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Top Three Issues Impacting Protein Processor Profitability

By Jeff Binczyk

Advancements in technology, the development of creative flavor and seasoning profiles, and a shift in how consumers think about the food products they purchase have provided new and exciting opportunities for the protein processing industry.

However, processors remain challenged as both external and internal factors threaten sales, profitability and overall success.

Here are three meat processor challenges and tips to help processors mitigate their impact to the bottom line.

Operational Efficiencies

Challenge: Many processors use clipped or piece goods for large-volume production, which can result in costly inefficiencies on the production line. Often, products on the line are not consistent in size and shape, so the piece good must be longer to accommodate the largest items. As a result, a substantial amount of material may be wasted on smaller pieces. This leads to production delays, added costs of material waste, and increased labor.

Opportunity: Historically, the processing industry has been reluctant to adopt and new technologies and innovations because it often requires a significant financial investment. However, evolving packaging technology allows processors to match their product with the perfect food packaging solution to decrease waste, maximize gains, and minimize investing in new equipment. The potential waste resulting from piece-good packaging can be resolved with continuous-packaging technology, which allows a processor to use only the amount of packaging required for the specific product. Pulling what is needed from a continuous roll is less expensive and speeds up production versus using pre-cut lengths. These advancements in processing operations can reduce material waste and lower the number of production workers required for the line.

Shelf-life Concerns

Challenge: As environmental issues, operational concerns and demographics increasingly challenge profit margins, it is critical that products safely remain on shelves as long as possible. High prices can cause protein products to remain on the shelf for a longer period than desired, because there is a threshold for what consumers will pay. Disposing of expired or unsold product increases expenditures for retailers and processors, alike.

Opportunity: Proper packaging plays a critical role in preserving product for longer periods of time. Packaging that controls oxygen and moisture, modified-atmosphere packaging, and antimicrobial packaging can help extend a product’s shelf life by retaining freshness. Options including packaging film and high barrier shrink bags can protect food from outside contaminants and increase yield.

Changing Demographics

Challenge: Outdated views among processors about consumer wants and needs may increase pressure on profit margins. Processors can be out of touch with what makes consumers tick and what matters to them when it comes to making food purchases. Research suggests that millennials should be a key target market for processors because they are now the largest percentage of the consumer population. This new generation of consumers is incredibly tech-savvy, and many processors are failing to connect with millennials where they live – online.

Opportunity: Understanding the new consumer will better inform processors’ business methods. In order to stay on millennials’ radar, brands must offer more interactive touch points for engagement. Millennials enjoy sharing their experiences, especially with food, online in real time and rely heavily on recommendations from bloggers, social media, review sites, friends, and family to inform their shopping preferences. This social sharing provides useful market data for retailers and processors. Capturing and analyzing this data can help processors and retailers stock shelves to avoid unsold expired products, and help adjust production to accommodate ongoing changes in consumer preferences.

While these three issues can be detrimental to profitability, processors can take proactive steps to minimize the financial impact on their business, remain innovative, and stay ahead of the competition.

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