Premium Protein quietly assuming force in beef industry

By MATT OLBERDING/Lincoln Journal Star

Sunday, May 06, 2007 - 12:04:37 am CDT

The company does have some of its own products, but much of the work it does -- slicing, freezing, packaging meat -- is for other others, from giants like McDonald’s and Sam’s Club to small companies and local fast-food restaurants.

“We like to be the background guy,” Sands said. “Most of what goes out does not go out under our name.”

That may be why hardly anybody outside the food industry knows that the Lincoln company has grown to become one of the largest processors of organic and natural beef in the country.

But more and more people are taking notice.

Lately, Sands said there has been a steady stream of Japanese and Korean visitors to the plant at Northwest 46th and Adams streets, as Premium Protein works those markets.

And the company recently got an infusion of money from private equity firm Matlin Patterson, the firm’s first agricultural investment, according to Sands.

With the investment, which neither Sands nor the firm would quantify, Matlin Patterson became the company’s majority owner, relegating Flint Hills Foods, a Kansas company, to a minority ownership role.

Though Matlin Patterson is known for investing in distressed companies, Sands said that’s not the case with Premium Protein.

Instead, the firm is investing in a distressed meatpacking industry, which Sands said Premium Protein has weathered better than most.

He called the cash infusion from Matlin Patterson, a “validation of our model,” 

That model runs contrary to most of the rest of the packing industry.

While large meat processors such as Tyson and Smithfield are focused on reducing prices and costs, Sands said Premium Protein is focused on “value-added” products for which customers will pay a premium. 

“Our premise is we ought to be more focused on selling it for more money,” he said.

That means doing just about anything its customers want, from cutting steaks and freezing hamburger patties, to providing meat from a slaughter operation in Hastings, to suggesting and testing new meat products.

It also means allowing customers to do extensive audits and inspections of Premium Protein facilities and to know where their meat is coming from.

“A lot of times people think of the USDA as being the only inspection process,” Sands said.

Even without so much scrutiny from its clients, Premium Protein would still have a lot of hoops to jump through.

Because the company processes chicken and pork in addition to beef, the Lincoln plant has strict segregation requirements to meet.

For instance, on the day a reporter visited, the company was processing chicken for a client. That meant, per USDA rules, that the cooking operation had to be shut down for the day.

Customers seem to notice and appreciate the lengths to which Premium Protein is willing to go to fulfill their needs.

Howard Miller, who’s in charge of product development for Premium Gold Angus Beef of Austin, Texas, said Premium Protein’s versatility and flexibility were a major reason his company chose them to package its natural and organic beef products.

“Believe me, I could have gone anywhere in the United States,” Miller said, “but I chose them because they are big enough yet small enough to custom process, and that’s what we’re looking for.”

Premium Angus has been sending beef from Texas to Lincoln for about a year and a half, Miller said.

Why ship beef halfway across the country to be processed?

“Premium Protein has always had a very high regard for our quality,” he said.

That high regard includes suggesting new products and new ways to make Premium Gold’s existing products more appealing.

“They’ve been very willing and very understanding and very cooperative in coming up with new meat products,” Miller said.

Ann Marie Bosshamer, executive director of the Nebraska Beef Council, agreed that Premium Protein is very accommodating.

“I do think Premium Protein Products has done a good job in being very flexible and versatile and finding a whole host of customers they can work with,” she said.

Among that host of customers are those from Japan.

A big company focus is on exporting beef to Japan, Sands said, a country that’s notoriously strict about meat safety.

Mad cow disease scares in the U.S. beef industry over the past few years have made the Japanese even more skittish.

Japan allows only boneless meat from cows aged 20 months or younger and limits imports to beef that has been through stringent checks at selected U.S. meat processing plants.

Japanese consumers who buy Premium Protein beef can do so relatively worry-free.

The company has created an Internet-based computer tracking system that allows Japanese retail buyers to check the history of their beef before they even leave the stores.

In-store computer terminals right at the meat counter allow consumers to type in an identification number from a package of meat and find out when and where the animal was born and when and where it was slaughtered.

It’s a patented technology called Tracked Right that Sands says tracks meat “from birth to box.”

He said the company has plans to use the technology in Korea and also may roll it out in the U.S. at some point in the future.

“We’re the only (company) in the U.S with this technology,” Sands said.

That kind of advanced technology doesn’t surprise the Beef Council’s Bosshamer.

“It’s always been a company that’s very visionary and looking well beyond where we are today,”she said.

That visionary thinking extends to Premium Protein’s business model as well.

Sands said he thinks that his company’s model of small, niche-based meatpacking and processing could be a blueprint for the future of the industry.

For instance, small meatpacking operations like Premium Protein’s plant in Hastings, which employs about 220 people, could be spread out  to 10 different communities.

The 10 plants would slaughter about as many head of cattle and employ as many people as a large slaughterhouse, but the economic impact would be larger and the environmental impact smaller, according to Sands.

Also, he said, if there is ever a problem such as tainted meat or a mad cow scare, it’s easier to track where the cattle came from when they’ve come from small operations.

While Sands concedes that “we’re not going to put the big boys out of business, nor do we want to,” Sands said he sees evidence the “local movement” in meatpacking is growing.

As for his own company, Sands said it is rapidly growing, though he declined to give financial information.

Premium Protein recently acquired a seafood distribution company in California and plans to continue to pursue acquisitions, Sands said.

 He predicted that 2007 will be the company’s best yet.

“We’re on the cusp of growing a very significant company,” he said.

Reach Matt Olberding at 473-2647 or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it