A Savory New Prospect
Saturday, June 11, 2005
Discount retailer Target Corp. calls to mind many things. A porterhouse steak isn't one of them.
But as the chain that brought the world a Michael Graves-designed fondue set plunges deeper into the food business, it is adopting an increasingly common tactic in the grocery industry: launching its own line of high-end beef. Sutton & Dodge Steakhouse Quality Angus Beef, named after a fictitious butcher and an equally mythical restaurateur, hits stores this summer, with cuts ranging from rib-eye and T-bone to tenderloin and New York strip.
Sound strange? Food Lion LLC, the no-frills supermarket chain, just introduced a line of premium beef called Butcher's Brand. Moderately priced Safeway Inc. is finishing its rollout of Rancher's Reserve, another all-Angus beef brand. Even Wal-Mart Stores Inc., better known for cheap clothes than fine meats, is getting into the business, with a line of premium deli meats dubbed Prima Della.
Premium store-brand meats, once the territory of gourmet specialty stores, are quickly trickling down into mainstream supermarkets and the big-box discount chains as retailers jostle to stand out in an increasingly crowded field of grocers.
The not-so-subtle strategy, retailers say, is to lure customers into their stores with high-end meats that cannot be found anywhere else -- Sutton & Dodge can be found only at SuperTarget, the chain's larger-format stores -- and hope they stick around to do the rest of their food shopping.
Beef, said Safeway spokesman Greg TenEyck, is a "determining factor in selecting a supermarket and remaining loyal to it."
Food industry analysts say the shift to premium meats reflects the steady evolution of store brands from their humble roots two decades ago as cheap alternatives to name-brand products into their emerging status as destination products in their own right.
Target has created Archer Farms and Market Pantry grocery products. Safeway has Safeway Select, plus Signature brand soups, salads and sandwiches. And Giant has Orchard Harvest foods, Pure Power cleaning products, and Nature's Promise organic products.
"Supermarkets are now positioning these products to be as good as, or better than, national products," said Karen Brown, a senior vice president of the Food Marketing Institute, a Washington-based trade group.
One reason: Retailers typically earn more profit on store brands than they do on national ones because they control the manufacturing and marketing costs, said Jason Whitmer, a grocery industry analyst at FTN Midwest's Research Securities Corp.
With more supermarkets pushing more of their own brands, sales of so-called private-label products grew 18 percent between 1999 and 2003, compared with 14 percent for national brands, according to Progressive Grocer, an industry trade publication.
But why the sudden popularity of high-end store-brand beef? In part, grocery stores are trying to cash in on what's left of the high-protein diet craze, which has dramatically lifted sales of beef, industry analysts say. Supermarket sales of beef hit $65 billion in 2004 and are expected to grow 4.5 percent this year, according to Progressive Grocer.