Beef jerky superstar

by Bryan Salvage
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Marfood USA, the Taylor, Mich.-based North American headquarters for Sáo Paulo, Brazil-based Marfrig Group – the third-largest supplier of protein in the world – is an international superstar as the world’s largest private-label beef jerky supplier. While Marfood USA cannot share specific private-label customers’ names, the company boasts that it supplies private-label beef jerky to nearly 70 percent of all major US food and drug retailers.

It also proudly claims ownership of the upscale Pemmican brand beef jerky, the third best-selling national brand in the $1.5 billion US meat snacks market, which was acquired from ConAgra Foods in 2008. Marfood also owns the Pecos Bill’s brand, the No. 1 selling beef jerky in Western Canada. Marfrig Group and Marfood USA service Canadian customers through Mirab Canada, headquartered in Cranbrook, British Columbia. The Canadian operation provides private-label and branded meat snacks to the Canadian market.

Marfood USA’s product portfolio doesn’t end with beef jerky. It also offers conventional frozen cooked beef for ready meals and deli counters, compacted beef from the hindquarter and forequarter packed in tubes and beef extract; canned meat products for retail and foodservice; fresh beef tradition cuts and portion-control products; as well as limited production of specialty meats, such as Bresaola and Carpaccio.

Marfrig acquires Marfood

Marfood USA was acquired by Marfrig Group in December 2007. “Our most important mission at Marfood is being an extension of the Marfrig Group within the markets we serve in North America,” says Paul Fox, newly appointed Marfood USA managing director. “Marfood USA is essentially a trade name and a legal entity.”

In late March, Fox took the reins from Alain Martinet, who returned to Brazil where he still serves on the parent company’s board of directors. Prior to joining the company, Fox worked for 17 years at Tyson Foods Inc. in various domestic and international leadership positions. He also has four years under his belt as a private equity CEO with Dickinson Frozen Foods, a leading food ingredient company.

Fox says he was attracted to the Marfrig Group for one important reason.

“We have 7 billion people on the planet today,” he says. “One billion of those don’t eat as well as they should. Between now and 2050, we should have more than 9 billion people. As an industry, we have much work to do. The Marfrig Group has a huge role to play in helping to solve the world’s nutrition challenges. For that reason, I sought them out and was surprised and pleased to be invited to join their group.”

The Marfrig Group and Marfood USA operate under an entirely different mindset regarding social and environmental responsibility compared to most competitors – from the company’s founder and CEO Marcos Antonio Molina dos Santos on down, says Michael Farley, Marfood USA marketing director.

“Together with Greenpeace, we established the protocol to stop ranchers from encroachment into the Amazon,” he adds. “We don’t source from anyone who does. And our beef is all-natural, grass-fed. Our philosophy is ‘pasture to package’ – taking control of the entire value and production chain.”

Market dominance

Marfood USA is the largest meat snacks provider in North America and dominates space in retail outlets by a significant margin. Pemmican is Marfood’s high-end, whole-muscle product, Farley says. “Pemmican only deals in approximately 45 percent of the meat snacks category because Pemmican is whole-muscle beef jerky exclusively,” he adds.

“We don’t do sticks or chopped and formed so that’s a pretty good achievement to be ranked where it is,” says Nakia Watkins, Marfood USA marketing manager.

Marfood’s promotion strategy is simple: make things better. “This is the culture of our entire organization,” Farley says.

Operation Gratitude is one such promotion. “This summer, for every bag of Pemmican Beef Jerky a consumer buys, we’re going to send a bag to deployed troops in harm’s way,” he adds. “It’s simply the right thing to do.”

On April 1, Marfood ran a 24-hour promotion where it sent a free bag of jerky every 20.11 seconds to consumers who visited its Pemmican Beef Jerky website (www.pemmican.com). In addition, for every bag given to consumers, two bags were donated to the Safari Club International Foundation for their Sportsmen Against Hunger program.

The company describes its Pemmican core users as outdoorsmen who hunt, fish and camp and tend to be conservationist by nature. “When we look at brand-user surveys, we see people who have interests in making the world a better place. We see interest in health and wellness among our users; we also see a certain level of affluence with our core Pemmican users,” Fox says.

The struggling US economy has elevated private-label, Fox says. “With private-label being more prominent in the marketplace, there has been a shift in quality,” he adds. “Private-label customers are looking for a lot of differentiation and for product quality that is as good as or better than the leading national brands.”

Fox says there is growth in his company’s canned meats business (approximately a $1.3 billion US category) as well. Marfood’s canned products include corned beef, corned beef hash, roast beef in gravy, chili and beef stew, just to mention a few. “We’re doing things in the way of low-fat and low-sodium that are making the category interesting to new participants and shoppers,” he adds. “We also do quite a bit of work with fresh beef muscles and cooked frozen beef for industrial users. We bring those out of Uruguay. It is a growing business that is becoming increasingly important for our customers as there is a lot of volatility in the global food complex and it makes sense for customers to diversify their supply.”

Marfood’s specialty meats business offers high-end products, such as Carpaccio, Farley says. “Such products are primarily served in higher-end restaurants as appetizers,” he adds. “It’s a very select market and select customers use this type of product.”

“It helps us gain entry into the white table cloth forums; it gives us another point of distinction,” Fox adds.

Looking forward, Fox says the biggest long-term challenge is growth. “Marfood USA has to make a fair return on capital investments so we need to grow the business to meet the growing needs of human nutrition, particularly in the developing world,” he adds.

“Short-term, we have to be good business people,” he continues. “We have to not only meet our customer’s needs in an appropriate fashion, but we have to be ‘on trend’. The most important opportunity for Marfood USA is to continue contributing to the success of the Marfrig Group and to be a meaningful contributor in providing for human nutrition.”

Packaging precision in ‘The Box’

At the heart of Marfood USA’s 60,000-sq.-ft. Taylor, Mich. complex is its 54,000-sq.-ft. packaging facility that is dedicated to clean-room packaging of its own Pemmican brand of beef jerky (Original, Peppered, Hot & Spicy Teriyaki and the newer Mesquite) and brisket meat snacks, Pecos Bill’s brand of beef jerky for Canada, and hundreds of private-label beef jerky products, even including some organic, for US retailers.

All beef jerky products packaged at Taylor are manufactured at four Marfrig Group processing plants – one each in Argentina and Uruguay and two in Brazil.

Approximately 6,000 sq. ft. of office and mezzanine space is also located in the facility and a 24,000-sq.-ft. materials storage building to house jerky supplies prior to packaging is located near the plant. Products for packaging arrive in bulk from South America via sea freight.

This warehouse opened for business as Marfood’s beef jerky packaging hub in 2002. Seven packaging lines operate within its strict clean-room environment. “All packaging into pouches or packages is done in ‘The Box’ – an enclosed, totally sterile environment,” says Peter Castronova, plant manager and 33-year industry veteran. “Before entering this area, workers enter an adjacent room, wash their hands and suit up for the day. Most packages are MAP pouches; some are vacuum packaged.”

The Box began operating in March 2003. Line one is automated machinery acquired since Marfrig’s acquisition of Marfood USA in December 2007. The machine takes the place of seven people. “There is only one person on this line and it does upwards of 77 packages a minute; the weights are controlled phenomenally,” Castronova boasts. “She puts the pouch in a hopper online and then the machine picks the pouches up, holds them, opens them, loads them, weighs them, seals them, puts the code date on them and goes through the wall via conveyor on the other end ready for the case.”

Line two and four are manual lines, while line three is another automated line similar to line one – but is a rollstock machine.

Line five is a Laudenberg rollstock machine. “That machine is our flagship machine for Pemmican,” Castronova says. “It’s another totally automated machine. You put rollstock on there, add zipper material for recloseable zippers, load the meat in a hopper and product goes up, drops onto a scale, the scale weighs it and fills the bag.”

Line six is a roll stock horizontal fill/form/seal machine and line seven is a vertical fill and seal machine. Each line uses a 14-multihead scale for weighing. “They do a really good job in controlling weights; very tight tolerance,” Castronova says.

Two dicers accommodate custom orders. Finished product comes in basically 2-by-3 inches, which is standard piece size for jerky, Castronova explains. “We can cut product to spec for certain customers who may want smaller pieces and bags,” he adds.

Approximately 25 percent of the beef jerky packaged at this facility is Pemmican brand products; the remaining 75 percent is a variety of private-label jerky products for hundreds of customers. Finished products are distributed throughout the US, Canada with some product sailing to UK markets.

Although the company won’t divulge its production numbers or throughput capabilities, Castronova says, “We have the capacity to multiply what we’re doing by several times. We have the backing from our sister plants in South America to provide more product or packaging capacity if needed.”

Order lead time is generally 10 days, but the plant can also take emergency orders requiring faster turnaround. “The key to success in private-label is you have to be flexible and nimble,” says Michael Farley, Marfood USA marketing director. “We serve approximately 25,000 stores in the US on the private-label side.”

Finished jerky products packaged at Taylor feature a 12- to 18-month shelf-life.

Regarding new product development, Marfood USA and Marfrig Group work together as one unit. “We have a lot of people in different countries involved in different stages,” Castronova says.

“We have plants that have their own R&D and QA. Here, we do some basic work in Taylor. But we also use a third party to do the high-level, bigger platform type of new product development,” adds Nakia Watkins, marketing manager.

Marfood USA has an in-house art and graphics department, which allows its customers to quickly react to changes in market conditions or labeling regulations. A new Pemmican package design, which the company calls “a clean, less- aggressive design,” was launched earlier this year.

Marfood USA also introduced its new brisket beef jerky this past year. Brisket Beef Jerky is made using a proprietary process that makes it unique compared to other jerky products. “I can tell you it is a jerky process that has been modified to enhance the individual muscle of the brisket – which is different, Castronova says. “You must modify the process depending on the type of muscle you use.”

One major challenge Castronova faces is staying flexible for his legions of private-label customers. “The ability to quickly change over, react fast and efficiently is always challenging. Some days I’ll go through multiple changeovers in a one-shift day. Every product represents a different customer, meat type and bag size,” he says.

Perfecting packaging

Marfood USA has pioneered its Template Packaging System offering its customers the highest-quality packaging and cost efficiency. This system pairs massive packaging material runs, which flow into its proprietary labeling and graphics template system. This allows customers to develop their own unique store-brand program with the same efficiencies as a national brand.

Taylor’s labeling operation allows the plant to offer customers a variety of different labels and the ability to change rapidly on demand. “If you need a case of product, I can make it,” Castronova says. “If you need 10,000 cases of products, I can do it. If you need a case of one flavor each, I can do that, too. That’s what the label template program on these labeling machines allows me to do.”

Since Marfrig acquired Marfood USA in 2007 and Marfrig’s acquisition of the Pemmican brand from ConAgra in 2008, the complex has added a storage warehouse, materials management and logistics department, which meant hiring a materials manager, a materials analyst and logistics manager, as well as a shipping and receiving supervisor.

“We’ve also added automated machinery; everything used to be manual,” Castronova says. “And we added a bigger sales force. Everything has gotten a lot bigger under Marfrig. I don’t think there is one area that hasn’t been improved since the acquisition.”

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