Walmart Joins the Beef Business


By Kayla Sargent

 

Mega food retailers are following a path of vertical integration.  Costco Wholesale Corporation began breaking ground on a Nebraska plant to produce their popular $5 rotisserie chickens from farm to finish late last fall.  Walmart Inc. established their Indiana milk processing facility last year to supply the Great Value brand dairy products.  The most recent announcement is Walmart’s plan to go into the beef business.

Walmart has been working with 44 Farms for over two years in preparation to supply their stores with high quality Angus beef.  44 Farms President and CEO Bob McClaren announced the ranch partnership with Sam Walton and Walmart in July 2017 and Walmart just made the announcement official on April 24.  The products are expected to be on store shelves later this year.

Walmart Senior Vice President, Meat, Scott Neal said the decision is an attempt to continually improve the beef supplied to customers through added transparency, while still keeping affordability and freshness in mind.

“Customers also want to know what’s in their food and where it comes from.  To answer our customer’s demands, we need visibility in every step in the supply chain,” Neal said.  “So, we’re working with best-in-class suppliers to create and end-to-end Angus beef supply chain.”

McClaren, through the Walmart partnership coined ‘Prime Pursuits’, is helping to source cattle from family farms and ranches.  Prime Pursuits is a feeder calf buyback program administered by the 44 Farms team that would require producers use “predominantly Angus Strong® genetics” and that calves “meet the USDA definition of Angus”.  Angus Strong® genetics are those that originate from the 44 Farms Angus seedstock program.  Additional requirements for Prime Pursuits calf buyback include a minimum weaning period of 45 days; no more than 90 days age spread in the bunch; no hormones added; and subject to a minimal sort by 44 Farms representatives.

“No bigger paradigm change has taken place in the beef industry than what is happening with Walmart bringing truly high-quality, all-natural, no-hormones-added Black Angus beef to its customers. This bold vision gives Walmart a special place at the table by contributing to the most enjoyable and memorable moments in the lives of its customers,” McClaren said.

Next, the cattle will be fed and finished at Mc6 Cattle Feeders, a fourth-generation feedlot near Hereford, Texas.  Today, Mc6 Cattle Feeders has grown to 55,000 head yard and they specialize in feeding all-natural and non-hormone treated cattle (NHTC).  The operation also participates in the Global Animal Partnership (GAP), Verified Beef Never Ever 3 (VB-NE3), and Age and Source Verified (ASV) programs.  The yard is Beef Quality Assurance (BQA) certified as well.

“Walmart has listened to its hard-working customers and taken on the monumental task of providing steakhouse quality, natural Black Angus beef to their local stores. This bold vision will not only elevate backyard barbecues and family dinner tables across the country, but transform the entire supply chain,” Hank McWhorter of Mc6 Cattle Feeders said.

Finished cattle will be shipped to Creekstone Farms, a Kansas-based processor of “Premium Black Angus Beef” for processing. The new partnership with Walmart will create more than 250 additional jobs at the processing plant.  Creekstone President and CEO Satoru Oura said the company “welcomes the opportunity to partner with industry leaders in providing premium quality Black Angus beef to Walmart customers” while also increasing the number of jobs at the “state-of-the-art facility.”

Finally, the product will be shipped to a Walmart-owned case-ready packaging facility in Georgia that will be operated by FPL Food.  This venture will create another 200 jobs at the facility and “provide many opportunities for the agriculture community to include farmers, ranchers, and cattlemen alike,” FPL Food President and CEO Francois Leger said.  “The positive impact will be felt by many.”

Initially, the Angus cuts will include steaks and roasts and will be offered in roughly 500 stores in the southeast including Georgia, Alabama, and Florida. Neal said that the project will allow the company to “leverage the learnings we gain across our business.”  McClaren told WAR in January that the eventual goal would be to supply all Walmart grocers with high quality Angus beef.

Currently, Tyson Foods Inc. and Cargill Inc. supply Walmart with the majority of its beef.  This isn’t expected to change despite the new vertically-integrated program.  Walmart is Tyson’s largest customer, accounting for an estimated 17 percent of their annual revenue, according to Bloomberg.

“Five hundred stores isn’t huge, but it is a meaningful footprint,” Tim Ramey, a Tyson analyst at Pivotal Research Group told Bloomberg.  “It’s congruent with steps by other large retailers to get more visibility into their meat supply chains.”

Still, Tyson offered their support of Walmart’s new project, according to Bloomberg. Jason Nichol, a Tyson senior vice president who manages the Walmart account, said, “Walmart is a great business partner of Tyson Foods and we are fully supportive of the project.”

Neal offered similar sentiment calling Tyson Foods “integral to our success.”

But, for those customers “treating” themselves to beef, Neal said the new supply chain will offer “unprecedented quality and transparency.”

“Our customers can trust that what they pick up from our meat department will be among the best – and most delicious – meat they can get,” he said. “Together, our beef program can truly change the dynamics of the beef industry.”

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