Subtle signs of a changing beef industry have been visible for the past half-dozen years. But two announcements last month, both involving IBP, underscore the fact that a new era in beef marketing has begun.
IBP unveiled its Thomas E. Wilson branded beef and pork products with a vow to create the most recognized label in the retail meat case. Few observers were surprised by the news, but the simple fact that IBP was ready to go public created more coffee shop excitement than $1.25 calves. Legend has it that "Big Green" is seldom first to launch a new idea or concept, but when they do they do it right.
Even Richard L. Bond, IBP's president and chief operating officer, acknowledged the magnitude of IBP's foray into branded products when he said, "Thomas E. Wilson is the single greatest initiative IBP has undertaken since the introduction of boxed beef."
IBP's branded product launch came on the heels of an announcement by six of the world's largest meat and poultry processors that they have agreed to create an online, business-to-business marketplace for meat and poultry products, service, and information. IBP, Cargill Inc. and its red meat business (Excel Corp.), Smithfield Foods Inc., Tyson Foods Inc., Gold Kist Inc., and Farmland Industries Inc.'s red meat business (Farmland National Beef and Farmland Foods) have signed the letter of intent to create the online venture.
The marketplace will be a natural web-based exchange that will provide a single, convenient place for buyers and sellers of meat and poultry products to connect with each other. The exchange will promote efficiencies in the market by facilitating faster and more direct product comparsion and price negotiation, reducing paperwork and other duplication.
The six founding members of this web-based meat exchange have combined meat and poultry sales of over $40 billion. The six firms represent three of the four largest beef processors, four of the five largest pork processors and the two largest poultry processors. The initial capitalization for the company is $20 million, and each of the investing companies will have a seat on the board of directors. The founding companies say the exchange will operate as a neutral, independent company.
"This marketplace will make our customers' lives easier by providing one convenient place to conduct transactions and help manage their supply chains," says Robert L. Peterson, IBP chairman and chief executive officer. "We believe this will become the leading business-to-business site for these products and services because of the resources of the founding members."
With a new branded product line and the launch of a web-based meat marketing exchange, IBP appears poised to continue its leading role in the meat processing industry for the foreseable future. In addition, IBP says it will spend about $400 million on capital developments this year to build new warehouses, upgrade plants to produce case-ready meat and build covered wastewater lagoons.
Building on its 39-year history, IBP is preparing for changes in the meat business, and they've sent a clear signal to producers that they expect changes in the way they buy cattle. IBP's new Real Time Market Value program (RTMV) is designed to encourage the production of a consistent supply of quality cattle.
As the largest player in the beef packing industry, IBP has come under harsh criticism from some producers during the past few years. But whether you're an IBP fan or critic, the fact remains that IBP will continue as one of the most capable marketers of your product to retailers and consumers.