The question on everyone’s mind is how far everyday demand for meat sits above the old baseline. From the two panic buying weeks to Easter and the second surge of stocking up to Mother’s Day, the past two months have not seen a week that clearly reflects everyday demand for meat and poultry. The week ending May 17 could have come close; however, tight supply and purchase limits along with the reopening of restaurant dine-in facilities in many states altered the demand landscape yet again. Despite the supply pressure, dollar sales grew 26.3% the week of May 17 vs. a year ago and volume grew 13%. The volume/dollar gap remained unchanged at 13 percentage points.
Meat Department Dollar and Volume Growth vs. Comparable Week in 2019
Source: IRI, multioutlet, one-week percent growth vs. year ago
Year to date through May 17, meat department dollar sales were up 24.8%, boasting double-digit growth for 10 weeks running. This reflects an additional $5.5 billion sold vs. the same time period in 2019. Year-to-date volume sales through May 17 were up 18% over the same period in 2019, reflecting an additional 7.6 billion pounds of meat and poultry sold vs. the same time period in 2019. IRI found that along with sales, meat’s presence in social media was extremely strong. Mentions of meat and related terms were up 66% vs. pre-pandemic.
About 60% of meat’s multibillion year-over-year gain is due to increased spend per customer. Millennial households were behind the biggest increases in meat spending since the onset of coronavirus, much like they drove growth (not spending) pre-pandemic. During 2019, millennials represented $23 out of every $100 spent on meat/poultry, far behind boomers ($35) and Gen X ($32), according to IRI National Consumer Panel data for total U.S. all outlets. However, millennial spending pre-pandemic was rapidly gearing up, at 2.4 times the average, while boomer spending was slowing down. These patterns held up during the pandemic as millennials have been among the hardest-hit generations, with about 40% of millennials having lost their jobs as a result of COVID-19 or had their work hours reduced. Shoppers under the age of 35, with and without children, lower and higher income, increased meat/poultry spending by more than 50%.
Dollar vs. Volume Gains
In point of sale data, the gap between volume and dollar sales remained 13 percentage points for the week ending May 17, signaling continued pressure on pricing due to tightness in the supply chain. Compared with the same week in 2019, the week of May 17 showed continued double-digit volume/dollar gaps for beef and pork, but for others, dollars and volume started to track closer together, including chicken, turkey, lamb and exotic meats. Several processed items, including sausage and frankfurters, continued to show double-digit volume/dollar gaps. “Most beef and pork products are in tight supply given ongoing plant challenges, whereas chicken and turkey volumes are adequate to oversupplied,” said Christine McCracken, executive director of food and agribusiness for Rabobank. “We saw inventories of grilling items build in front of Memorial Day, whereas the slow ramp up in foodservice has set a floor on chicken prices.”
But supply is likely to continue to impact the dollar and volume performance in weeks to come. “Beef and pork facilities continue to struggle, with cattle slaughter off 14% from year-ago levels and hog plants down 8% from the same period. The huge backlog of animals created during the downturn is only getting larger, which should limit price increases in coming weeks. The situation in poultry is a little worse this week, with growing numbers of plants experiencing COVID-19-related disruption in the Southeast and production dropping 1% from the prior week,” said McCracken. “Grilling items gained support in front of the Memorial Day weekend, with grinds the clear winner. Chicken did not fare as well, with the ramp up in foodservice demand still the primary demand driver for most items and much of the early loading now complete. We expect to see chicken prices strengthen in the coming weeks, however, as we begin to see the impact of 7% production cuts taken earlier this spring. Higher prices are also impacting export demand, where we saw a sharp drop in shipments and some cancellations in the latest week. Softer exports may not translate into significantly lower pricing, however, as cuts heading into these markets are not commonly found on our store shelves.”
Consumer comments on the Retail Feedback Group Constant Customer Feedback (CCF) system point to purchase restrictions and limited inventory continuing to impact purchases during the week of May 17. “The meat department had very little and, of course, now there are limits on the amount you can purchase. I’ll just have to come back later in the week.” Another wrote, “The items I could not get were just due to the meat shortages and of no fault to the store.”
IRI’s measure reflecting the average number of items sold per store remained significantly down for meat, at 296.3. This is the first time the average fell below 300 and reflects 47 fewer items than the same week last year.
The supply chain woes have affected wholesale and retail prices. Shoppers called out higher meat prices and fewer meat features on CCF. “I understand it is difficult to get meat, but I still feel the prices are a bit high.” Another shopper said, “I check the circular every week and there was literally one meat item on sale, lamb. I have no idea how to make lamb so that was totally useless. I get that there are shortages, but a few more items on sale to help those of us who have lost our jobs would be nice.”
IRI’s insights on the average retail price per volume also show significant upward pressure on retail prices for the week ending May 17 vs. the same week in 2019 for beef—particularly ground beef—and pork. The average price per volume for turkey, lamb and exotic meats have mostly stabilized in the one-week view compared to mild inflation in the four-week view.
Meat Gains by Protein
The overall 26.3% meat department gain was fueled by double-digit gains for all proteins. The two smaller proteins, turkey (up 39.5%) and lamb (up 40%), had the highest percentage gains, but beef easily had the highest absolute dollar gains ($131 million), followed by chicken ($39 million) and pork ($24 million).
Turkey’s strong week was driven by the combination of growth in ground turkey (33.8%) and whole turkeys (127.2%). The latter is driven by extended holiday promotions by several retailers and particularly Walmart’s “pay it forward” no expiration gift card that can be used specifically toward a whole bird turkey or ham.
Ground proteins were frequently among those items with purchase limitations in mid-March and again in late April and May. Popular due to their versatility and ease of preparation, grinds achieved big gains over the week ending May 17 vs. the comparable week in 2019:
- Ground beef increased 31.2%.
- Ground turkey was up 33.8%.
- Ground chicken increased 27.1%.
- Ground pork was up 11.3%.
Ground beef has been a pandemic powerhouse, with an additional $1 billion in year-to-date sales through May 17 vs. the same period in 2019. For instance, looking at the four weeks ending April 19, which encompass the two panic buying weeks, household penetration for ground beef rose 7 points to 49% of U.S. households, according to IRI's National Consumer Panel data for total U.S. all outlets. The average household spent $5 more on ground beef than in the prior year, an increase of 30%. And the buying frequency increased with 23% of buyers purchasing ground beef two or more times during that four-week period, up 6% from 2019.
A Detailed Look by Area
Total meat department sales came in just under $1.4 billion for the week, with continued gains for the big three (beef, chicken and pork) that have seen double- and triple-digit increases ever since the week of March 15. Processed meats, sausages, frankfurters and bacon continued to do extremely well also.
Weekly Sales Gains vs. Comparable 2019 Week
Source: IRI, total U.S., multioutlet, one-week percent change vs. year ago
Significant differences are observed when comparing dollar protein shares between the first week of March, reflecting pre-pandemic sales levels, and the week ending May 17. While shares are influenced by holidays and differ from week to week, pork and beef’s share continues to be elevated in the one week and year-to-date views, whereas chicken’s share is down in both. The same look at volume shows the effect of pricing, though increased volume shares for beef and pork as well.
The next sales report, covering week 11 of coronavirus’ affected shopping patterns, is the week of Memorial Day weekend. As the unofficial start of grilling season, this is often one of the biggest holidays for the meat department throughout the year.
IRI found that one-third of Americans had different plans than in 2019, with 19% saying they would not be hosting or attending get-togethers and 13% foregoing trips that they undertook in prior years. It is likely that just as seen with Easter and Mother’s Day, people celebrated the holiday but in different ways. The net effect for the meat department will be in next week’s report. Meanwhile, the relaxation of the stay-at-home executive orders looks different from state to state and encompasses everything from the partial reopening of dine-in restaurants to the opening of hair salons and gyms to merely shifting from stay-at-home to safer-at-home. As states begin to enter their various reopening phases, the economic and social readiness of consumers to reengage with foodservice will become clearer. For the foreseeable future, it is likely that grocery retailing will continue to capture an above-average share of the food dollar with meat in a starring role.
Anne-Marie Roerink is principal of 210 Analytics, which specializes in research for the food retailing industry and authors studies in meat, produce, bakery, deli, frozen, confectionery, snacks and retail operations. She can be reached at firstname.lastname@example.org.