Meat has proven one of grocery’s most dynamic departments in the last year. Consumer experimentation with cuts, value-add and exotics is more pronounced than ever, despite rising prices and a decrease in promotional activity. And while dietary trends pre-pandemic may have favored less meat-forward plates, the last 20 months have served to underscore the category’s enduring popularity.
“Inflation has definitely hit food prices and, in particular, fresh meat with overall fresh meat average price exceeding $4 per pound ($4.13), an increase of 12.3% for the latest quarter,” says Pete Swanson, senior analyst, IRI Fresh Center of Excellence. Meanwhile, promotional activity has declined. “Overall, the percent of fresh meat sold on deal dropped five percentage points to 28% and below 30% across the major proteins. And the percent of beef product sold on deal dropped nearly eight points.”
But despite fewer deals and rising prices, IRI finds that absolute dollars are still increasing across major proteins and the total meat department, which saw sales increase 1.2% for the 52 weeks ending Oct. 3, 2021 and 3.9% for the last 13 weeks. While the gains are modest, they are also significant when viewed through the lens of 2020 pandemic panic spending, which drove unprecedented meat department sales, says Swanson.
“The sales baseline for 2021 is still ahead of 2020 levels and compared to 2019, meat department sales are nearly 20% higher in the last 52 weeks,” he continues. “Products that attracted new buyers in 2020 such as lamb and exotics like bison have established a base of repeat buyers. Lamb sales are up 33% compared to 2019 and exotics are up 26% from 2019.”
Convenience continues to drive sales in meat with consumers looking for new and easy ways to prepare flavorful meals.
“Premiumization products are the darling of the meat department growth,” says Swanson. “Value-add products continue to grow at rates far exceeding conventional counterparts.”
And while IRI finds sales of value-add meats have a relatively low base compared to conventional, the sub-category has not shown signs of plateauing. “With innovations in flavor options, easy-to-prepare will continue to attract new buyers and increase buy rate of existing shoppers,” he adds.
Premiumization on the health and wellness front will also continue to resonate as consumers are increasingly educated on regenerative farming and the care and well-being of livestock raised for human consumption. “This awareness can be seen at the register with continued growth rates in No Antibiotics Ever (NAE) and organic, which have shown slight growth on share to total proteins,” says Swanson.
Better cuts and grades of meat have also hit their stride in traditional grocery, which at one time was only obtainable through restaurants, high-end steak houses and specialty butcher shops, Swanson observes.
“There is definitely a buyer for premium high-end cuts and retailers have recognized this,” says Swanson, pointing to prime grade beef sales, which are up nearly 30% year over year.
Total Dollar Sales by Department
All numbers represent percent changes of dollar sales
Total U.S. multioutlet (MULO) | “YA” is the year ago for the same weeks ending 2020, 3 YA is the same weeks ending 2018; 2 YA is the same weeks ending 2018; 3 YA is the same weeks ending 2017 | IRI Unify in the Integrated Fresh database which combines fixed and random weight items
Latest 13 Weeks Ending 10-03-21
Note: Meat Alternative/Substitutes are refrigerated plant-based proteins
Claim by Fresh Protein
Latest 52 Weeks Ending 10-03-21
Latest 52 Weeks Ending 10-03-21
Latest 52 Weeks Ending 10-03-21
Measures: Dollar Sales refers to the total cumulative dollar sales sold for that product during the time period (not included, but used as reference) | Dollar Sales change refers to the percent difference between the current and prior period for Total Dollar Sales | Dollar Share to Dept refers to the total dollar sales of that product divided by the total dollar sales of the department to which it belongs | Dollar Share to Category or Aisle refers to the total dollar sales of that subcategory divided by the total dollar sales of the parent category/aisle
To learn which of the consumer shopping habits born of the pandemic are here to stay and which trends are likely to wane in 2022, WGB sat down with Anne-Marie Roerink, principal of 210 Analytics, a firm specializing in research for the food retailing industry.
What is the biggest story in meat as we wrap the fourth quarter of 2021 and head into 2022?
Anne-Marie Roerink: The overarching story in meat is the continued strength in sales, not only in comparison to the pre-pandemic normal of 2019, but also 2020. During the fourth quarter last year, we assumed that 2020 would be a high watermark for many years and decades, as consumers started to re-engage with restaurants. Yet demand remains strong as the virus continues to keep a firm grip on where people spend their food. The question is whether the high level of inflation, supply chain constraints and the lower government economic support levels will start to have an impact on volume sales. That picture is not entirely clear given the upswing in COVID-19 cases in August and September, which drove dollars back to retail.
Within this overarching strong performance, there are many interesting story lines, including:
Holiday Sales. The 2020 holiday sales were extremely strong, but if Halloween celebrations are any indication, we may be in for another very strong holiday season in the fourth quarter of 2021. Much like 2020, we will likely see a mix of traditional meat options and some items that are better suited to small gatherings, including turkey parts, ham slices and other premium meat options.
Smaller Proteins. Interest in smaller proteins, including lamb and niche meats such as bison and venison is on the rise. Several had record 2020 sales with continued year-on-year growth in 2021. This is also part of the bigger trend that grinds are producing a tremendous percentage of total sales across all retail channels.
Convenience. We see that in everything from online shopping to convenience-focused solutions such as value-added meat, fully cooked meat and deli-prepared meats. It is clear that consumers continue on the path of the hybrid meal—meaning, they prepare some items from scratch and mix that with convenience-focused solutions.
Inflation, rising prices and supply chain issues are making headlines in. What’s the impact on meat and how do you see these issues affecting sales?
Initially when inflation started to rise, meat inflation was actually below that of the total store. Much of that had to do with the patterns we saw in 2020. But in September and October meat inflation quickly rose to above total store levels. The high levels of inflation throughout the store are going to have an impact, but to date we have not seen quite the substitution levels that are typical for periods of inflation.
Typically, we see people switch from eating out to more eating in, but they were already doing that. Next, we typically see people look more for promotions, but there are many fewer promotions today than in 2020 and especially 2019. Then we see people switch between cuts and kinds of meat. But go-to items that used to be a little bit cheaper may not be all that more cost effective in the current marketplace. In other words, many of the substitution behaviors that we see during typical times of high inflation are not holding true today. Importantly, shoppers will have noticed for the last 20 months that eating at home tends to be a lot more cost effective than eating out, so we may simply not see as much reaction to stretching the meat dollar than we did in prior years.
IRI estimates that 80% of meals are still consumed at home. Do you see the trend continuing? What role will meat play in at home meal consumption as we move into 2022?
Throughout many surveys, we see that consumers feel they are more knowledgeable about cooking now. We know confidence was a barrier in the more expensive cuts of meat, and between having cooked more and a host of new appliances, it is likely that we will continue to see an elevated share of at-home meal preparation, with meat as the star, for many more months, if not years.
What’s the latest with online meat purchases and where is the channel headed?
Online meat sales, and online grocery sales in general, were one of the biggest stories of 2020. We are expecting continued growth in 2021, but not quite at the same rate as we saw last year. For fresh meat there is an opportunity to close the gap between center store share of dollars sold online, versus fresh dollar shares sold online. Many consumers have adopted a dual store strategy, where once or twice a month they buy all center store items online and continue to buy meat in the store.
The big question is whether that is the same store they used for the online order or a different one, which is why closing that gap is important to ensure the store captures the omni shopper’s entire basket versus just part of it. Retailers are working hard to give people reassurance that the meat they buy online is of the same quality as the meat they purchase in store. I estimate that by the end of 2021 about 14% to 15% of total food and beverage dollars will be sold online. For meat this is closer to 10% of total meat dollars.
Earlier in the pandemic consumers traded up and tried new cuts and types of meat. Will consumers stick with these products or go back to their pre-pandemic ways?
We continue to see quite a variety of items land in people’s baskets. Ribs and roasts, for instance, in both beef and pork continue to do extremely well. Those were items that intimidated millennials. But after 20 months of more home-cooking, lots of digital inspiration and a variety of appliances that make it easier, we see better engagement across generations in many different cuts. As I mentioned earlier, another one is exotic meats. While small, many are growing tremendously fast. Often in ground format, it’s a foot in the door for people to try the flavor, texture and cooking properties before banding out to other cuts.
Frozen meats made tremendous gains earlier in the pandemic as consumers stocked up. How does fresh compare with frozen now?
The interesting thing about fresh and frozen is that as an industry we tend to look at it as fresh versus frozen. However, shoppers, especially younger ones, mix and match fresh and frozen across many meals. According to the American Frozen Food Institute, 30% of Americans invested in additional freezer space in 2020. At the same time, we see a lot of retailers doubling down on frozen food space. Innovation is also driving frozen. We see great innovation in both animal protein and plant-based solutions, from claims to marinated offerings to meals to products developed specifically for small electrics such as air fryers and instant pots.
Additionally, many people have a very favorable price perception of frozen food, which means during times of high inflation in the meat case we’re likely going to see more dollars leak to the frozen food space. Another well-recognized benefit is the reduction in food waste, which is a hot button issue among younger shoppers especially.