Market-makers

by Steve Krut
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When brothers Mike and Rob Lorentz bought out the Cannon Falls, Minn. family meat business from their parents in 1997, there was an internal disagreement . “We had worked in the custom plant for many years – Rob in slaughter and processing and me in retail,” Mike recalls. “I wanted to go headlong into retail because that was the area of the business I knew. Rob thought differently and I’m glad he did.”

Developing a future business strategy in the largely rural agricultural community 35 miles south of the Minneapolis-St. Paul Airport became easier when the brothers focused on finding “innovative ways to meet the needs of our area.”

The 10,000-sq.-ft. facility their parents established was a basic custom-exempt establishment and the brothers noted the fact that many area farmers who were raising animals were going broke.

“They were our customer base and we needed to help them if we were to survive,” CFO Mike says. “We decided on a plan to become a ‘market-maker’ for their livestock. We used a lot of direct mail to let them know we would be doing things the right way and that this approach could help them sell their products with their own label through Lorentz Meats.”

The brothers’ campaign to help educate their local producers was bolstered when they secured a $400,000 grant from the U.S. Dept. of Agriculture’s Fund For Rural Development. The grant allowed them to develop an educational program that they taught in Minnesota, Iowa, Texas, Georgia, Wisconsin, Nebraska and Virginia.

As their message of partnering with local producers spread, so did the need for a new plant. Three years later. they constructed another 10,000 sq.-ft. facility in an industrial park two miles from the original plant, which they decided to sell in 2005. Incidentally, the new owner was focusing his meat business on retail sales, and six months later that shop was closed.

The Lorentz brothers partnered with family members and friends to finance the new plant and designed it to be efficient, emphasizing sanitation and humane livestock handling.

“We followed the published animal-handling guidelines developed by Dr. Temple Grandin,” Mike explains. “One day she was here for a meeting of nearly 400 farmers held in a large tent erected outside and she offered some additional suggestions that we incorporated.”

In the name of operating the business transparently, the Lorentz brothers even built a second-floor glass observation area, which has attracted thousands of visitors.

“This eliminated the need for farmers to don smocks and caps to see firsthand the quality job we were doing with their animals,” he said. “School groups, agricultural organizations and anyone interested could come in and observe. We were totally open.”

So effective was this approach that in his book The Omnivore’s Dilemma, author and meat industry critic Michael Pollan praised the observatory as the “glass abattoir.”

Dedicated to differentiation

Operating under USDA inspection, the Lorentz facility worked to differentiate itself from the competition. Mike says the operation has greater efficiency than nearby locker plants, but cannot match the volume and low price per pound that industry giants like Tyson Foods can affect.

“We created our own niche market based on the needs we saw and feel we can deliver the quality work and product in our region that no one else can currently match,” Mike says.

With an emphasis on being unique, the Lorentz brothers moved into organic private-labeling and even more heavily into grass-fed meats. They co-pack bison and elk for larger companies and even have product reaching the European marketplace. They feel that products like upscale Berkshire pork and their ability to offer local and source-verified exotic meats give them an advantage.

“We are kind of an in-the-middle size of operation,” Mike observes . “Even our Web site, www. lorentzmeats.com  , is purposely a bit vague. We don’t want the one-animal-a-year farmer to think that we are too big for him nor do we want larger producers to think we are too small to work with them.” He adds that a Web site makeover is planned over the next few months.

He estimates the firm does about $5 million in annual sales, but points out that much of what they do is in service and not actual product sales. If the value of what goes into their rollstock machines and shrink bags were tallied, Mike says it would represent about $15 million.

The Lorentz brothers strive to keep a pulse on the changing marketplace. Consumer demand caused them to dedicate significant resources toward the cured meats segment, with sausage, bacon and ham production now accounting for nearly 3,000 lbs. per day. Nearly 50 percent of their cured products are made without nitrites, relying on fermented celery juice as a curing agent. He says they are not afraid of investing time and money to expand the business if it means getting a highquality, safe and consistent product. Size matters
Lorentz Meats designed their plant to process about 11,000 head of cattle per year and it currently operates at 75 percent of that capacity. They use outside auditors, including Cook & Thurber, to help assure their customers that they abide by their pledge of safe and quality work. Those co-pack customers include both individual companies as well as a number of farm co-ops.

“Our philosophy is not that big is bad or that small is always good,”

Mike says. “It is just that we want to follow what we designed our business to be in terms of our openness. If our customers don’t know us in every detail, they can’t trust us. We must be big enough to serve yet small enough to react.”

The firm recently added a second shift for specialty packing and utilizes an outside cleaning contractor.
Yet, despite its phenomenal growth, Lorentz Meats remains realistic about the future.

“There are some very large companies out there that can handle 5,000 animals a day,” Mike says, “and we don’t want to be anywhere [near] where they are. Sure, we always want to grow, but we always want to remain small enough to manage well.”
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