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Wal-Mart Upgrades To Angus Beef As Grocery Competition Heats Up

Published on Jul 4 2017 9:25 AM in Fresh Produce tagged: Walmart / Meat / Angus / 4th July

Wal-Mart Upgrades To Angus Beef As Grocery Competition Heats Up

Just in time for Fourth of July barbecues, Wal-Mart Stores, Inc. has upgraded its beef to certified Angus across the US, as the fight for food shoppers’ cash intensifies.

For the past year, the nation’s biggest grocer worked with meat giants including Tyson Foods, Inc. and Cargill, Inc. to secure a supply of Angus steaks and roasts at no additional cost to consumers, said Scott Neal, Wal-Mart’s senior vice-president of meat, seafood and quality control. The higher-quality cuts have been available in all of Wal-Mart’s 4,700 US stores since March, but the retailer hasn’t announced or advertised the shift yet.

Rise To The Challenge

The move is part of Wal-Mart’s response to rapidly intensifying competition. German discounters Aldi and Lidl are expanding aggressively, and Amazon.com, Inc.’s purchase of Whole Foods Markets, Inc. threatens to upend the industry. Wal-Mart also wants to entice shoppers by offering kerbside pickups of online grocery orders and improving the quality of fresh foods like produce and meat, which are a key draw for customers.

“All purveyors of food are being forced to step up their game,” said Bill Lapp, president of consulting firm Advanced Economic Solutions. “There is such disruption in the grocery-store sector that you have to do something.”

With its marbled, tender cuts, Angus beef has become synonymous with quality. Demand for the meat has skyrocketed in recent years, with fast-food chains like McDonald’s, Burger King and Hardee’s offering Angus burgers.

While US beef consumption has dropped over the past decade because of a 2014 drought that cut the herd to its smallest since 1951, the USDA’s Economic Research Service is predicting a rebound, thanks to increased supply. Demand could also increase now that China has restarted imports of US beef, lifting a ban that had been in place since 2003.

“Beef is an absolute opportunity for us, in terms of where we can grow,” Wal-Mart’s Neal said in a phone interview. “Our market share is not where we want it to be, relative to the rest of the store.”

The retailer’s whole-muscle beef-product offering is now entirely Angus, Neal said, adding that Angus rib-eye steaks sell for just under $10 a pound. The change doesn’t affect Wal-Mart’s ground beef, which comes from a broader supply of meat that includes non-Angus sources.

‘Verified Angus’

Wal-Mart is calling its product Verified Angus since Certified Angus Beef is a brand name owned by a cattle-rancher cooperative. Neal says that Wal-Mart’s Angus product adheres to similar quality standards on measures including marbling, flavour and consistency.

“[Angus beef] delivers the eating experience that consumers are looking for,” said Jason Nichol, who, as senior vice-president, oversees Tyson’s relationship with Wal-Mart. “We’ve been happy with the results to date.”

A Cargill spokesman declined to comment.

Wal-Mart last upgraded its meat in 2011, when it moved from offering primarily Select beef – the lowest of the three government grades – to a blend of Select and Choice, the middle category. The change took 18 months, as suppliers had to shift stocks from other retailers, but it paid off, as Wal-Mart’s market share in beef increased by four percentage points, Neal said.

The price premium for Choice grade widened to a record last month over Select, in the wake of Wal-Mart’s move, according to Kevin Good, who tracks the beef market for researcher CattleFax in Centennial, Colorado.

“[Wal-Mart] created more demand and competition for choice cuts,” Good said. “Wide spreads create higher cattle prices.”

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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