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Beefonomics: Cargill Meat Solutions Turns Trash to Cash

How Cargill Meat Solutions is winning over grocers, consumers, and its employees — and driving growth — with its first entry into the branded beef business.

Beefonomics: Cargill Meat Solutions Turns Trash to Cash

When Chef Pete Geoghegan cuts open a plastic package of beef tongue and unspools the 3.5-pound monster across his cutting board, it is more than a foot long, pale, and jiggly from a bottom layer of fat. It will be the key ingredient in tonight's main course at the Culinary Innovation Center at Cargill Meat Solutions in Wichita, Kansas: tongue tacos with tomato salsa.

Geoghegan, a Culinary Institute of America-trained chef, is preparing them so top executives can taste the spoils of their latest venture, Rumba Meats, the meat-processing juggernaut's first foray into the branded beef market. The chef nonchalantly tosses the tongue into a pot to simmer. It will take about four hours for the tight muscle to tenderize. "It's amazing how great it is," says Misty High, assistant VP of beef marketing. (And yes, I'm aware she's getting paid to say that.)

Apparently, consumers agree. Since Rumba's line of "always fresh, never frozen" variety meats (think tripe and sweetbreads) hit Wal-Marts and chain grocers in June 2007, sales have more than doubled, High says. The company now offers over 17 different delicacies at more than 7,500 locations. Rumba revenue is projected to top $100 million annually within the next five years. And Cargill — a $15 billion player in the beef business — has done it all with a readily available product most butchers long counted worthless: slaughterhouse leftovers.

It started on the chopping block. About five years ago, Hispanic workers in a Dodge City packing plant aired frustrations that they couldn't find high-quality offal in mainstream stores. Cargill had been shipping frozen 60-pound blocks of entrails mostly overseas. Those kept in the United States had to be defrosted and trimmed before repackaging. Even then, the average tongue had a shelf life of just a few days, often spoiling well before a weekend fiesta. Cargill did some research and discovered that although 80% of ethnic-minority consumers shopped at standard supermarkets, only 40% actually bought meat there. "A lot of stores weren't carrying these cuts," High says. "They didn't have the labor to prepare it."

With a booming population, Hispanics represent the next big wave of buying power, a combined $1.1 trillion annually by 2010, according to Cargill's research. Many second- and third-generation immigrants remain connected to their heritage through traditional dishes, says Rodrigo Salas, director of strategic services at Cinco, the ad agency supporting Rumba. High saw the potential for what she calls "raw product overlap: Different cultures making completely different dishes from the same cuts of meat." They could target Hispanics and African-Americans and Asians and even yuppies, that cross-cultural force now coveting beef cheek and short ribs thanks to the slow-food movement and chichi chefs embracing the cuts.

But Dodge City workers didn't want just access to odd cuts. They also wanted to be able to inspect them for freshness before buying. First, Rumba decided to clean all the meat in-house, cutting prep time for the consumer. Next, each organ would be vacuum-packaged in an ultra-clear, tamper-proof container, so customers could pick it up and judge it from all angles. The air-lock process also provided longer shelf life: Seal in a low-oxygen environment, chill quickly, and you can reduce microbes enough to stock for 25 to 30 days. The only downside? Deoxygenated red meat ends up looking purple. Cargill Meat Solutions president Bill Rupp opted to create recipes to help dispel any yuck factor. "There's a different expectation in this market," he says diplomatically.

The venture couldn't have come at a better time for Cargill, which, along with the rest of the beef industry, found itself shut out of about a dozen foreign markets — an industrywide loss of nearly $2.6 billion — after the U.S. mad-cow scare of 2003. But while Jim Henger, executive director of channel marketing for the National Cattlemen's Beef Association, calls Rumba's domestic push "commendable," he cautions against wild growth predictions. "It's kind of like the organic market," he says. "Everyone talks about double-digit growth, but when you basically start from a small volume, it's easy to get those numbers in the early stages." And while on a per-meal basis the actual economy may be undeniable — one tongue at about $8.50 can feed four to six, according to a Rumba recipe card — John Lawrence, an agricultural economist at Iowa State University, quashes the idea that this could be the next great discount protein with two words: "hot dogs."

When dinner is served in the test kitchen, High, Rupp (who left the company in December), VP of sales John Niemann, and associate brand manager Meredith McGowan all dutifully clean their plates. The tongue is a little gamey, but, like tofu, seems to have picked up the flavor of what it was cooked with. For me, the true taste test occurred moments before, when Geoghegan pulled the steaming tongue from his pot and tugged the skin off. Without warning, he lopped off the tip and passed it over for a nibble. "Even for someone who doesn't know what they are doing, it's going to taste a lot like pot roast," he assured me. I didn't want seconds, but he was right.

A version of this article appeared in the February 2009 issue of Fast Company magazine.