Niman Ranch, Inc.

views updated

Niman Ranch, Inc.

1025 East 12th Street
Oakland, California 94606
U.S.A. Telephone: (510) 808-0340
Fax: (510) 808-0339
Web site: http://www.nimanranch.com

Private Company
Founded: 1969
Employees: 110
Sales: $31 million (2002 est.)
NAIC: 311611 Animal, Except Poultry, Slaughtering

Niman Ranch, Inc. works with more than 300 independent family farmers who raise livestock according to the company's strict protocols: They must meet Niman Ranch's environmental standards, use approved genetics, keep careful health records, and pass the company's regular inspections. Niman Ranch ranches its own cattle on 1,000 acres of rolling hills in the Point Reyes National Seashore, marketing its processed beef nationwide, along with sustainable beef raised by close to 50 other cattle producers throughout the West. The company's pork comes from 260-odd Midwestern hog farmers. Niman meats are available through the company's web site, via stores, and from third-party mail-order sources.

1969–77: Hobby Becomes a Specialty Business

Bill Niman began keeping pigs, goats, and chickens in 1969 on 11 acres of land that he bought for $18,000 in Bolinas, California, a coastal town an hour north of the Golden Gate Bridge in Marin County. At the time, he was an elementary school teacher with an interest in old-fashioned techniques of animal husbandry. Niman fed his animals outdated yogurt and spent barley from Anchor Steam Brewery and allowed them to range freely. Later, his first wife bartered tutoring services for a few head of cattle, and the couple began to sell its meat to neighbors and local businesses. "We learned an inch at a time," Niman recalled in a 2003 Forbes article.

From the beginning, Niman's husbandry practices focused on sustainability and ecological stewardship. "A couple of communes started up in Bolinas . . . people were very interested in self-sufficiency," he explained in the San Francisco Business Times in 2002. Unlike most livestock companies, which crammed their animals into feed lots without ever grazing and rushed them to slaughter at little more than a year of age—before they were fully mature—Niman gave his animals plenty of space to roam for close to two years.

"The whole idea in raising any grazing animal is to convert naturally growing grass and forage into proteins humans can eat," Niman stated in the San Francisco Business Times. Young calves received their mother's milk for the first two months and were weaned by seven months. For the next 14 to 18 months, they grazed on high-quality clover and hay (grasses which were about to go to seed and contained the most stored energy). When they reached 800–900 pounds, they were moved to feedlots where they were fed a ration of sugar beet pulp, cane molasses, corn, barley, wheat, and soy meal for an average of 140 days or until they were about 20 to 24 months of age.

Niman also refused to administer unnecessary hormones, chemicals, or feed additives to his cattle and other livestock. The use of antibiotic feed had become accepted practice in the United States by the 1970s in response to the crowded, disease-promoting conditions of the industrialized stock industry. In addition, administering sub-therapeutic antibiotics to animals promoted growth, bringing livestock to market faster. However, there was ongoing debate as to whether antibiotic resistance in animals can be transferred to humans.

Finally, Niman differed from other meat producers in the way in which he prepared his meat for market, going against the livestock industry's productionist model that emphasized efficiency. After slaughter, his cattle were "shrouded," following an old-fashioned and uncommon practice of wrapping the carcass in a salted cloth for five days to draw out excess moisture. Shrouding reduces carcass weight by about 10 percent. The meat was then aged up to one month. By contrast, most commercial meat was slaughtered, almost immediately butchered, and sealed in Cry-O-Vac bags in order to retain as much moisture as possible.

1978–97: Niman-Schell Meats Gradually Expands

In 1978, Niman took on a partner, Orville Schell, a journalist and early critic of the mass production methods of the meat industry, who that year wrote a book called Modern Meat. The company became Niman-Schell Meats. As word spread of Niman-Schell's tasty, naturally raised meat, the business grew from supplying neighbors to providing restaurants in California and beyond with meat. The two men increased the company acreage and hired a ranch hand, but Niman still had to work construction jobs to make ends meet. Niman realized he could not sustain a pork business since soybean and cornmeal feed difficult to transport. So in 1979, he switched to cattle alone. "We raised more and more beef cattle as we got more land," he recalled in the San Francisco Business Times. The 11 acres became 200, and Niman-Schell became a USDA processing entity.

However, the 1980s were a tough time for Niman-Schell. With an 18 percent mortgage on its acreage, the company struggled to make payments. Fortunately, the federal government decided to acquire its land through the laws of eminent domain in 1984; the condemned land became part of the Point Reyes National Seashore, and Niman and his partner received $1.3 million for the property. They also retained the right to graze their cattle on the land for the rest of their life for the cost of property taxes, or $3,000 per month in rent.

Between 1980 and 1997, beef consumption fell from 72 pounds per person per year to 63 pounds as eating less or no red meat became associated with living a healthier lifestyle. However, during this same time, sales of Niman Ranch and other branded beef were actually increasing. Only a few million pounds of branded beef sold in 1979—more then 480 million in 1998. This increase was due to the enthusiasm of chefs throughout the country for the taste of cattle raised according to old-fashioned methods as well as to the introduction of branded beef offerings and value-added beef products such as marinated strips, fully prepared pot roast, and breaded and seasoned country-fried steaks.

In 1989, Niman-Schell also began to sell free-ranging, naturally fed lamb when he met sheep ranchers in the Sacramento Valley who shared his views on low-tech agriculture, who started selling their meat to him for distribution. In 1997, the company also began to sell pork products from hogs raised by Midwestern family farmers who agreed to the company's strict protocols. The move was a boon for the small, family hog farm, which was having difficulty surviving the late 1990s. Vertical integration and concentration in hog production had made difficult financial times for hog farmers, and the decline in the number of small hog farms accelerated in late 1998 and early 1999 when hog prices hit historic lows.

1997–2004: Steady Growth, New Alliances, and a National Reputation

Niman Schell became Niman-McConnell LLC in 1997, when Schell left the company to become dean of the University of California-Berkeley's School of Journalism, and two new investors, Rob Hurlbut and Mike McConnell, joined Niman Ranch. That same year, it hired a full-time controller as business began to speed up. The company had sales of about $3 million in 1997. By 1998, that figure was at about $5 million. Business doubled in 1999 and again in 2000 to put the company's sales in the range of $20 million annually. Hog slaughter more than doubled to 980 a week in 1999. The company, then a confederation of 30 ranchers, added a web site that informed customers where they could buy Niman meats. It was the first effort at publicity.

In April 2000, Niman Ranch joined Freshnex, an online marketplace that enabled restaurants and grocers to buy fresh foods in bulk at reduced shipping costs. Still the company required an employee who arrived at 4 a.m. each day to transcribe the 100-odd orders left by chefs on the company's answering machine the night before. Niman had become the meat of choice of top restaurants nationwide; in fact, even restaurants that did not buy from Niman claimed that they did as consumers came to recognize the outstanding taste of its free-ranging meats.

A strategic alliance formed between Niman and Chipotle Mexican Foods, a chain of fast-food restaurants owned by Illinois-based McDonald's Corporation since 1998. Chief executive officer of Chipotle, Steve Ellis, saw the arrangement as one of redefining fast food and its ingredients to focus on food quality and social responsibility. In 2001, the company became Niman Ranch, Inc. By 2002, it was supplying 20,000 pounds of pork a week to Chipotle and adding additional hog farms to its network to meet demand.

Sales doubled again in the late 1990s and early years of the new century to reach about $31 million in 2002 even as Americans were eating about 4 percent less red meat per person beginning in 2001. Niman Ranch had become a visible advocate for agricultural sustainability, a living wage for farmers, and a healthier and more humane ranching process. The company now marketed meats for 200 hog farmers, 45 cattle ranchers, and five lamb ranchers nationwide.

In 2003, Niman Ranch was slaughtering about 2,700 hogs a week when it received $350,000 from the USDA for product development, marketing, and hog purchases. The money went toward recruiting another 100 to 150 hog farmers who would bring with them another 1,000 head a week. Cattle, raised by Niman's network of 45 small West Coast ranchers, many in Marin and Sonoma counties, were slaughtered at the rate of 150 to 175 per week. (Large commercial operations slaughtered as many as 400 animals per hour.) These ranchers raised the cattle until they were one year old, at which time, Niman finished them on grain in feedlots in Idaho. Carcasses were transported back for butchering at the company's facility in East Oakland, purchased in 1999.

Company Perspectives:

Niman Ranch produces the finest tasting meat in the world by adhering to a strict code of husbandry principles: our livestock are humanely treated, fed the finest natural feeds, never given growth-promoting hormones or antibiotics, and are raised on land that is cared for as a sustainable resource.

By the first years of the new century, organic beef represented 1 percent of the national beef market. Niman, whose own meats were not yet organic because the grain the company fed its livestock was not certified organic, wanted its meat to be still more pure—completely natural, organic, and certified. Bill Niman commented in 2000 in the Wine Spectator that his company would accept no halfway measures in going organic. "It will have to be all organic or none at all because we want to be what we say we are. That's why we feed out cattle in our own lots [by our] own employees. . . ."

Whatever direction Niman Ranch would take next, its decisions were dictated by the principles of sustainability, responsibility, and good taste that had guided it all along. As Bill Niman said in a 2004 Beef article, "When you have your name on it, you focus on the eating quality, tenderness and flavor. You can get today's consumer to try something one time, and it better be a good experience or they won't try it again."

Principal Subsidiaries

Niman Ranch Pork Co.

Principal Competitors

BC Natural Foods, LLC; Laura's Lean Beef Company; Maverick Ranch Association, Inc.; Cooperative Regions of Organic Producers Pool.

Key Dates:

1969:: Bill Niman founds a part-time livestock operation.
1978:: Orville Schell joins Niman as a partner; company is named Niman-Schell Meats.
1979:: Niman-Schell Meats switches to raising only cattle.
1989:: Niman-Schell begins to sell free-ranging, naturally fed lamb.
1997:: Schell leaves the company, which is renamed Niman-McConnell LLC.
1999:: The company launches its web site.
2000:: Niman Ranch joins Freshnex for marketing its meats.
2001:: The company forms a strategic alliance with Chipotle Mexican Foods; changes its name to Niman Ranch, Inc.