Outpost Road Trip

Buedel’s Corporate Chef, Rlogouss Kramer, Master Butcher, Peter Heflin, and Logistics Manager, Michael Tibbs, took a road trip to Outpost Natural Foods recently to help celebrate Outpost’s fourth store opening in Mequon, Wisconsin.

Outpost is the fourth largest natural foods co-op (by sales) in the U.S. They are known for providing a unique, fun and educational shopping experience of fresh, local and natural foods, including hard to find items. They are a IMG_20140621_104539444_HDR“locally-owned cooperative” committed to sustainable living, fair trade, local growers and community. Outpost stores are “year-round farmers markets.”

When you send a bunch of meat guys out to celebrate something (anything, for that matter) you have to know there’ll be loads of high quality meat on hand. Russ, Peter and Michael spent the day “slow-smoking” Niman Ranch St. Louis Ribs. (Russ used his competition BBQ team’s glaze and sauce. They won a Grand Champion title at the Glen Ellyn Backyard BBQ photo 3last year – and don’t even think about asking him for the recipes.) The Buedel team prepared “split” ribs (cut in half for appetizer sized servings) for the event.

The Huen Family, one of Niman Ranch’s family farms from Fulton, Illinois, was also on hand to talk to customers about the way they raise their hogs for Niman Ranch, and answer questions. (Buedel supplies Outpost with Niman Ranch products and organic poultry.) Peter says the Outpost people are just great to work with and are totally dedicated to keeping to their core vision. “The Outpost staff is behind the whole movement and their customer base is very supportive, giving a lot of feedback to all the departments about sustainability and humane practices.”

St. Louis Style Ribs were first pophoto 1pularized in the 1930′s by butchers in the St. Louis area. They are actually Spare Ribs with the rib tips cut off to dispose of cartilage and gristle with very little meat. St. Louis Ribs didn’t become an “official USDA standard” until the 1980’s. Both Spare and St. Louis Style Ribs are most commonly grilled and smoked in the southern regions of the U.S. For more info about ribs, check our Meat Up post on Ribs 101 for Summer Grilling. If you’d like to try some St. Louis Ribs in your own backyard, here’s a recipe from Russ:

St. Louis Spare Ribs at Home

Spread a light coating of yellow mustard and liberally sprinkle your favorite BBQ Spice/Rub on both sides of the ribs.

Bake ribs on a baking sheet in a 350 degree oven for approximately 20 minutes until lightly brown. Transfer ribs to roasting pan with about an inch of water on the bottom, cover tightly and cook for 45 minutes to 1 hour until meat is tender between the bones.

Preheat grill to a medium heat. Cook ribs until they are nice and brown on the outside. Brush your favorite BBQ sauce on both sides of ribs when they’re just about ready and let the sauce glaze.

Have a great Fourth of July everyone!

From the desk of John Cecala || Website LinkedIn @BuedelFineMeats  Facebook

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Meat Picks | 6.26.14

Ed’s Fest

ED Debevic FlyerMake a note of this date: Saturday, July 26th. You’re all invited to a party at Ed Debevic’s from 11-5, for a luau-themed food and fun fest for the whole family. What makes this (fifth) annual event extra special this year, is Ed’s 30th Anniversary! Hard to believe it’s already been three decades since Debevic’s has been open.

For those of us around (way back in 1984), Ed Debevic’s was an immediate hit. Their shakes, burgers, retro diner setting and wildly entertaining wait staff exploded onto the casual dining scene. People just loved it – and they still do today. What’s not to love about a “cheap and deep” menu?

Don’t miss Ed’s 30th Anniversary on July 26th! A portion of the party proceeds goes to local charities too!

Best Burger in the Nation

1-kuma-flickr_RLeeThe Daily Meal expanded their annual perfect patty list from 40 to a whopping 101 Best Burgers in America earlier this month. The top slot went to Kuma’s Corner in Chicago for their signature Kuma Burger complete with: bacon, sharp cheddar, lettuce, tomato, onion and a fried egg. As The Daily Meal put it, “It’s not as though there’s not enough flavor in the burger, but that egg… whoah.”

Gadget Giveaway

TailgaterTailgater Monthly is running a sweepstakes you might be interested in. They’re giving away $5,700 worth of outdoor tools, equipment and accessories you can use for barbeque and parties at home and on the go – everything from a compact portable generator to a floating cooler. Entry to the contest is free via online registration good through tomorrow, 6/27.

Fixin’ for the Fourth

carwfish boilLooking for something different to do on the 4th? How about a Crawfish Boil at Shaw’s? For $30, you can get an all-you-can-eat Louisiana style crawfish boil with potatoes, sausage and corn fixins’ from 12-9 on July 4th.

Find a complete list of July festivals and concerts at Time Out Chicago.

Post of the Week

Do you love this Facebook post from Niman Ranch as much as we do?

Post of the WeekFrom the desk of John Cecala || Website LinkedIn @BuedelFineMeats  Facebook

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The Latest on Finely Textured Beef

The Wall Street Journal called me last month for thoughts on a piece they were doing regarding the resurgence of finely textured beef (aka “pink slime”) in answer to rising beef prices.

Back in August of 2012,img-learn-packaging-overwrap we addressed the potential future impact on the industry due to the pink slime hysteria ignited by the media on consumer markets. (Read 1 of 10 Things (at the very least) the Foodservice Industry DOES want you to know.)

Thousands of good working people ultimately lost their jobs at companies producing Finely Textured Beef (FTB) who were forced to shut down from an avalanche of cancelled orders due to the misguided media frenzy. What made the situation even more exasperating was the fact that these production processes were USDA approved. All laws and regulations were followed, but it was the processors that bore the immediate brunt of the fallout.

When this occurred, the beef industry was experiencing its lowest herd numbers since 1955 due to drought, and the impact of removing FTB from the food supply required a substantially large amount of additional cattle to fill the demand gap for ground beef.

It was more than logical to predict these effects would likely drive up cattle futures and eventually the price of ground beef for all of us.

How Much is Too Much?

Before the pink slime hysteria in 2012, the average price of 100% ground beef in 2011 was $2.78/lb as per the Labor Department’s Bureau of Labor Statistics, which has been tracking ground beef prices since 1984. By May 2014, the average price of 100% ground beef was $3.85/lb, a 38% price increase compared to the 2% average annual rate of inflation in the United States. Just last weekend, a friend of mine told me she paid almost $5/lb. for 80/20 ground beef at her local grocery store. Consumers, retailers and regrill imagesstaurateurs are all paying much more now for ground beef.

Ground beef is the most bought and consumed type of beef by far. With that in mind, combined with the fact that beef prices are at record highs, it’s no wonder that finely textured beef is indeed making a comeback.  Retailers and consumers, perhaps now more properly educated on the subject, are purchasing products that include FTB in the ingredients.

FTB is currently sold to over 400 retail, food-service and food-processing customers, more than before the 2012 controversy, albeit overall in smaller amounts. Production of finely textured beef has also recently doubled at some manufacturing plants from its low point after the controversy.

Environmentally Sound

The production process for finely textured beef recovers lean beef from steak and roast fat trimmings that would otherwise be wasted. It is made the same way the dairy industry makes cream by using centrifugal force to separate the cream from milk. Cargill posted an easy to follow video outlining the start to finish process early this year; watch it here.

ftbThe maximized use of harvested animals, further popularized by “nose-to-tail” culinary trends, also makes the most of the limited natural resources used to produce beef. Conversely, in a market free of FTB, the following occurs: 1.5M more head of cattle are needed to fill the gap, 10.5M more acres of land is used for grazing those cattle, 375B more gallons of water is utilized to feed and process the cattle and 97M more bushels of corn is needed to feed them, which is grown on 600K more acres of land.

Wrap Up

On the surface, the return of FTB to the market would seem to indicate retailers and consumers are more concerned about cost than method. The good news is, environmentally sound USDA approved beef practices, which produce quality ground beef at better prices, is back.

From the desk of John Cecala || Website LinkedIn @BuedelFineMeats Facebook

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The Grand Champions of BBQ Pitmasters

WINNER - RSSeason 5 of BBQ Pitmasters came to an end last Saturday night with Rescue Smokers taking the title of Grand Champion, $50,000 purse and an exclusive invitation to the prestigious Kingsford Invitational later this year.

Rescue Smokers and Squeal Like a Pig competed in a final showdown where they were challenged to cook an unprecedented four different meats for one turn-in box: chicken, spare ribs, brisket point and pork shoulder. At four hours out from the finish, a surprise “one bite challenge” for whole shrimp was added to the mix for a chance to win an extra point.

Rescue Smokers also won that challenge with a bacon wrapped grilled shrimp. Judge Myron Mixon told the team afterward it was risky adding “an extra protein” to RS-TURN IN BOXthe challenge because it had to be “cooked perfect too.” Squeal Like a Pig’s Pitmaster, Joe Pearce had never cooked shrimp before the challenge.

Robby says he knew their turn-in box looked perfect and affirms you have to be a hit with “appearance” because that’s where the judging begins. Pearce, the youngest competitor, to ever make it to the show’s finals, lost by an undisclosed margin. “Joe is an accomplished Pitmaster for his age,” says Royal, “and I respect him for that.”

BBQ Brothers

Where Joe Pearce actually competed with his brother, Robby says he and teammate Raymond Poore are definitely like brothers. “There’s always a front man, and I have the gift ofRS-TASTING gab,”describes Royal, “but Ray and I are equals…we also argue. You didn’t see this on air, but we had a disagreement in every episode.” Royal says it’s easy to disagree on things because it’s very frustrating when you have to cook something you’re not familiar with.

“The team that Robby and I used to compete on before we created Rescue Smokers believed that one man made it all happen, ” recalls Poore. “So when we got started we never put the “i” in team. If I need to do a comp and Robby needs to do a comp, we are confident that we both can make it happen. And if I make a change or Robby makes a change, we trust each others’ decision whether good or bad.”

Royal and Poore always kRescueSmokersnew each other, but never had a relationship before BBQ. Royal says he got into it because of his father. “My dad joined a cook team and my brother and I would go hang out with them. When my dad died in 2002, Ray came to me and asked if he could take my dad’s place.”

Their relationship blossomed as a social hobby at first. “When we originally started, it was Ray and our wives, then another couple joined us, and a younger couple was also with us for a while.” Both couples eventually dropped off according to Royal because, “…it doesn’t give you anything back. You’re lucky if you break even – it’s just been the four of us for the last 5 years. BBQ is a passion – it’s not about the money. I’d love to do this full time, but it doesn’t pay the bills.” And, there’s only one Myron Mixon, right? “Exactly!”

Winning Profile

RS-BRISKET AND BUTT ON THE PITWhen they’re not competing, Royal says he and Poore’s family get together in their backyards. “Our families taste test for us.” Their children take on the role of spectators, “They love BBQ, and they love to hang out.”

Having lost by a miniscule margin in the semi-finals last year, Robby professes the biggest difference between BBQ Pitmasters Season 4 and 5 was that he and Ray came back ready and prepared to cook anything. “We took swings to hit a home run and it paid off.” Some of that renewed readiness may be attributable to an experience they had late last year when Destination America was filming a new cook show in their home state of Georgia.

RS-BRISKET BURNT ENDSBBQ Pitwars would have four top crews (including Myron Mixon and Pitmasters co-judge, Moe Cason), competing against each other during BBQ circuit competitions. When Royal heard Pitwars would be filming at the Big Pig Jig® in Georgia last November, (his “home cook”), he called the show producer to tell them they better keep their eye on Rescue Smokers while filming because they were going to “take Myron down.” The gauntlet was somewhat brazen at the time given the fact that Rescue Smokers had come in 2nd behind Mixon for the last three consecutive years in a row at the competition.

Placing 9th in Ribs, 4th in Shoulder, 1st in Chicken and 1st in Whole Hog out of 130 teams, Robby and Ray did beat Mixon and won the 2013 BPJ Grand Champion title. [You can see the win in Episo2013BigPigJigChampionde 3 of BBQ Pitwars.] How did Myron react? “He was happy for us,” says Royal, “as he would be for himself.” After that win, Rescue Smokers was invited back to BBQ Pitmasters for Season 5.

Beating Mixon was a full circle moment for Robby who says it wasn’t until he went to Mixon’s cooking school in 2007, that he truly learned how to cook BBQ. “We never won anything before that time and at the very first competition after that, we won a state championship!” Royal is also quick to point out that winning championships Myron competes in is absolutely essential. “You want Myron there. If we’d won [the Big Pig Jig®] without him there, it would be like Barry Bonds’ home run record – there’d always be an asterisk after your name.”

In competitive BBQ, “you have to be extremely consistent,” offers Royal. “Don’t change anything, try it again – be very careful with timelines, and get the product out at the right time. Be confident, have fun, be consistent, and get lucky …in judging.”

Status ‘Q

RescueSmokehouseGrillIn 2007, Ray and Robby each put in $1,000 and have never put in anything since. “We’ve been blessed to have it pay for itself,” says Royal, who says they’ve been able to buy their equipment, supplies and cover expenses with their winnings.

In 2012, Ray opened a restaurant in Ashburn, Ga., Rescue’s Smokehouse Grill, on the same day Robby received a promotion to Director of EMS and County Fire Chief. Poore says winning BBQ Pitmasters has meant the world to him and his family, “…not only is it nice to see your dad or husband on TV, but it has greatly helped out my restaurant.” He likes “making people smile with great food” and the challenges that come along with that. “I have one customer that wants his steak med-rare with no blood, who would figure?”

Prior to restaurant openings aMyron & Ray outside restaurantnd promotions, Rescue Smokers used to compete over 28-30 weekends a year, now they limit it to 10-12. Royal says it’s always been a stress release for him, “The average working life in EMS is only 7-8 years. You see a lot of awful things.” He says the guys at the station have always been supportive of the team, “…and now I’m their boss.”

The team’s winning track record, BBQP experience, and lighter weekend travel schedule has also paved the way to new opportunities. Ray and Robby are getting ready to launch a line of sauces (in July) and have plans to open a cooking school in the very near future. “We don’t just cook in one sanction – we cook them all across a 3-4 state area,” points out Royal. “We were the first team to win in four different sanctioning bodies; your flavor profiles change so much by cuisine, region and requirement. We are one of the most versatile teams in the nation.” [Read more about sanctioning bodies here.]RS- RIBS OFF THE PIT

Royal is looking at the new endeavors as an opportunity to “make a little bit” from their competitive efforts. He also made a point in saying that Rescue Smokers has never had any sponsors until recently – kinda. “Last December, my wife and I bought a camper. Several weeks later, the guy we bought it from invited us to lunch. He wanted to know why with all the BBQ competitors in our area, he wasn’t selling more trailers.” Royal ended up buying a new trailer for Rescue Smokers (which they’d planned on doing) by striking a “better” deal with the dealership in exchange for putting their logo on the trailer.

That’s a Wrap

BBQ Pitmasters was filmed last January and February over a five week period. “Every 3-4 days they did a new round,” describes Royal, “we were there from sun up to sundown – at one point it was 32 degrees – it was really cold!”

BUEDEL FINALS MEATAfter the final episode was filmed, they brought their check home and hid the trophy. It wasn’t too tough keeping quiet about the results until after the first episode aired in April when people kept asking them how they ended up in the competition. Robby tooled a standard reply: No matter if we won or lost, we met some great people, cooked some great product and had a great time.

Royal says they didn’t do anything special for the first airing of the final episode last Saturday night. “We had a bigger crowd. I smoked some sausage; Ray cooked some pizzas. Afterwards, it was a blast.”

From the desk of John Cecala || Website LinkedIn @BuedelFineMeats  Facebook

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New Chew on the Block | Mikey’s Jerky

LOGO trimmedOf all the possible businesses, a young entrepreneur could get into these days (tech, being the most obvious choice) you can’t help but wonder why Mikey Allen chose jerky. Yet the decision to go into the snack biz was far more logical than you might think. At the ripe old age of 25, Allen has been making jerky for 20 years.

Family Passion

“I remember we [he and his siblings] got this tiny little hydrator for Christmas when I was 5 – it probably made about 2 lbs. worth of meat at a time,” says Allen. “My dad used to go hunting, so the first jerky we made was with venison. We made it a couple of times a year and gave it to friends and family.”

Allen says his father and grandfather always had a great appreciation for doing things by hand. “My dad grew up in Champaign and went hunting with my grandfather. The recipe we used to make jerky was the same recipe my dad used with his father, and it’s the same recipe I use for Mikey’s Or894030_230185417188667_608606519362212903_oiginal today.”

Pictured left: Mikey and his Dad at one of their first open market stands.

The youngest of three children, Allen’s family moved from St. Louis to Louisville so his father, then a general dentist, could go back to school for orthodontics. “My dad was unhappy with general dentistry, so he went back to school and my mom, who was a nurse at the time, supported us.” The family eventually planted permanent roots in Wheaton, Illinois when Mikey was 6.

Allen went to work after college for Groupon in sales and on to logistical and advertising sales after that. It was during this time when his lifelong “hobby” started taking on a different perspective. “I started selling jerky to co-workers and friends and they all said, ‘you really have something here’”.

Perfecting the Product  

A year ago last April, Mikey quit his job dedicating himself to turning his passion for jerky into a legitimate business. He executed extensive due diligence, went through the agonizing process of getting industry licensed, and set his goals on producing a healthy handcrafted all natural snack. “In the jerky business, there’s not much out there yet in this niche.”

10301430_243618842511991_2282074179221836951_n(Pictured right: One of Mikey’s customers started sending his jerky overseas to her brother in the Army. She says the soldiers  love it.)

Allen currently rents commercial kitchen space and contains production costs by pulling “all-nighters” working a perpetual graveyard shift. “The process is very labor intensive” he describes. “There’s slicing, trimming, marinating, hydrating and then packaging. I lay every piece out singly for hydrating. It takes about 10 hours per run, plus the 4-8 hours for prep and marinating. I can make about 250 pieces in a 24 hour turn around. If a batch doesn’t turn out right, I throw it out!”

Dedicated to producing healthy, all natural and antibiotic free products, Allen says he Googled “grass fed suppliers” and found Buedel. “James [Melnychuk] has been just awesome with me, showing me the ropes of the meat business – he treats me like I was ordering 1,000 pounds a week.”

Mikey uses eye of the round cuts for his jerky with little fat from grass fed cattle and Creekstone Farms Black Angus beef. “I admired the companies who used only eye of the round cuts when I first started out, because it’s super lean. You can use bottom round, but it’s more labor intensive to trim it.”

Flavor Profiles

Having made venison and bison jerky in the past, Allen says he’d also like to experiment with some exotic meats in the future too, but will keep his focus on handcrafting beef jerky for now. “A lot of my competitors outsource to mass production facilities.”

Mikey’s Jerky currently comes in three core flavors: Mikey’s Original – a smoky bite with a strong, lasting finish, Great Barrier Beef – a zesty exotic herb and spice blend, and Grim Beefer – a hot and spicy version, “not for the faint of heart”.10012228_226415907565618_1235124841889871716_o

Allen says most people say his Grim Beefer flavor has just the right amount of kick, and others tell him “it could be hotter.” Always experimenting with new flavors, feedback from family and friends often weigh in. “Someone wanted me to do a brown sugar and maple syrup version and at one point we tried a Paleo diet version – it had a LOT of pepper.”

The ingredients on a package of Mikey’s Original include beef, water, salt, crushed red pepper, soy sauce, teriyaki sauce, Worchester, liquid smoke and hot sauce. The jerky has soy and wheat allergens, however Allen also plans on expanding into gluten free products in the future.

Until last week, Mikey’s Jerky was only available by word of mouth and at local area weekend markets. Two new access channels were launched this week: Online Order and a special Father’s Day Gift Offer good for three consecutive monthly deliveries.

After Father’s Day, customers will have the option of joining The Jerky of the Month Club, which will include new and limited flavor profiles. You can also buy a bag this weekend at the French Markets in Wheaton and Glen Ellyn.

Building a Brand

17-20 pieces of Mikey’s Jerky fill every brown bag which has a tested shelf life of three months. “People love the packaging because it gives you a clean feel,” he says. “I’m selling the week of production right now, but when I hit retail, I’ll have to have it retested.”

Already approached by a Whole Foods rep, Allen is busy laying the groundwork for production expansion refurbishing a kitchen to commercial standards to move into next fall and hiring his first employees. His immediate goal is to be cooking 24/7 while staying true to the handcrafted process. The new kitchen would allow him to produce 750 bags a day – three times his current 24 hour turn around.

Mother's Day promoThankful for the support he’s received from friends and family, Mikey credits his dad for coaching him, his mom for teaching him “Quick Books”, (and helping him with all the “cute packaging” he’s really bad at), his siblings for helping him sell and his college buddy, graphic designer Adam Vicarel, for creating his logo. (Pictured left: Mom’s ‘cute’ Mother’s Day packaging.)

As with many startups, crowd sourcing may also be on the horizon, but Allen is quick to mention the help he’s received from his friend, Bob Sorenson at Threadfunds.com. Thread Funds is a platform for “crowd funded apparel and merchandise”, where startups can sell logo branded items to raise awareness (and funding) for their products, services and/or events. You can buy a Mikey’s Jerky tank top here.1557590_203964463144096_1545155536_n

Allen says his biggest challenge is “time management”. He only pulls two ‘all-nighters’ a week, but they wipe him out the next day. It’s about meeting supply and demand, and he says he’s trying to “work smarter”.

Mikey’s big vision is to keep the company family operated and handcrafted within the healthy/all natural retail market. “I want to provide a quality product people will appreciate that tastes good!”

From the desk of John Cecala || Website LinkedIn @BuedelFineMeats  Facebook

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Meat Picks | 6.5.14

Food Apps

mobile-appsAccording to Tech Republic, food apps are one of the hottest 2014 tech startup categories. Last week they published a slide article on “apps that are changing the food industry”, citing 15 new releases. Some highlights on the list: Harvest Mark – traces where your food comes from, Wild Edibles – identifies wild plants and flowers you can prepare for consumption and Farmstand – finds local and seasonal foods by mapping farms and farmer’s markets.

Score Card

Game 1 of the NBA finals may start tonight, but the battle between Pilgrim’s Pride v. Tyson Foods over who buys Hillshire Brands is heating up.

If you haven’t kept up with who’s on first, Pilgrim’s Pride is now up, 2 to 1, after raising the ante this week from their offer of 5.6 billion to 6.7 billion countering HillshireBlogPicTyson’s 6.2 offer. What’s most interesting in this war of the food titans is the fact that Hillshire was focused on acquiring other companies. Ironically, it was Hillshire’s most recent acquisition plan, to buy Pinnacle Foods, which turned the tables on them.

How will this affect food fans? In the consumer arena, ticket prices will most likely go up! Read our latest post: What happens to price after the food fight?

BBQ Semi Finals

Buedel Fine MeatsThe competition was intense last weekend in the first of two semi-finals on BBQ Pitmasters. Each team barbecued three different kinds of ribs, beef, baby back and country style, in an episode appropriately named, Ribs, Ribs & More Ribs. The semi-final round further challenged the Pitmasters by requiring three meats to be cooked versus the normal two.

Judged on “taste, tenderness and appearance”, Robby Royal of Rescue Smokers won the round by a margin of 2/10 points. It was poetic justice for Royal who lost by 1/16th of a point last year in the semi-final round.

The remaining three teams compete this Saturday, June 7th at 8pm CST on the Destination America network. Don’t miss it!

Top Meeting Spots

Crain’s just published a best list of private dining rooms in the city. Focusing on the downtown, River North, Gold Coast and Randolph Market neighborhoods, they whittled the list down to a choice 32 covering “traditional and trendy, refined and rustic, blow-out and budget-conscious”. Here’s their top picks:

Crainslist

From the desk of John Cecala || Website LinkedIn @BuedelFineMeats  Facebook

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What Happens to Price After the Food Fight?

The past few weeks have been all but mundane in the world of retail food products. Two big chicken producers, Pilgrim’s and Tyson Foods, have waged a food fight over acquiring Hillshire Brands for retail market dominance.

HillshireBlogPicGet Your Score Card Out

On May 27, Pilgrim’s Pride (PPC) offered to buy Hillshire Brands Company for $5.6 billion, then two days later Tyson Foods (TSN), offered $6.2 billion for Hillshire.

Pilgrim’s is the second-largest chicken producer in the world. They employ approximately 38,000 people and have the capacity to process more than 36 million birds per week for a total of more than 9.5 billion pounds of live chicken annually. Pilgrim’s is owned by JBS S.A. the largest animal protein company in the world.

Tyson Foods, Inc. is one of the world’s largest producers of meat and poultry with over $34.4B in annual sales, they process over 41,000,000 chickens, 135,000 cattle and 391,000 hogs per week.

Formerly part of Sara Lee Corp., Hillshire Brands (NYSE: HSH) is a leader in branded foods. The company generates nearly $4 billion in annual sales and has approximately 9,000 employees. Hillshire Brands’ portfolio includes iconic brands such as Jimmy Dean, Ball Park, Hillshire Farm, State Fair, Sara Lee frozen bakery and Chef Pierre pies, as well as artisanal brands Aidells, Gallo Salame and Golden Island Jerky.

Hillshire Brands has also recently been on a buying spree of their own to enhance and increase their presence in leading retailers. Just last month, Hillshire completed its acquisition of Van’s Natural Foods from Catterton Partners. Van’s is a leading better-for-you brand with simple/clean ingredient food brands in frozen breakfast and snack foods, including waffles, pancakes, cereal, crackers and snack bars. Van’s frozen breakfast and snack foods are available at grocery stores, mass merchandise stores and natural food retailers nationwide.

A few weeks after the Van’s deal, Hillshire announced plans for a $4.2B acquisition of Pinnacle Foods a leading producer, marketer and distributor of high-quality branded food products. Pinnacle’s name brands, such as, Birds Eye®, Armour®, Open Pit® and Vlasic®, are found in more than 85% of American households.

How Much is Hillshire Worth?

Hillshire Brands knows how to innovate new products and market them. Acquiring Hillshire would give either bidding company increased scale and presence in Frozen, Refrigerated and Dry retail spaces – a move which would help further vertically integrate their businesses and be in the center of retail stores.

Pilgrim’s and Tyson also know that commodity meat is a low margin business compared to the margins that are made on prepared foods. Hillshire’s strong portfolio of retail brands stands to improve their gross margins and boost profits for shareholders.

Pilgrim’s offered $5.6B / $45 per share – a 25% premium over Hillshire’s stock price the day of the announcement, a multiple of 12.5x Hillshire’s EBITDA. Tyson’s then raised the stakes to $6.2B / $50 per share – at a 35% premium over Hillshire’s stock price the day of the announcement, a multiple of 13.4x Hillshire’s EBITDA. Pilgrim’s responded (as of today) in smackdown fashion with a $6.7B / $55 per share counteroffer.

Both companies also want Hillshire to call off its planned $4.2B acquisition of Pinnacle Foods and are willing to pay the $164M breakup fee. It would appear they generally consider Pinnacle’s products to be outside of their core interests.

How Will This Affect Consumers?

The Hillshire deal may be good for shareholders of the companies who invest for positive returns, however it may not be a case of what’s good for the goose, is good for the gander, for retail shoppers. We may be paying higher prices when all is said and done.

Over the last year, consolidations in the food service industry such as, Sysco’s acquisition of US Foods and Smithfield’s sale to the Chinese have the potential to prove equally problematic for consumers. Both of these deals portend to reduce competition, giving consumers less choice and less opportunity to vote with their dollars. These types of scenarios are not limited to the food industry either. The airline industry is often taken to task on limited choices due to price fixing.

2014 marks the 100th anniversary of the Federal Trade Commission Act and the Clayton Act, two laws passed in compliment to the first anti-trust law, the Sherman Act of 1890. These laws were passed to guard against monopolistic practices: to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down and keep quality up. In my opinion, the consolidation of companies means less competition which I believe drives higher prices.

You can’t help but wonder if trends like these continue whether food companies will reach the pinnacle of being “too big to fail” like the retail banking industry during the financial crisis of 2007-2008. Will less choice, higher prices and bail outs, ultimately become the status quo?

From the desk of John Cecala | |Website LinkedIn @BuedelFineMeats  Facebook

 

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