SIC 5147
MEATS AND MEAT PRODUCTS



This industry consists of wholesale distributors of fresh, cured, and processed (but not canned or frozen) meats and lard. Establishments engaged in the wholesale distribution of frozen packaged meats are classified under SIC 5142: Packaged Frozen Foods. Establishments engaged in the wholesale distribution of canned meats are classified in SIC 5149: Groceries and Related Products, Not Elsewhere Classified.

NAICS Code(s)

311612 (Meat Processed from Carcasses)

422470 (Meat and Meat Product Wholesalers)

According to the U.S. Census Bureau, 3,305 establishments were engaged in the wholesale distribution of meats and meat products in 2001. The total number of establishments climbed to 4,118 in 2003. Combined, they generated approximately $29,955.50 million in sales. The average sales per establishment was about $7.50 million. The workforce climbed to 66,619 people and the average number of people per establishment totaled 16. Most establishments employed under five workers. There were 1,958 businesses that employed five or fewer people. States with the highest number of wholesale distributors were California with 507, New York with 463, Texas with 288, and Illinois with 265. Together, they dominated almost 40 percent of the market. Meats and meat products represented 2,375 establishments, which was more than 57 percent of the market. Fresh meats followed with 1,194 establishments and controlled 29 percent of the overall market. Meat brokers numbered 365 businesses or 8.9 percent of the market.

The Cryovac Division of Sealed Air Corporation, in conjunction with the National Cattleman's Beef Association underwent an assessment of "supermarket fresh meat departments." Their focus was in the areas of "packaging, point of sale materials, and the presence of non—meat items in the meat case." There were a total of 25 leading U.S. markets that took part in this audit. Some findings revealed that beef, poultry, and pork were the leaders in the retail marketplace in 2002. About 65 percent of the average retail meat cases contained beef. Poultry followed with 22 percent, and pork at 14 percent. Consumers demand for leaner, and boneless cuts remained prevalent with 82 percent of steak, and 93 percent of roasts retailed as boneless. Their findings also concluded that consumers shop for convenience, and 98 percent of the meat markets accommodated them with a section devoted specifically for that purpose. However, less than half used a "point—of—sale to attract consumers to the section." A major finding was in regards to conflicting labeling, specifically on ground beef, and that less than half of the packages lacked cooking instructions. Non—meat items totaled 60 percent, such as vegetables, potatoes, and condiments. In almost 94 percent of the fresh meat markets their cases contained processed meats, as well. The "fresh meat case may be moving toward providing whole meal solutions rather than providing only fresh meat." In conclusion, the average beef consumption had increased by five percent, and the average price had also increased by two percent. This finding concluded the shift in consumer demand. Since 1993, there has been a dramatic shift in the way consumers shop for meat. Even though the price is higher for premium cuts, some consumers tend to prefer the premium labeled meats.

According to Steve Kay, editor and publisher of Cattle Buyers Weekly, 2001 was a year for "Merger Madness," or as the "year of mergers," some of which were between former leaders within the industry. Some include IBP, Inc.; Packerland Packing; Taylor Packing; Emmpak Foods; Moyer Packing; Rocco Enterprises; and B.C. Rogers Poultry. The merger activity had slowed down in 2002 and the industry did not expect to see the continued consolidation. The U.S. Department of Agriculture's Foreign Agricultural Service reported that meat exports would decline in 2003, which had not occurred since 1985. The experts attributed the decline in poultry exports of 11 percent to be the main cause of the expected decline. The safety of meat and meat products continued to be an issue since the bovine spongiform encephalopathy,

SIC 5147 Meats and Meat Products

commonly referred to as "mad cow disease," was discovered in a single cow from Canada.

According to the Food Institute, U.S. red meat and poultry was forecast to increase 0.7 percent in 2004. Overall beef production had dropped 3.2 percent in 2003, however, poultry was up 1.3 percent, while pork was up 0.8 percent. According to reports, prices were expected to remain the same, or drop slightly for 2004.

One of the largest meat and meat products wholesalers in the United States was Monfort, Inc., a major company in ConAgra Beef Companies. Monfort began in the 1930s near Greeley, Colorado, as a family-owned cattle feeding operation and became an international, multibillion dollar company. By the late 1990s it employed 19,000 people in the United States and, by 1999, it had an annual sales revenue of $7.1 billion. In 2003, a few of ConAgra's customers included Wal—Mart, Sysco Corporation, and Wendy's Hamburgers. ConAgra's sales were $19.8 billion for 2003.

Monfort, Inc. was the only major meat producing company with cattle feeding, beef, pork, and lamb processing operations, national distribution and transportation, a by-products and pet foods division, and a construction company. An innovator in the industry, Monfort introduced quarter-inch trim specifications, which started an industry-wide trend toward lean cuts. In response to retailer demand for even leaner cuts of meat, the company began offering Super Lite cuts, trimmed to one eighth of an inch. Company officials expected demand for their products to grow as innovative packaging, value-added products, and exports helped boost sales.

Other industry leaders were Tyson Foods; Cargill, Inc.; Smithfield Foods, Inc.; Farmland Refrigerated; Sara Lee Packaged Meats; Hormel Foods; Oscar Mayer; Perdue Farms, Inc.; and Pilgrim's Pride Corp.

Further Reading

Conagra Foods Inc. Annual Report, 2003. Available from http://www.conagrafoods.com .

D&B Sales & Marketing Solutions, 2003. Available from http://www.zapdata.com .

"Profiling the U.S. Retail Meat Department in 2002." National Cattlemans Beef Association, 2002. Available from http://www.beef.org/dsp/dsp_locationContent.cfm?location=ID=892 .

"The Outlook for Food Prices in 2004: Updated." The Food Institute, 20 February 2004. Available from http://www.foodinstitute.com/outlook.cfm.com .

"Top 50: Survival Skills." Meat and Poultry, 1 July 2002. Available from http://www.meatpoultry.com/resourcecenter/ind_article.asp?ArticleID=58890 .

U.S. Census Bureau. Statistics of U.S. Businesses 2001. Available from http://www.census.gov/epcd/susb/2001/US421420.HTM .

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