Walmart Raising the Steaks in the Meat Business

Mega-retailer Walmart Inc. (NYSE: WMT | WMT Price Prediction) said Wednesday that it is getting into the cattle business. The company announced a calf-to-steak supply chain for Angus beef that Walmart says will meet customer demands for quality beef and a more transparent supply chain.

The company plans to offer cuts of Angus beef in 500 of its U.S. stores. Not including the company’s Sam’s Club warehouse stores, Walmart operates 3,570 supercenters and about 1,200 other store formats in the United States.

Walmart’s current beef suppliers are Tyson Foods Inc. (NYSE: TSN) and privately held Cargill. Although neither is participating in Walmart’s new supply chain, a Tyson executive told Bloomberg News, “Walmart is a great business partner of Tyson Foods and we are fully supportive of the project.”

Walmart said the new effort will create a steady demand for its rancher and feed-lot partners, helping create stability in the market. The retailer expects to create 250 new jobs at Creekstone Farms’ beef processing facility in Kansas and another 200 jobs in Georgia at a packing plant operated for Walmart by FPL Food.

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Hank McWhorter of Mc6 Cattle Feeders commented, “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 barbeques and family dinner tables across the country, but transform the entire supply chain.”

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Angus beef typically commands a premium price, and Walmart is seriously attempting to raise the quality of its food offerings. Walmart, for example, is selling USDA Choice Angus Ribeye Steak for $9.97 a pound in packages of two. Albertsons is advertising a USDA Choice Beef Ribeye Steak for $9.99. Higher graded USDA Prime-rated meat is typically sold in restaurants.

If Walmart can maintain similar pricing levels for its Angus beef, the company expects to drive more customers to its meat counter and to its grocery aisles in general. And grocery stores are where U.S. consumers spend $840 billion a year.

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