By Susan Moran
SAGUACHE, Colo. ? As he drove his truck into the family ranch on a recent sunny morning, Mel Coleman Jr. put on his Stetson hat and greeted his Uncle Jim, who runs the ranch. In a pasture behind the house, five horses hovered placidly and several black Angus cows ambled up to a salt station.
Mr. Coleman, 55, spoke wistfully of his days branding and moving cattle on the ranch his ancestors started in 1875. The sprawling ranch, in the high-desert San Luis Valley about 180 miles southwest of Denver, is the birthplace of Coleman Natural Foods, founded by his late father, Mel Coleman Sr., in 1979 under a different name.
From the start, his father sold “natural” beef ? something alien to most shoppers and meat producers back then. On a sales trip in the early 1980’s, his father camped out in a rented car to save money as he made his pitch to grocers. His cows, he said, were not given antibiotics and growth hormones like the big producers’ cattle were, and he fed them a vegetarian diet.
It took the elder Coleman years to win converts, not only among retailers but also among consumers and government regulators. Now, paradoxically, natural and organic meats have become so popular that even the big conventional meat producers are getting into the business, and Coleman is left in the unexpected position of scrambling for shelf space.
Coleman itself has changed. The company has grown to become one of the largest producers in the still small natural and organic meat industry. Coleman is now owned by an investment firm. As chairman, Mr. Coleman spends countless days traveling from the company’s headquarters in Golden, Colo., promoting the latest line of products with retailers and nurturing relationships with the 700 independent ranchers who supply most of its meat. Those largely family-owned ranches are facing their own pressures, from persistent drought to volatile meat and crop prices, tempting some to sell to developers.
The elder Coleman was also an early advocate of more stringent labeling of beef. The Agriculture Department did finally adopt standards for “natural” food in the mid-1980’s, but it required only that those products be “minimally processed” and lack artificial ingredients.
Much later, in 2002, the government developed regulations for organic food, and those are much more stringent. Organic food ? including produce, meat and the grain fed to cows and other animals ? must be grown without pesticides, chemical fertilizers, antibiotics and growth hormones in most cases, though loopholes exist.
“Mel Sr. was one of the pioneers to develop a truly natural meat company, ” said Dave Carter, head of the National Bison Association and former chairman of the Agriculture Department’s National Organic Standards Board. “His legacy lives on. But now the natural label has lost its meaning.”
Today, many companies offer natural and organic meat. Three of the biggest conventional meat producers ? Tyson Foods, Swift & Company and National Beef ? have introduced natural products in the last few months. They have joined the niche players in natural and organic foods, among them Organic Valley of LaFarge, Wis.; Maverick Ranch Association of Denver; Laura’s Lean Beef Company of Lexington, Ky.; Dakota Beef of Howard, S.D.; and Niman Ranch, based in Oakland, Calif. In addition, much organic meat is still sold directly by ranchers at farmers’ markets and over the Internet.
Coleman Natural thinks that shoppers are discerning enough to trust that its standards are higher than the Agriculture Department’s. But the company is also hedging its bets and gradually expanding its smaller organic business.
“We like to say we’re one grain away from being organic,” Mr. Coleman said.
That one small grain bears a big price tag. Organic cattle feed can cost up to 30 percent more than genetically modified and chemically treated grains. That means shoppers nationwide pay a premium for organic meat ? as much as 50 percent for beef and 20 percent for chicken. For instance, in the Boulder, Colo., area, a pound of 91 percent lean organic ground beef sells at Whole Foods for $6.09, compared with an 85 percent lean all-natural product for $3.99. Albertson’s sells conventional choice grade beef for $1.99 a pound.
Organic meat is the fastest-growing segment of the $14 billion organic food business, even though it represents only 2 percent. Last year, organic meat sales, which includes poultry and fish, soared 55 percent, to $256 million from 2004, far faster than the overall organic food industry’s 15 percent annual clip, according to the Organic Trade Association. The association estimates that organic meat accounts for only 0.22 percent of overall meat sales. Organic growth is expected to accelerate now that Wal-Mart has decided to offer more organic food.
According to the consumer research and consulting firm ACNielsen, natural meat sales, which excludes fish, nearly doubled in four years, to $681.3 million in the year ended April 22. (The firm tracks only natural-labeled bar-coded products sold in mass merchandiser stores, excluding Wal-Mart.)
“Organic food is just at a tipping point heading mainstream,” said Samuel Fromartz, author of the new book “Organic, Inc.”
George Chivari, president of Coleman, estimates that organic meat will account for as much as 25 percent of its sales by 2010, up from 12 percent this year and 7.5 percent in 2004. He would not disclose sales or income figures for the company, other than to say that its profits are increasing.
Coleman was bought in 2002 by the investment firm Booth Creek Management for an undisclosed price. A few months earlier, Booth Creek bought Petaluma Poultry, the largest organic poultry supplier in the United States. Today, Petaluma operates under the Coleman roof, and nearly half of Coleman’s sales stem from poultry.
George Gillett, a partner in Booth Creek and the strategist behind the Coleman and Petaluma purchases, is helping take Coleman Natural further into mainstream grocery stores. Today, most sales come from Whole Foods, Wild Oats and other natural grocers, as well as some big retailers like Costco, Safeway and Kroger. Mr. Gillett aims to put beef, chicken, pork and other animal products in the same delivery trucks, making it easier and more cost-effective for retailers to buy in high volume.
Mr. Gillett knows supermarkets well. A few years ago, Booth Creek and another investment firm bought a majority stake in the giant meat packer ConAgra Beef from ConAgra Foods of Omaha for $1.4 billion. That business is called Swift & Company, one of the big three meat packers that recently began competing with Coleman in natural meat.
Mr. Gillett, who is chairman of Swift, does not view Swift’s move as a problem for Coleman. “There’s a validation process occurring,” he said. Coleman being in the natural meat sector “to some degree legitimizes it.”
Coleman’s push to diversify into other meats, including pork, and prepackaged and deli-ready foods (organic and natural), reflects its desire to accommodate consumers as well as to cushion itself from one-time and cyclical downturns in meat prices. Some of Coleman’s rivals in the natural category, meanwhile, are jumping head first into organics. Maverick, a family operated meat producer, recently announced that it would be 100 percent certified organic within five years, up from 5 percent now.
Charlie Moore, vice president for marketing and one of the four sons of the Maverick founder, Roy Moore, wonders how he can compete against the big meat packers. “They process more cattle in one day than we do in one year,” he said. “For us, going organic is also about survivability.”
Both natural and organic meat producers agree that their success depends on the viability of small ranches and farms. Developers are eager to buy them out when the going gets tough. Many ranches face extinction as their owners approach retirement and their descendants abandon the rugged lifestyle.
From 1982 to 2003, nonfederal acreage (including state- or county-owned and tribal land) devoted to grazing fell more than 5 percent, from 611 million acres to 576 million acres, according to the Agriculture Department. And that figure does not include agricultural land that has been sold in small parcels called ranchettes.
To help blunt the momentum of vanishing ranchland, Coleman Natural is spending thousands of dollars a year, through the American Farmland Trust, to help farmers and ranchers manage their animals and the land they graze on in more environmentally protective ways. One strategy is to work with public or private land trusts to place their land under an agriculture conservation easement. Typically easements limit subdivision and nonagricultural development, in perpetuity, while allowing landowners to retain ownership of the property and the right to use, lease or sell it for similar agricultural use.
Cathy and Mike McNeil, who own a ranch in Monte Vista, Colo., have done just that. Their McNeil Ranch sells frozen natural and grass-fed beef under the Diamond F Brand label. While grilling some homegrown, grass-fed hamburgers for a visitor in their home, the couple explained how a prolonged drought in 2002 forced them to sell about 400 head of cattle out of a total 950 from their 3,000-acre ranch. Within a couple of years they will have sold all of their land ? for a total of $1.8 million ? to another land trust as a conservation easement. They retain a right to continue ranching.
At the Coleman ranch, Mr. Coleman said farewell to his Uncle Jim and drove along the lonely dusty county roads, pointing out the modest house where he grew up. These 105,000 acres of pastureland, covered with Western wheat grass and rabbit brush, were owned by various Coleman family members and are now largely under conservation easements.
“We may be investing also in some of our competitors’ future,” he said, “but if it changes agriculture and helps preservation and the sustainability of our environment, and brings economic sustainability of small family farms and ranches, that’s a good deal.”
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