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"CASE IN POINT"


By Lisa M. Keefe, Editor

Call it the meat case dilemma: Skilled butchers are getting harder to find, and even stores that cut or grind meat in-house are subject to a growing number of food safety regulations. Meanwhile, consumers are increasingly sensitive to the source of their meat products, and many would rather buy goods that look like they were prepared and wrapped in the supermarket's back room.

Enter AVA Cos. Inc. The Hicksville, N.Y.-based processor of pork, beef and lamb is growing its business in the elbows-out retail channel, using a two-pronged program for (nearly) duplicating what an in-house meat cutter would do with the fresh meat case: Know what items sell, to whom and when, and display them in a familiar, comforting cellophane overwrap package.

"Our competitors are big packers and they have the packer mentality. We have more of a retail mentality," says CEO Albert Girgenti (jeer-JEN-tee).

Adds the company president, Leonard Lombardi Jr., "If it doesn't scan the register, it doesn't do anybody any good."

THE RETAIL GAME

AVA's fresh meat cuts and ground products are distributed almost exclusively to retail supermarkets along the entire Atlantic Seaboard and into the Midwest. Duking it out in the fresh meat case is a tough slog for a relatively small ($150 million to $200 million revenues) processor without the economies of scale and logistics afforded a Tyson or a Cargill.

But Girgenti and Lombardi are unfazed, and why not? They count several large regional chains among their major clients, and scores of small, independent grocers in the New York area as loyal customers (none of whom the two wanted to name for publication, out of deference to their customers). They built such a client roster "thinking like a retailer," Girgenti says.

He and Lombardi adopted that mindset in 2000, when they peeked into the back room of AVA's supermarket customers and saw their products sitting there, not in the meat case. The stores' dwindling number of meat cutters hadn't gotten to it yet, creating a bottleneck.

Lombardi researched the meat-cutter industry - average age and number of newcomers to the business - and saw the case-ready writing on the wall. AVA installed a packaging line and began producing fresh meat items ready for retail sale.

But not in a MAP package or other straight-from-the-factory choice: "I knew the best way to do it was to make it mimic exactly what the store was doing," Girgenti says. That meant a cellophane overwrap.

ONE AT A TIME

For example, the overwrapped packages initially were shipped in conventional mother bags, with a dozen or so per gas-flushed bag. Over time, however, new challenges arose; shrink rates were too high, and the overwrapped packages were too often damaged from tumbling over one another en route inside the larger bag.

In 2004, new equipment became available that would put as few as one unit inside a small pillow pack flushed with a controlled, specific atmosphere, and AVA revamped its line. Now the overwrapped units are packaged just one to four in a mother bag.

"We have an overwrapped package that .. . keeps the look and feel as if it was done at store level. Now, how do we ensure that that package has integrity all the way through the process? That's a single bag," Lombardi says.

Girgenti allows that the system is a bit heavy on the use of packaging materials at a time when most manufacturers are cutting back on packaging. Nevertheless, he argues, AVA's system is more economical and ecologically sensitive in the long run than larger mother bags, primarily because it reduces shrink The one-to three-item system better protects the products in transit, with fewer leaks and damaged packaging. Most importantly, at the store level the meat case manager takes the overwrap units out of the mother bag on an as-needed basis; with larger mother bags, once the outer bag is opened all the units must be put into the case, whether they're likely to sell or not.

The impact on AVA's customers can't be underestimated, says Scott Lively, managing partner with Katama Co., a prepared organic foods company based near Cape Cod, Mass.

"You have a lot of these basic grocery stores that have an issue with finding qualified meat cutters," says Lively, who has worked with AVA on sales and marketing programs.

"By Sunday, there's not much in their meat case. "They can have product that looks like it was cut in-house, it's not vacuum-packed or prepackaged, it has the foam tray and still has a pretty incredible shelf life."

SPACE CASE

In 2007,AVA saw an opportunity to go further in helping its retail customers replicate the meat cutter's results, without the meat cutter. The company introduced the Case Space Optimization program (CSO), a trademarked, consultative marketing program that is made available to customers at no additional cost.

The goal is to put the right products in the right part of the case at the right time of day and the right day of the week. To do that, AVA will send a representative to the customer's store - or stores - many times over a period of weeks to evaluate who is shopping when, for what, and where, and the degree to which the meat case configuration and product variety meets those customers' needs or not. AVA can offer the supermarket a set of recommendations for how to stock its fresh meat cases in order to boost sales and reduce shrink.

For example, Lombardi notes, if no ground beef sales are rung up between 6:30 p.m. and 7:30 the next morning, it's probably not because nobody came into the store looking for ground beef; rather, there wasn't any in the case to buy. The department manager went home at the end of the workday and didn't stock the meat case adequately.

AVA's data would project sales of various products for the evening, weekend or overnight periods. And if the projections proved to be off, any employee can unpack one unit, or a few units, of AVA's overwrapped fresh meat products and put them in the case.

"If [a meat manager] can sell more product out of the case with [the] same overhead and labor structure, those percentages as a whole come down and it becomes a more profitable segment," Lombardi points out.

LESS, BUT MORE

Besides collecting data on the meat case itself, the CSO program also reviews the meat department's logistics, including back-of-the- house storage and inventory, and food safety interventions.

Results of the study are presented to store management for review. If the store decides to put any of AVA's recommendations to work, AVA will manage tests of those ideas first, then build an overall program for each location. As part of CSO, AVA even offers a training program for store personnel, calling it Case Ready Academy.

Finally, the program's individual components are offered on an a-la-carte basis.

AVA doesn't charge its customers for using the CSO program. It's part of the company's value-added proposition, the executives say.

"[We're] a mid-size company with strong competitors with deep pockets. We all can make product, but if [AVA] can't be nimble enough to make it where it fits a customer perfectly and it's sellable, then what's our point of difference? We're just another company putting meat in a tray," Lombardi says.

MOTHER OF INVENTION

AVA's two-part marketing program may be tailor-made for a retail meat business that is fast-changing. Girgenti is clear, though, that these ideas grew out of necessity, not unique insight into future trends. As he tells it, AVA had just bought its current building in Hicksville - the company's fourth location since 1985 - and he had overreached.

"When we opened up this building in 2006, and to 2009 it was the worst time of my life," he says. "We [couldn't] cover the overhead. We came up [with the] Case Space Optimization program, [and it was], well, 'If you can't sell the product, sell a helping hand.'"

Girgenti's efforts to right the company's ship have paid off. AVA now leases the next-door building as well, for dry goods storage, and now employs more than 300 people, versus about 100 six years ago.

Says Girgenti, "We concentrate on these trends and our weaknesses become irrelevant. We take complexity and turn it into simplicity."