Walmart does end-around Tyson for direct beef supply chain

Walmart announced Wednesday (April 24) its own entry into the beef industry. The retail giant said it is developing an end-to-end supply chain for Angus beef working directly with ranchers and bypassing some of its largest beef suppliers like Tyson Foods and Cargill.

The retail giant said it has been working to improve the quality of its food with the company’s fresh division and meat department at the forefront of this effort in hopes of creating a steady demand for cattle ranchers and providing customers with unprecedented quality and transparency.

Walmart U.S. CEO Greg Foran has called for better quality meat offerings at Walmart for the past three years and this is a continuation of that agenda. The retailer is working with ranchers like Bob McClaren of Prime Pursuits in Texas.

“As clean labels, traceability and transparency become more and more important to customers, we’ve made plans to enter into the beef industry creating an unmatched system that allows us to deliver consistent quality and value,” said Scott Neal, senior vice president, Meat, Walmart U.S. “By enlisting a number of best-in-class companies to take part in the supply chain, we’ll be able to supply customers with unprecedented quality, provide transparency throughout the supply chain and leverage the learnings we gain across our business.”

He said a selection of Angus beef cuts like steaks and roasts from this supply chain will be sold in 500 Walmart stores in states in the southeast including Georgia, Alabama and Florida. Walmart said this initiative will also create more than 250 jobs in Kansas at Creekstone Farm’s beef processing facility and another 200 jobs in Georgia in Walmart’s own case-ready facility that is run by FPL Food.

“No bigger paradigm change has taken place in the beef industry than what is happening with Walmart bringing truly high-quality, all-natural, no-hormones-added Black Angus beef to its customers. This bold vision gives Walmart a special place at the table by contributing to the most enjoyable and memorable moments in the lives of its customers,” said McClaren. “It’s been four generations since we began, yet the traditional values of the McClaren family and 44 Farms are as relevant today as they were more than a century ago.”

Walmart will have to convince shoppers to try the product once it’s available in stores. Multiple consumer surveys indicate Walmart has not typically been considered a great place to buy beef. Sam’s Club, on the other hand, is seen as a meat destination for steaks by many members.

Over the past three years, Walmart has worked to get consumers to try the Angus steak it sells including conducting a steak taste-test challenge to ask consumers if they could tell which steak came from Walmart. Walmart Angus steak was also featured on the television show MasterChef, but that was a sponsorship the company paid to get. In-store demonstrations to taste the Angus beef continue and yet many consumers say they won’t buy steak from Walmart.

With more consumers looking for additional transparency on the foods they eat, this could become an opportunity for Walmart to win favor as they also like to support smaller industries as opposed to corporate farming.

“Walmart has listened to its hard-working customers and taken on the monumental task of providing steakhouse quality, natural Black Angus beef to their local stores. This bold vision will not only elevate backyard barbecues and family dinner tables across the country, but transform the entire supply chain,” said Hank McWhorter of Mc6 Cattle Feeders. “Mc6 Cattle Feeders is honored to help make this vision a reality. Mc6 is a family business that has been feeding and raising cattle on the same land in the Texas panhandle for four generations.”

Walmart is the nation’s largest grocery chain and it will continue to have relationships with meatpackers like Tyson Foods, Cargill and Excel for many of the meat protein items it sells across the nation, company officials said. The beef from this new initiative will be in about 10% of its stores.