MeatingPlace - August 2006
"Force of Nature" - Company Profile of Laura's Lean Beef
By Jack Neff, contributing editor
Laura's Lean Beef became one of natural foods' biggest independents by going mainstream. Now that the mainstream is going natural, the best may be yet to come for the company and its namesake -- if she stays in the game.
For 20 years, Laura Freeman has been attending what she calls 'tree hugger' conferences -- gatherings of natural and organic food marketers.
But the founder of Laura's Lean Beef has seen some big changes in recent years. The settings are more posh, and key players such as Odwalla, Cascadian Farms and Ben & Jerry's have entered the corporate folds of Coca-Cola, General Mills and Unilever.
Not Freeman. From her farm in Lexington, Ky., she continues to lead one of natural foods' largest remaining independents and one of the nation's largest natural beef processors. In fact, sales of her Laura's Lean beef products, which include fresh and precooked offerings, grew by a whopping 27 percent -- to $140 million -- last year.
Not surprisingly, the precooked lineup is Laura's biggest driver of growth, being one of just a handful of brands to offer consumers low-fat, natural beef in the convenience section of the supermarket. Most recently, Laura's added a precooked meatloaf to the line. She's also working on lean beef sausage and deli items.
She's done it all by swimming upstream, making it her mission to usher lean, natural beef into the mainstream rather than specialty stores -- and do so without glitzy, expensive advertising. Today, her marketing tools include a Web site, a newsletter and, of course, her face, which adorns every package of Laura's Lean product.
An unhappy accident in December inspired yet another avenue for the self-styled populist to extend her reach. Though she was wearing a helmet, a blow to the back of her head from a horseback-riding accident affected her speech and balance. Because she sometimes found it easier to write than speak, Freeman started a blog to keep in touch with her growing community of customers and fans.
She's recovering with humor and grace, but the blog -- a mix of social commentary, recipes and business updates -- shows she hasn't stopped telling it like it is. In one entry, she explains why being laid up in the hospital convinced her that lean and natural product is more important than ever: 'I fractured my pelvis, which meant I spent a lot of hospital time flat on my back, at eye level with -- well, I'll say it -- people's behinds. They all were way too wide!'
'Boomville'
Those behinds haven't escaped Wal-Mart's notice either. A pledge by the retailer to sell organic foods at a mere 10 percent premium met with consternation in some natural-foods circles, but Freeman sees the move as more of an opportunity than a threat.
'For the health segment, it's boom-ville,' she says. 'There's concern about General Mills versus the itty-bitty farms, that Wal-Mart will shift the dynamic. But I'm not sure it's bad to get people thinking about what they eat, which will likely be the result. The world is dominated by Wal-Mart. I think the answer is to address matters as they are.'
Freeman isn't looking to add Wal-Mart as an account -- at least not yet. With her product already distributed among 5,200 retailers, she knows that adding Wal-Mart's 2,000-plus supercenters to her roster would be a stretch. But her success makes it equally clear that her product line would be a natural for the Bentonville, Ark.-based behemoth. 'I've always been a mainstream producer,' Freeman says. 'I'm not in Whole Foods. There wasn't a Whole Foods in Kentucky when I started in 1985. There were only IGA and Kroger.'
The Cincinnati-based Kroger Co. eventually served as her springboard to near-national distribution. The big break came when the chain began looking for high-end beef products that would yield incremental sales. 'We sell beef to people who aren't buying beef,' she says. 'They're buying chicken breasts or seafood.'
Manageable Expansion
Kroger made it fairly easy for Laura's to expand in manageable steps -- regions of about 100 stores at a time. She started with the Louisville, Ky., region in 1986 and expanded from there. Along the way, Laura's hired John Tobe, retired CEO and president of Jerrico Inc., whose restaurant concepts included seafood chain Long John Silver's. While Freeman focused on product quality, Tobe used his chain management experience to work on budgets, accountability, controls and other realities of regional expansion.
'Laura's magic has been her ability to find the right distributor at the right time to introduce her product to more conventional consumers,' says Paul Gingerich, meat category director with Denver-based distributor Albert's Organics and former executive with retailer Wild Oats. 'Her strategy was to create a niche among conventional retailers. It's worked brilliantly.'
Today her product is distributed in 44 states, and her staff numbers more than 90, including seven regional cattle buyers who oversee farms that must raise animals on natural feed and without growth hormones or antibiotics. That approach clearly is resonating with Kroger and, now, Minneapolis-based Target, which is distributing Laura's in 12 SuperTargets.
'It's not a huge part of our business, but it's an important and growing part of our business,' says Mark Koster, meat merchandiser with Kroger. 'It's a heart-healthy program, so it's a good niche.'
Though Freeman eventually may look to do business with Wal-Mart, she will first have to contend with its iffy pricing proposition. By virtue of her natural designation, her products already command more than a 10 percent premium, raising the question of how Wal-Mart can meet its pricing goal. Then there's the issue of sourcing. 'I don't think Wal-Mart can supply all those stores using a single source,' Freeman says. 'There's no way.'
Right Niche, Right Time
Give her time. Laura's Lean expects sales to grow by nearly 30 percent this year, propelling the company toward $200 million territory. Though the brand's low-fat profile was its calling card in the 1980s, its natural claim currently accounts for a growing part of its appeal.
The natural and organic categories have not only caught the attention of Wal-Mart, but the likes of Springdale, Ark.-based Tyson Foods. 'For smaller processors such as Laura's, the challenge will be to become that much more distinct,' Gingerich says, 'then do a better job communicating what they're doing.'
Freeman is doing plenty of both. The brand already enjoys media support, with its precooked pot roast recently receiving kudos in Health magazine and on the television show 'The View.'
Freeman recognizes communications is a two-way street, especially in product development. Many of her new product ideas come from consumers. A friend who's a chef works on most of the ideas, and Laura's staff ranks the top items. Prototypes are then merchandised in a mock store, where staff members observe as consumers interact with the product.
Though she's seen many other top names in natural foods sell their businesses, Freeman isn't ready to follow suit just yet. Her daughter recently graduated from college, but 'she doesn't want to farm, so it's uncertain how that will work out,' Freeman says. 'But I have no plans to sell right now. The end hasn't been written yet.'
High On The Blog
Long before Laura Freeman began her blog, the Internet played a pivotal role in marketing Laura's Lean product to consumers. Laura's Web site, www.laurasleanbeef.com, not only educates but engages, with recipes, tips on nutrition and services, including one that refers consumers to health professionals. It's less a site than a community, and one that's growing.
Additionally, the company has an e-mail database of more than 100,000 -- a strong following for a brand that, as yet, is sold in only a handful of chains.
The blog capitalizes on the biggest marketing asset for Laura's Lean Beef -- Laura. Freeman's approach also has made fans of her retail customers. Mark Koster, meat merchandiser with Kroger, says one of the reasons he likes the brand is because it's 'very consumer-oriented. Her personal contact with consumers even extends to sending them coupons.'
In this case, however, a picture may be worth a thousand of those coupons. Freeman herself acknowledges that a decision to place her photo on product packaging helped her forge a bond with the brand's predominantly female consumer base -- even if consumers don't always remember her name. Freeman recalls focus groups in which consumers only remembered 'that woman in the green label.'
'Who cares?' she says. 'A woman on the label means something; people stop to see who it is. We hear that over and over again. Its impact is hard to quantify, but for sure, it's a big deal.' Public relations, such as a recent positive endorsement of her pot roast on television's 'The View,' is invaluable, especially for an enterprise whose ad budget isn't quite ready for prime time.
25 years ... and growing.
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