Case Studies of Value Added Production and Marketing

CASE STUDIES OF VALUE ADDED PORK PRODUCTION & MARKETING
Executive Summary
Swine producers have recently expressed increased interest in gaining greater value from hogs
raised by investing or aligning further up the market chain. Perceived advantages include
increased control over their product, an opportunity to gain direct access to customers, and to
capture a greater value of the final price of pork which has increased relative to farm prices.
However, few participants in the market chain have a complete understanding of the challenges
in controlling a greater part of the market chain. In order to gain insights into the issues faced
by direct pork marketing firms, a case study methodology was developed and three direct marketing
pork firms were studied. The case studies were conducted in the first half of 1999.
Three cases were chosen: Nahunta Pork Center in North Carolina, The Egg & I Pork Farm in
Connecticut and Gordito’s Meats in Utah.
Each case study participant had a unique pork production system. However, there are commonalities
which arose which provide further guidance for those seeking to develop niche or
value added markets.
Production System Flexibility
Marketing Flexibility
In the cases of Goridto ’ s and Nahunta, there was heavy reliance on the ability to adjust production
to respond almost immediately to market conditions. Nahunta was able to control supplies
through the use of a large holding facility. They further controlled supply for various products
by having variable sized pigs available. Goridto’s makes use of a similar situation in that
they have a farm through which pigs are held to control slaughter flows. Given their small
scale, the utilization of refrigerated trucks provides some flexibility in their cooling and storage
capacity at the plant level as well. On the production side, The Egg & I farm had somewhat
less flexibility on the production, but was the only operation which froze and vacuum packed all
of their product. This was complementary to the mail order and catalog sales focus of the business
and allowed for seasonal control of supplies to meet demands.
In Goridto ’ s’ case, not only had they developed flexibility, but they illustrate ways to forge fit
within related parts of the chain. This is illustrated by their sourcing pigs from much larger
commercial operations and utilizing their distribution techniques to service dispersed Hispanic
markets. Although this flexibility was clearly a key element of their competitive positioning, the
question remains as to whether this is truly a competitive advantage relative to larger commercial
slaughter and processing operations.
Goridto ’ s and The Egg & I Pork Farm both had multiple consumer outlets for their products.
Goridto ’ s sold to retail stores in several states, as well as to at least three different ethnic populations
(Hispanic, Vietnamese, Pacific Islander). Each market had nuances which allowed them
to utilize different types of hogs (lighter or heavier weights). In addition to these sales,
Goridto ’ s also was marketing direct through retail stores. This allowed improved access to their
customers and has allowed them to capture a greater share of the food dollar. They intend to
expand their direct marketings as an important way to increase their value. Similarly, The Egg
& I Pork Farm markets through its own retail outlet, mail order, catalog orders (Dean & DeLuca),
a direct vending bus/deli service as well as area restaurants and grocers. This diversity of customers
protects them from being hostage to one or two large accounts and provides broader
exposure to customers. With the recent reduction of offerings by Dean and DeLuca, this illustrates
the importance of having multiple reliable outlets for product. Only Nahunta has very
focused marketings through their own retail outlets.
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