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Premium grassfed programs ‘on trend’ in food service sector

Jon Condon, 19/08/2020

Peter Andrews

Peter Andrews, head of one of Australia’s largest portioning and value-added meat businesses, shares his thoughts on the future of certified grassfed brand programs, the importance of diversification in meat businesses during turbulent times, and the impact that COVID has had on the red meat supply chain since April.

 

 

 

 

 

 

 

CERTIFIED grassfed brand programs have a strong future in the upper end of food service industry, Andrews Meat Industries head Peter Andrews says.

Speaking in a podcast hosted by JBS as part of its Great Southern Grass Matters series, Mr Andrews said certified grassfed product was definitely ‘on-trend’ with Australian and international restaurant and hotel chefs.

“From 2004 to about 2011, we always used to buy grainfed for our food service supply business – mainly because chefs were chasing marbling and consistency. But the problem was that grainfed can also have a very large eye muscle size, making it hard to portion control, to cut smaller steak portions that chefs are increasingly demanding these days,” he said.

However chefs were increasingly wanting to feature a pasturefed product, provided it had some marbling and consistency, and the development of farm-assured pasturefed products like JBS’s Great Southern program now offered that.

“It also has a smaller eye muscle, which lends itself to using a lot of different cuts on the animal, and using them in different ways. We’ve found we can do a lot more work with cuts like a T-bone, an OP rib or a rib sirloin, for example,” he said.

“Smaller carcase size means we can cut a bone-in steak portion in a range from 300 grams to 500 grams, whereas a grainfed product more or less starts at 500g. It gives us a lot more versatility, and gives chefs more options.”

Sample of Great Southern’s Little Joe marbling score 4 and up farm-assured grassfed product. Click on image for a larger view

“On the boneless cuts, like a striploin, cube roll or tenderloin, again they are smaller eye muscle size, making it easier to portion a 200g or 180g tenderloin steak which still has a little thickness to it, which is what chefs are looking for. If you try to cut that portion-weight tenderloin steak off a heavier grainfed carcase, it’s going to be a much thinner steak.”

Mr Andrews said JBS’s Great Southern brand now played an integral role in the Andrews Meats business.

“The Great Southern brand has now become integral to the business – it has basically become the leading brand for the the pasturefed product that we sell, ranging from Great Southern, to the higher level Pinnacle (BMS2+) and Little Joe (BMS4+) within the family of brands,” he said.

Supply guarantees

With about 2000 active clients, the Andrews Meats business undertook around 800 to 900 deliveries daily to customers, Mr Andrews said.

“We’re a just-in-time business, which means the customers order the night before, for delivery the next day. It provides a window of just 5-6 hours in the early hours of the morning to get all that product portioned, put onto a truck and delivered,” he said.

By nature of the sheer size of JBS’s Great Southern program, one of the attractions with the farm-assured program was guarantee of supply, Mr Andrews said.

“We purchase the product in advance, and have surety that we will have the product delivered and supplied. They give us a commitment to how much of a particular product they can supply over a forecast period of time.”

“When we are quoting to chefs for their menus, they want to know with confidence that they can access the product, for a certain period, whether that be three, six or 12 months. They also want to know what the price stability will be for the product, and we can get that with Great Southern, as well as having the guarantee of supply and quality.”

Mr Andrews said he thought certified grassfed programs would only continue to increase in their appeal within the food service market.

“That applies especially with premium products like Great Southern’s Little Joe. If you’d said to me five years ago that you could provide a marbling score four and better grassfed product, I would not have believed you. It just didn’t exist.”

“But through the Great Southern program and the work that’s been done, they’ve developed the Little Joe product, which is absolutely amazing – it’s marbled and looks like grainfed, but is certified off grass. It’s a nice, small, eye of meat, and when chefs see that, and what they can get out of pasture-fed beef, they will just keep wanting that product,” he said.

Grainfed has become more of a generic product in the marketplace compared with premium pasturefed, Mr Andrews said.

Business diversifies

Mr Andrews gave a brief summary of Andrews Meats’ growth over the past 30 years.

“From around 1995, we started looking at portion control and value-adding. There wasn’t a lot around then, and very little branded beef in the market,” he said.

Originally Andrews looked for small individual; farmers it could align with, trying to brand their products to appeal to chefs, to get away from the ‘commodity market’ that existed at the time.

From around 1999, a lot of pubs, hotels and clubs were starting to deal with better cuts of meat, and Andrews started focusing more on the higher restaurant market. Part of that was centred on new hotels and restaurants that were opening across Sydney, in time for the 2000 Sydney Olympic Games.

In 2004, the business was diversified into three divisions – food service (including portion-cutting), pre-cooked/value-added meat, and export and branded meat, mostly under grainfed brands and Wagyu. Those three divisions now make up a big part of what Andrews does.

“One of the mean reasons we wanted to grow the export business was to supply back into the food service market our own brands – brands that we could control, so that we weren’t reliant on companies to distribute their brands,” Mr Andrews said.

“What we found was that every time we’d take on another company’s brand, over a matter of time, for whatever reason we’d lose that brand. So we wanted to control the brand that we promoted to our customers, and it’s the main reason why we diversified into export.”

Andrews’ export business ended up flourishing, growing into a much bigger business.

“Initially it was to export products and supply branded grainfed product back to our food service business. But since then, we’ve obviously taken on a lot of additional brands over the years.”

Blockchain-enabled traceability

The launch last year of a Blockchain-enabled traceability program for JBS’s King Island brand was an exciting step for Andrews Meats – but more so for end-users, Mr Andrews said.

“Under the program, chefs will be able to buy a primal or some portioned steaks and trace each portion back to the farmer who grew the animal. There’s a lot of future in having that individual traceability right through the system, and it’s is one of the attributes that chefs and some retail customers are starting to look for. It’s that whole provenance story – where the product came from and who grew it – that supports and underpins the value and quality of the product,” he said.

But Blockchain traceability was not just about the chef or the end-customer. Farmers would get more out of the technology than anybody else in the long-run, Mr Andrews said, as information and data is collected over time.

“It’s still all very new, but will keep improving over time, allowing livestock suppliers to improve their own operations and the consistency and quality of the meat they produce.”

Asked whether blockchain style traceability may one day become the norm in branded beef, Mr Andrews said once end-users started seeing more and more such products hitting the market, there would be greater demand for it. “More suppliers will have to go this way,” he said.

COVID impact on meat trade

Being heavily exposed to the food service trade as it is, COVID-19 had made conditions ‘really hard’ for Andrews Meats over the past four or five months, Mr Andrews said.

“Between revenue growth and diversification, most of our longer serving staff had to this point only ever seen this business go one way, and that’s up,” he said.

But once COVID struck – basically shutting down all food service trade, except for the vulnerable care market that the company supplies – it represented a big hit to the Andrews business.

“It was a challenging time – we certainly did not see it coming, and you can never prepare yourself for such an event. Once the announcement was made on the Sunday that venues would close the following evening, it meant that basically nobody ordered the next day,” Mr Andrews said.

“Our business dropped by 80pc overnight. All we were supplying in the end were nursing homes, hospitals and vulnerable care groups.

“We knew something was coming, in what was happening overseas, but just didn’t know how that would affect us. We’re in a better place now, but nobody knows where all this is heading, or how long it will last.”

With stock holdings averaging $19-$20 million, a lot of the product held by the business had to be discounted or diverted into other channels.

“The hardest part was turning off the supply chain. We had meat already booked to come in that we could no longer use. We had to defer or cancel product, and had some very difficult conversations with suppliers,” Mr Andrews said.

Fortunately, at the same time, retail was booming, with insatiable demand for product, meaning a lot of wholesalers and traders were able to sell much (but not all) of that product into the retail market.

“We couldn’t sell it all though, because a lot of the product we produce is bespoke, for certain customers. The cruise line industry, for example, represents 15pc of our revenue, and at the end of July we still had product tied up in freezers for the cruise lines, which is produced specifically to their requirements.

During the depths of the COVID impact on retail, mince meat became incredibly popular, and anything that could be minced – topsides, rounds, silversides, chucks – was commanding a high price for retail use. At the same time there was also a retail surge for steak cuts as well.

“There was even a rush on Wagyu, but it was a crazy time – people were emptying butchery shelves every day. What was happening was that a customer entering a shop was seeing empty shelves, so if all that was left was pork, they’d buy that too. Everybody was just trying to fill their fridges and freezers with whatever they could – no different that toilet paper and bread.”

Value in diversification

With the second COVID wave sweeping through Victoria, Mr Andrews said it was important to remain cautious – with a downturn in trade following recent spikes in Sydney, on top of what has happened in Victoria.

“Planning forward, we’re just going to be cautious. We know it is going to be a long and slow road back. There’s part of our market that we know we will not see at all this year – the airline trade, cruise ships, and international hotels, conventions and function centres. Sporting venues have also been greatly reduced. Combined, they represent 30pc of our business, so we know there are some hard times ahead.”

“While none of us knew that there was going to be a pandemic, what we have learned out of all this is the value that a diversified business model provides in delivering a more secure and sustainable business.

“Having a business that operates in exports, has a cooked/value-added division, and the food service division has worked for us during these difficult times. Obviously with foods service being hit the hardest, the other divisions have been able to carry the business.”

“This is a year where you really can’t look at your results – it’s about survival, and keeping the business strong. A lot of the things we are doing now are about the future – strengthening our management team, retraining, thinking of new ideas and initiatives, and how we can play in that business-to-consumer space in the future.”

“We’re still investing in the business, in infrastructure and elsewhere. We’re not looking at this as an excuse to stop working on things, remaining optimistic that things will change, and we want to come out of this strong.”

 

 

 

 

 

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