Niman Ranch Founder Won't Eat NR Anymore?

[Chris Hennes]

Niman Ranch, a popular source for high-quality, humanely-raised and slaughtered, antibiotic-free beef, pork and lamb, seems to be having some more growing pains. From the article:

[bill Niman] said he can live with losing the business he built from scratch. But he can't stand quietly by, he says, while the new owners fundamentally change the brand that influenced an entire food movement. He refuses to eat their products.

[...]

Hurlbut locked horns with Niman, trying to convince him that streamlining the cattle operation in the same way they did the swine line would make the business profitable. But Niman wasn't budging.

"He suffered from classic founder syndrome," said Guy Muzio, an early investor, who wound up walking away after the merger with only 12 1/2 cents for every dollar he put into the company. "He was resistant to change."

As usual, there seem to be several sides to this story, and of course we don't know all the details. It seems that Niman Ranch was bleeding money for it's entire existence, and got bailed out of bankruptcy last year by being acquired. The new CEO sold off the company-owned feedlot and contracted out the finishing: according to him, they are being held to the same standards as the original feedlot, but Bill Niman isn't convinced. Niman also objects to the use of anti-microbials (antibiotics are still banned from NR products, but now anti-microbials are not), and to the newly-increased shipping distances.

Niman's original business model was clearly unsustainable, and all the original investors lost scads of money on it. Something had to give: the new CEO argues that standards have not been compromised, things are just being done more efficiently. Niman disagrees, and thinks that the increased shipping distances, use of anti-microbials, and lack of control of the commercial feedlots have destroyed the quality of the product.

I think this raises some interesting questions. First, has the actual quality/taste of the beef diminished recently? Second, has the welfare of the animals decreased (setting aside whether you think that is important or not)? What's the deal with anti-microbials as opposed to antibiotics? Can you really go from losing $10k per month to making $7k per month without sacrificing anything? Would it have been better to just shutter NR if it couldn't meet its original goals?

[Hest88]

I saw that article this weekend. Thanks for posting. To be honest, although I feel for Bill Niman, I haven't sought out Niman Ranch meats in years. When it started popping up everywhere--including chain restaurants--I just felt there was no way they could sustain their quality and/or model at such volumes. Interesting to see that my gut instincts were correct to some degree.

[jvalentino]

I saw that article this weekend. Thanks for posting. To be honest, although I feel for Bill Niman, I haven't sought out Niman Ranch meats in years. When it started popping up everywhere--including chain restaurants--I just felt there was no way they could sustain their quality and/or model at such volumes.

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Unfortunate ditto. It reminds me of the cigar craze of the late 90's. Anyone that ate NR beef in 1990 and today should be able to tell a difference.

Someone who can take a business that was losing 10k/wk to making 7k and say "all it took was some streamlining" is either a genius or cutting some corners IMO.

The NR brand is now worth something however, and it will be interesting to see if/how that is exploited. That's where I feel bad for people like Bill Niman.

Jeff

[Chris Amirault]

So many interesting things going on in this article: beef vs. pork; "founder's syndrome" (seen that plenty of times); etc. I'm interested in this brand question. This was a compelling quote from the article:

"I consciously deferred profitability to expand the brand," Niman said, adding that he was on a mission to change people's eating habits and the wider and faster he could spread his message the better. He also wanted to give young people, who were gung-ho about the sustainable food business, a place to grow with the company. But looking back on it, he said, it was a "strategic error to defer profitability for as long as we did."

I think that this balance of profit and brand expansion is behind the answer to the question Chris posed above:

Would it have been better to just shutter NR if it couldn't meet its original goals?

←

Thanks to that quality-first, profit-second approach that doomed Niman himself, Niman Ranch became that most prized of business objects, a gold-standard brand, and this during the "death of brands" era. The article suggests that new management are fiddling with the same profitability/brand balance that Niman himself couldn't negotiate, if in an inverse relation: instead of how high can quality go before profitability destroys the business, they're seeing how low they can bring the quality down before consumers say enough is enough. (As you can see, I agree that you can't wave a wand and gain $17K in profits per month without affecting the proteins.)

Back to beef vs. pork. I learned a bit about the current state of quality beef last fall at the Food TV NYC Food & Wine Festival, and at that event everyone spoke in glowing tones about Bill Niman (and Orville Schell, his original partner). However, I also learned that one of the ways that pork and beef differ is that cattle are much more susceptible to infectious disease than many other animals, especially in CAFOs (concentrated animal feeding operations); 70% of all antibiotics used in the US to treat animals like us get pumped into beef cattle. That makes me want to know what these anti-microbials are all about....

[paulraphael]

I can't speak for their beef, but have buying their jambon royale ham weekly for the last couple of years. It tastes the same to me, and it tastes really good.

Even under Niman's ownership, the beef operation was so huge ... so many different farms over such a huge area ... that I just assumed they were not going to be in the very top tier of U.S. beef producers.

[Chris Amirault]

Hmmm.... Now that you mention it, I've definitely noticed a drop-off in the quality of their pork bellies the last few years.

[Chris Hennes]

[...]instead of how high can quality go before profitability destroys the business, they're seeing how low they can bring the quality down before consumers say enough is enough.

←

I wonder how low they will take it: it's a precarious balance between trying to make a profit off the brand, and driving the brand to worthlessness as consumers realize the quality's not there anymore. That said, at least as of a few months ago (the last time I had anything from NR), both their beef and pork are still head-and-shoulders better than anything I can get at most markets where I live. So even if quality is declining, at the moment I think they've still got a decent value proposition. You could take the next step up the quality chain, to something like Lobel's, but you're going to pay for it.

[paulraphael]

You could take the next step up the quality chain, to something like Lobel's, but you're going to pay for it.

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There are many steps on the quality chain. And a place like Lobel's represents a whole range of steps, probably from a little below the best NR has to offer to quite a bit above.

My concern with an operation like NR is consistency. I'm sure a lot of their meat is spectacular. But how reliable can it be when they're working with so many big farms, and when it seems that volume and profit are becoming higher and higher priorities.

[Hest88]

I'm interested in this brand question. This was a compelling quote from the article:

"I consciously deferred profitability to expand the brand," Niman said, adding that he was on a mission to change people's eating habits and the wider and faster he could spread his message the better..."

This was a naive and, frankly, silly thought. I'm not sure if he quite understood that when a brand becames big it then really becomes all about the brand as opposed to leading to an informed consumer decision.

Edited February 25, 2009 by Hest88 (log)

[deltadoc]

Quality is down. I just asked for a refund on a 10-lb bag of ground pork that I made into Italian Sausage. It had so many unchewable bits and rubbery pieces it was just plain unpalatable.

I then passed on getting that 30-lb box of Niman bacon bits and pieces.

I also passed on getting their bulk ground beef.

Guess I my experience wasn't just me!

doc

[docsconz]

The difference between using antibiotics vs antimicrobials is that antibiotics are used to treat infections and are given systemically. Antimicrobials are used superficially to keep germs down and to try to prevent infections. Theoretically washing something down with a chlorox solution would be using an antimicrobial - at least that is my interpretation.

Ironic that NR may be unsustainable. It hurts to think that.