“Who are these guys?” was the question many asked when Brazil's JBS SA bought Swift & Company two years ago. Its purchase brought JBS out of obscurity as Latin America's largest beef processor. Overnight, it became the world's largest, the third largest in the U.S. and the largest in Australia.

No one is asking that question anymore. Now it is: “What is JBS going to do next?” Rather a lot, as it turns out.

Before I answer the question, it is worth noting that JBS hasn't exactly been idle in the past two years. It has dramatically improved the former Swift beef business in the U.S. by increasing processing capacity and reducing costs. It acquired the former Smithfield Beef Group, the fifth largest beef processor in the U.S., and Five Rivers, the world's largest cattle-feeding operation (it sold 1.5 million cattle in 2008). It acquired Australia's Tasman Group and has also made significant improvements to it and the rest of its Australian business.

Now JBS is setting out to become the dominant global distributor of red meat (beef, pork and lamb) and to change the way it produces and sells meat in the U.S. JBS USA (the name for its U.S. and Australian operations) produces meat mostly in primal or sub-primal form. It sells this in boxes to retail customers, to further processors, for export and to the food service sector, in that order. Now it wants to cut out the middleman as much as possible and sell consumer-ready products direct to retail and food service customers. It intends to raise up to $2 billion to do this.

JBS revealed its intentions in a filing with the U.S. Securities and Exchange Commission for an initial public offering (IPO). Its intentions suggest JBS could significantly alter the way it does business in the U.S. Its IPO prospectus indicates it will focus on producing consumer-ready or centrally packaged beef, pork and lamb to distribute direct to customers. This would largely replace its current distribution of boxed meats. JBS might produce consumer-ready products at its existing plants or at new stand-alone plants. It will also likely buy further processing companies, such as steak-cutting operations, which already produce consumer-ready products.

JBS's focus is on providing case-ready meats to retail customers and portion control meats to restaurants and other customers. JBS obviously wants to grow its food service business. Its 2008 beef sales included only 14% to this sector, while pork sales were only 4%. Largest fresh meat company Tyson Foods in contrast sold 28% of its beef and 14% of its pork to food service and another 11% of its beef and pork as case-ready product.

JBS's prospectus also revealed its commitment to its U.S. and Australian business by saying it will spend $500 million of the IPO money on capital expenditures in both countries. That's a huge commitment at a time when new investment in the processing industry is minimal and much needed.

JBS USA had $15.4 billion in net sales of beef, pork and lamb in 2008. Its slaughter capacity puts it among the leading beef and pork processors in the U.S., it says in its filing. My slaughter capacity data put JBS No. 2 in beef, just behind Cargill and about equal with Tyson, and No. 3 in pork behind Smithfield Foods and Tyson. It has beef-processing capacity of 28,600 head per day in eight plants and pork-processing capacity of 48,500 head in three plants.

JBS has given no indication as to when it might proceed with its IPO. It might wait until next year when capital markets and the economy are stronger. In the meantime, the IPO filing gives potential investors and JBS customers time to examine what JBS intends to do. One thing's for sure. JBS continues to invest in and redefine the global beef industry.

Steve Kay is editor and publisher of Cattle Buyers Weekly (www.cattlebuyersweekly.com). See his weekly cattle market roundup each Friday afternoon at beefmagazine.com.