Dive Brief:
- Walmart announced Tuesday plans to open its first owned and operated case-ready beef facility in 2025.
- The retailer plans to break ground on the facility in Olathe, Kansas, later this year. Reuters reported that Walmart is investing $257 million in the facility.
- The upcoming facility furthers Walmart’s ongoing efforts to build out an end-to-end Angus beef supply chain.
Dive Insight:
Walmart said that the facility will package and distribute a selection of Angus cuts from Sustainable Beef LLC in North Platte, Nebraska, to serve stores across the Midwest. The company said that the Olathe facility will create more than 600 jobs.
Walmart disclosed last September its plans to acquire a minority stake in Sustainable Beef LLC. A few months prior to the acquisition news, the retailer debuted a private label beef line called McClaren Farms in stores across the Southeast.
In announcing the Olathe facility, Walmart noted that it has been publicly working on its end-to-end Angus beef supply chain since 2019. The retailer has said it entered the beef industry to sell responsibly raised, “steakhouse quality” meats under its own supply chain operations.
Walmart opened its first facility to support its beef supply chain in early 2020. The 201,000-square-foot facility in Thomasville, Georgia, is operated by beef production company FLP Foods and produces Angus cuts that are then distributed to Walmart stores in southeastern states including Georgia, Florida and Alabama.
Walmart is one of several grocers and retailers who are using in-house production to gain more control over their private label offerings. Costco, similarly, has in-house poultry production.
Vertical integration tends to further accentuate attractive attributes of private brands to retailers: higher margins, differentiation for customers and the ability to diversify their product supply and not rely so much on outside suppliers, Dr. Ricky Volpe, associate professor of agribusiness at Cal Poly, recently said in an interview.
