kurobuta.

Berkridge is stepping up production and

marketing the pork to restaurants and

specialty meat retailers, and hopes to

move into the mass market as consumers

develop a taste for the pricey product,

which sells for up to $10 a pound.

A smaller pork producer, working with

SiouxPreme Pork, is marketing a line of

pork products high in health-promoting

Omega-3 fatty acids. Prairie OrchardFarms of Winnipeg, Manitoba, has

received permission to market its prod-

ucts in Canada with an Omega-3 health

claim, and is working with USDA to mar-

ket its products in the United States. The

pork is produced by supplementing hogs’

feed with flaxseed oil and various miner-

als and vitamins, and the product deliv-

ers both taste and tenderness along with

its alleged heart-healthiness.

Company Retail sales in 2005 (est.)

1. Smithfield Foods $2.44 billion



4. Hormel Foods $1.2 billion

5. Swift & Co. $845 million

6. Seaboard Foods $720 million

7. Premium Standard Farms $445 million

8. Indiana Packers $300 million

9. Sioux-Preme Packing Co. $77 million

10. Hatfield Quality Meats $50 million


cRetailers, hammered by extremely high beef prices

turned to pork to maintain profitability.and steadily eroding poultry prices,

FRESH PORK: After several fat years, the porkindustry is having problems bringing home the bacon.

Nat

iona

lPor

kB

oard

3

2006 RED MEAT ELITE


iBeef, evidently, is still what’s for

dinner. At $32 billion, the category

boosted sales about 1.9 percent in 2005,

up from record sales the previous three

years and increases since the late 1990s.

According to the National Cattlemen’s

Beef Association, beef accounts for more

than half of dollar sales in the meat

department, about triple the sales vol-

ume of the two other major proteins.

While growth has flattened recently,

prices are still at an all-time high. And so

is consumption. Americans may be pay-

ing more for beef in the supermarket, but

they’re also getting a far better product.

NCBA has driven some of that growth

with its value cut development program,

which has identified cuts of beef like the

Flat Iron steak in chuck and round mus-

cle clusters that used to be ground up for

hamburger or sold as pot roasts.

Responding to the growth of low-price

leader Wal-Mart, retailers are upgrading

their selection and personal service. The

past year alone has seen the return of the

full-service butcher shop in major retail

chains such as Safeway and Florida-

based Sweetbay, among others. While

retailers once used beef as a loss leader

to get bodies into their stores, the chance

to appeal to more affluent shoppers has

led many to upgrade their departments,

increase service and sell higher-end

products. Customers

are having more suc-

cess cooking, and thus

buying more upmarket

beef products.

Higher prices

haven’t helped one

sector of the industry,

however. The largest

beef processors —

such as Cargill MeatSolutions, Swift &Co. and Tyson FreshMeats — have suf-

fered declining sales

and profits as carcass utilization has

dropped with lucrative overseas markets

cut off since early 2004. Where once a

container of cow tongues or short ribs

garnered $8 a pound in Japan, they now

sell for a fraction of that, if they sell at all,

on the domestic market.

Processors have also

suffered from the clo-

sure of the Canadian

border, first from a

ban on all live ani-

mals, and now from a

ban on cattle older

than 30 months. The

loss of those cattle has

impacted productivity,

and overhead now is

spread among far

fewer animals.

Overall though, the

beef market remains a

bright spot in the protein world, com-

pared to pork and chicken, both of which

are struggling as a result of rapid price

deflation. If the Japanese and South

Korean markets reopen to U.S. beef this

year, all sectors of the beef industry

should see a bump in profitability.

FRESH BEEF: Despite BSE, related trade embargos and ongoing controversy over carbon monoxide-enhanced packaging, beef sales continue to rise.

Company 2005 retail (est.)



3. Swift & Co. $2.60 billion

4. National Beef Packing Co. $2.10 billion

5. Smithfield Foods $1.20 billion

6. Greater Omaha Packing Co. $950 million

7. American Foods Group $648 million

8. Washington Beef/AB Foods $394 million

9. Lopez Foods $342 million

10. Brawley Beef $240 million


3Beef accounts for more than half of

dollar salesin the meat department,

about triple the sales volume of the two other

major proteins. 3

Nat

iona

lCat

tlem

en’s

Bee

fAss

ocia

tion

red meat elite...2006 red meat elite 40 meatingplacemay 2006 rank company/headquarters sales bacon...

Documents