Testimony by

Raymond M. Stewart

Senior Vice President of Operations

Cherokee Division/Perishables

Hy-Vee, Inc.

Hy-Vee Programs to Promote Produce and Beef

Made in the USA Through Voluntary Labeling

Before the U.S. Senate

Committee on Agriculture, Nutrition and Forestry

May 26, 1999

Washington, DC

Mr. Chairman and Distinguished Members of the Committee . . .

I am Ray Stewart, Senior Vice President of Perishables at Hy-Vee, Inc. I am extremely honored to have the opportunity to testify before this panel. My company very much appreciates your efforts to find effective ways to promote produce and meat grown in the USA.

Supporting our local farmers and ranchers has long been a high priority at Hy-Vee. We operate in America's heartland, whose economy depends heavily on the sales of these products. Hy-Vee serves four million consumers every week through 206 stores in the seven states of Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska and South Dakota. Our customers demand the high-quality products that Midwestern farmers can provide. For health reasons, they are buying more produce than ever in the nearly 70 years that Hy-Vee has been in business. And the livelihood of our 43,000 employees, who share in ownership of the company, depends on our ability to meet that demand.

I recognize that this committee has been considering legislation to mandate additional country-of-origin labeling on meat and produce. As I understand it, one of the major reasons is the notion that consumers may be moved to buy more domestic products, thinking that imports are somehow less safe and wholesome. Whether that highly questionable notion is true, we have found at Hy-Vee a very effective alternative - that is to promote U.S.-grown products in a positive way. We use voluntary labeling programs supported by promotional efforts that we conduct in tandem with our growers and suppliers. In this manner, we establish the value of U.S. brands as safe, wholesome and of the highest quality.

These efforts have dramatically increased sales. This year, we project that our meat sales will reach nearly half a billion dollars ($480 million) - a record for the company. And we expect to sell $280 million in produce - also a company record.

In my brief comments today, I will describe two highly successful promotional programs for beef products, along with marketing and educational efforts that are increasing sales of domestic fruits and vegetables.

First, I should emphasize that Hy-Vee partners with producers in virtually all of the produce and beef that we sell. And the bulk of it is U.S.-grown. This makes it easier to develop cooperative promotional programs and helps us increase our ties to the Midwestern communities that we serve.

Hy-Vee sells most of its beef through two branding programs: Blue Ribbon Beef and Amana Beef. Attached to my testimony are brochures that provide the details.

We launched the Blue Ribbon brand in 1995 to increase beef sales, partnering with Montford as the packer. To ensure high quality, Hy-Vee has set strict specifications. For example, we use cattle only from the upper Midwest - coinciding with our market area - and the herds are grain-fed to ensure tenderness and consistency.

Blue Ribbon Beef must come from cattle with a target age of 16 months, and the carcass weight must be between 700 and 850 pounds. We hand-select every carcass, working with our packer. The meat must conform to very specific marbling specifications since marbling has the greatest effect on taste.

Blue Ribbon is our primary brand. We introduced the Amana Beef line in 1993 as a premium brand. All the beef for this brand comes from select ranches in the upper Midwestern states. The packer is the P&M Beef Group, which is based in Kansas City.

The diet for cattle in this brand is more tightly controlled. The cattle is corn-fed from the surrounding area in Iowa. Amana Beef is comprised only of muscle cuts; in fact, our stores use these cuts to create a premium brand of ground beef, i.e., ground chuck and ground round.

In addition, effective this July, all Amana beef will be USDA Choice, which consists of more marbling. For the Blue Ribbon brand, we use the upper end of Select and the lower end of Choice.

Without a doubt, this voluntary branding program has increased sales. The program has also enhanced Hy-Vee's image as a retailer of high-quality products. And it has helped restore consumer confidence in beef at a time when the industry most needs it.

I should add here that Hy-Vee introduced a pork brand this year, working with Hormel Foods, based in Austin Minnesota. We rolled out the Blue Ribbon Pork program on January first. It has been very well received by consumers, and we expect record sales in 1999.

Hy-Vee's commitment to quality produce is just as strong and more broad-based since a great many more products are involved. We use domestic suppliers wherever we can and frequently point-of-purchase materials to advertise that to customers.

Our overall commitment to produce is perhaps most evident in a Hy-Vee initiative known as "Produce 2000." Several years ago, the company decided to move the produce department to the front of every one of our stores. This is so customers, upon entering our stores, are greeted by the inviting aromas of fresh fruits and vegetables, beginning their shopping trip in a most positive way. And that greeting includes posters, signs and point-of-purchase materials showing the huge contribution that U.S. growers make to our produce department. Our goal was to have the program completed by the year 2000, and it is nearly completed.

I do not have time to detail the numerous ways that we partner with growers to promote U.S. brands. We work extensively with major companies, such as Dole, Driscoll, Grimmway and leading Idaho potato growers. Where appropriate, we highlight the U.S. region where the product is grown, while in others, we associate the brand with a well-known company name.

I would like to describe one very successful initiative that associates U.S. growers with nutrition, using the well-known "5-A-Day" program. In Iowa, where Hy-Vee is headquartered, we linked the program to the famous Iowa State Fair, launching a campaign known as "Hey, Iowa Gimme 5." Hy-Vee's Larry Chance, our assistant vice president of produce operations, was one of the leaders.

The campaign opened with a parade down Main Street led by a vintage produce truck, followed by people dressed up as fruits and vegetables and trucks from supermarkets, brokers and produce shippers. Our supermarkets supported it by advertising home-grown products at the appropriate time from all the surrounding states. Hy-Vee had a booth at the state fair, where chefs demonstrated creative and convenient ways to prepare produce dishes and distributed 5-A-Day educational material.

We are now promoting the program and Iowa-grown produce through a much broader coalition. Its members include the Iowa Fruit and Vegetable Growers, the Iowa State University Extension Service, the Iowa Nutrition Education Network and the Iowa Departments of Agriculture and Public Health.

I cannot think of a better way to accomplish the twin goals of promoting the success of U.S. producers and the health of U.S. consumers. It promises to raise public awareness to a far greater extent than we can hope to accomplish with labels. If our goal is to have a significant impact on the diets and shopping habits of American consumers, our efforts would be much better spent on promotional programs of this magnitude.

Let's celebrate the best that American agriculture has to offer, and consumers will surely respond. We don't need new laws to do this. All we need is a willingness from the other industry groups here today to sit down with our own trade association, the Food Marketing Institute, and develop ways to promote America's meat and produce to America's consumers.

Thank you again for the opportunity to testify. I would be happy to answer any questions you may have.