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Don’t market to the middle. Design a meat case that appeals across demographic groups. Expand your convenient cuts assortment. Harness health and wellness as a growth driver.
Those were among the key takeaways from the 2016 Annual Meat Conference, hosted by the North American Meat Institute (NAMI) and Food Marketing Institute (FMI), Feb. 21–23 in Nashville, Tenn.
The conference marks the official unveiling every year of the latest Power of Meat survey, which this time affirmed that shoppers recognize the variety of nutrition benefits offered by meat and poultry, and place a high value on convenience, variety and transparency when making purchasing decisions in the meat department.
The 11th annual report, commissioned by NAMI and FMI, and conducted by 210 Analytics in partnership with Sealed Air’s Cryovac brand, examines meat purchasing, preparation and consumption trends through the eyes of the shopper.
Supermarkets strengthened their position as shoppers’ primary destination for meat and poultry, although consumers increasingly chose alternative channels, like farmers’ markets, dollar stores, and farm-direct and online stores, for certain meat and poultry purchases. This trend was particularly evident among Millennial consumers, who exhibited a higher propensity to shop at alternative outlets for meat products.
Along with price, consumer desire for transparency in the production process drove sales gains, with segments such as “antibiotic-free,” “grass-fed,” “hormone-free,” “natural” and “organic” meat and poultry recording high growth percentages despite remaining niche market segments.
But while interest in natural, organic and other clean-label identifiers has surged in the past five years, “interest does not always translate to actual usage,” said study presenter Anne-Marie Roerink, principal at San Antonio-based 210 Analytics, noting that shopper likelihood of selecting natural/organic over conventional products drops considerably as the price gap widens.
Cleanliness and freshness are the top attributes shoppers look for in their grocer’s meat department, Roerink added, with staff knowledge and availability among the top opportunities for improvement.
While inclusion of meat and poultry as a portion of a home-cooked dinner remained steady at 3.7 times per week, shoppers changed their purchasing patterns slightly and sought more variety in their dinner lineups, with upticks in pork, lamb, value-added and meat alternatives. Convenience meats, which include heat-and-eat, ready-to-eat and value-added products, also experienced sales growth, particularly among Millennial shoppers, who seek flavorful, fast and easy meal solutions.
“The meat department is a deciding factor for any grocery shopper, as evidenced by 27 percent of shoppers switching outlets when purchasing fresh meat or poultry compared with where they purchase the majority of their groceries,” said Rick Stein, VP of fresh foods at Arlington, Va.-based FMI. “The research underlines how food retailers have an enormous opportunity to combine the knowledge and skills of the neighborhood butcher with the creativity and flavor inspiration of a culinary chef to earn loyalty, grow sales and differentiate.”
Regarding purchasing decision drivers, price per pound, along with total package price, emerged as the dominant factor influencing meat and poultry product purchases, with product appearance falling to third place. Total package price proved more important to small households and Millennials, suggesting the future importance of package-size variety and price ceilings.
The majority of shoppers—more than eight in 10—affirmed the important role that meat and poultry play as sources of protein and other key nutrients in a healthy, balanced diet. The annual report series found that consumers were most likely to say red meat, including beef, pork and lamb, was important to energy levels and provided nutrients such as iron and protein.
Meanwhile, maintaining a healthy weight and receiving vital nutrients were factors associated with poultry. The findings were consistent across generations, with Millennials only slightly less likely to cite meat and poultry’s health benefits.
The “Power of Meat” report is based on data collected through an online survey of a nationally representative sample of 1,360 U.S. consumers.
Social, economic and age divisions are among the challenges facing meat retailers, according to the team from the Nielsen Perishables Group, which presented “Polarized Consumers Are the New Norm.”
Sherry Frey, SVP at the Chicago-based market research company, said that a focus on health and wellness, along with a populace dealing with obesity and a host of chronic ailments, is “changing consumers’ perspectives on how they’re eating — they want food as medicine.
Health-and-wellness claims are driving growth in meat despite accounting for a small share of total meat sales, she noted, naming fat, natural, hormones, preservatives, sodium and organic among key product claims. Meanwhile, “antibiotic-free” is growing, but still accounts for less than 2 percent of overall share.
There’s significant growth among consumers known as “Well Beings” — older, more affluent, more “green” and health-proactive folks who make more trips to the store and spend more per trip. The oft-forgotten Gen Xers aren’t indexing high for overall meat spend, although the “natural” claim ranks high among this demographic, Frey noted.
Meanwhile, the market is facing “unprecedented income inequality,” said Mikael Olson, associate client director at the Nielsen Perishables Group.
Households with incomes of $70,000 and above are driving sales; those below are driving sales declines across the grocery channel. The years 2011–14 saw greater elasticity across proteins; substitutions have settled down, but people have started substituting out of the meat case.
Household penetration, trip frequency, annual spend and basket size are all trending lower; 245,000 fewer households bought meat in 2015, resulting in $74 million in lost sales.
Overall, Boomers buy less in the face of high prices, while Millennials trade down their cuts or shop at cheaper retailers, or switch to processed or frozen products, but are less likely to walk away. Millennials explore alternative channels for savings, while Boomers are more faithful to traditional grocers.
Desire for “ease of use” is common to Millennials and Boomers, Olson noted. Price volatility among convenience cuts is decreasing faster than average, so grocers should prioritize these cuts (grinds, marinated meats, boneless/skinless) to drive growth.
Frey encouraged retailers to target specific audiences within this polarized landscape, and to look to produce and deli/prepared foods for cross-promotional ideas. “We cannot mass-merchandise anymore,” she asserted. “Retailers who continue to market to the middle will continue to struggle.”
Demographics were explored further in “Meating the Millennials,” led by Chris DuBois and Larry Levin, of Chicago-based IRI.
Shoppers are becoming more ethnically diverse, and “at the heart of the diversity are Millennials,” Levin said, explaining that “this means we have to adjust our flavor profiles. Millennials are at the forefront of taste innovation.”
To connect with Millennials, retailers and brand marketers must understand how they shop and move beyond misconceptions about the demographic. Among Millennials’ cherished values: They equate success with being a good friend, working for a cause and contributing to the community.
While price is the top factor in their purchasing decisions, with 70 percent choosing price over brand, Millennials also flavor brands that are local, natural, organic and innovative. Digital is a critical part of their pre-shop path to purchase.
“The meat department has a huge opportunity to influence in the store,” DuBois said. “It’s a chance to help a new generation learn how to cook, shop and buy.”
According to IRI, Millennials spend more on chicken than other age groups, and spend double when fresh meat is in their basket than when it’s not. They also buy more items boasting protein claims.
Levin said a key segment of Millennials to target is what IRI calls “New Traditionalists” — older, more educated and affluent consumers who make up 21 percent of this generation. Retailers and brands can reach them more effectively by aggressively shifting their marketing spend to digital, boosting digital and conventional in-store marketing, investing in social media, and stressing meat as the original source of protein.
David Portalatin, of The NPD Group, in Port Washington, N.Y., looked at consumption patterns in his “State of the Meat Eater” report.
Amid an economy slow to emerge from the last recession, “consumers are just not flush with cash,” Portalatin said. As such, meat has not kept pace with a return to home meals, and is shifting from center-of-plate to ingredient status.
Meat marketers would be wise to adopt strategies that involve the top growth food segments, including chicken, eggs, pizza, frozen entrées, sandwiches and meat snacks, Portalatin advised, adding that they should also pay attention to “clean eaters” who flavor natural and organic products and eschew processed ones.
Dynamics of Meat Retailing
Jerry Kelly, national business development manager for Duncan, S.C.-based Sealed Air Corp., presented “Dynamics of the Meat Case,” revealing the results of Cryovac’s 2015 “National Meat Case Study.”
Sealed Air and Texas Tech University teamed up to audit the meat cases of major supermarket chains, supercenters, and club and small-format stores across the country, noting meat types sold and linear feet of self-service cases.
“The big story is beef,” Kelly said, noting that the presence of packaged beef is down 3 percent in supermarkets and 8 percent in club stores since 2010, when the study was last conducted, the volume having been absorbed by ground beef and pork.
Meanwhile, “other” products gained space in the self-service case: processed meat, sausage, ham, seafood, value-added products and side dishes, “almost a 60–40 split, relatively constant over time,” Kelly said, “driven by the heat-and-serve category.”
Turkey, chicken and ground beef gained linear feet presence, while SKUs are consolidating for beef, pork, lamb and veal products.
Beef lost nine SKUs since 2010, and average pounds per package fell two-tenths of a pound. Kelly noted, “Two-tenths times all the packages sold adds up to a lot.” Meanwhile, the average number of packages per foot in the meat case dropped by 1.6 packages, which Kelly called “huge.” Share of boneless products grew from 57 percent to 67 percent.
The study team also found that production claims surged, with organic claims making considerable gains, especially for ground beef and chicken.
Store branding gained significantly, Kelly noted: “Stores have made a huge shift in branding their products.” Additionally, vacuum packaging grew considerably.
Branzino, chicarrones, nduja sausage, porchetta, pancetta and brisket are among the key meat-based cuisine trends to watch, according to Jack Li, managing director at Chicago-based Datassential, who presented “Consumer Trends Driving Meat Innovation.”
Li revisited Datassential’s Menu Adoption Cycle, which demonstrates how new food trends travel from inception, usually at fine-dining restaurants, to adoption (fast-casual, specialty grocers), to proliferation (chains, QSRs, traditional grocers, mass, club), to ubiquity (c-stores, frozen aisle).
A rise in alternative proteins, particularly pulses — crops harvested for their seeds, like lentils and chickpeas — should keep meat retailers and producers on guard. In response, the meat industry must focus on flavor applications that non-meat sources can’t deliver. Among key trends: meat pies, tortas, flatbreads, schnitzel, bison burgers, Bolognese and savory oatmeal.
The term “fresh” is overused, Li said — focus instead on specific qualities, like grass-fed and wild-caught. “Stress the benefits first — what the product will do for you,” he urged.
Attendees sampled the wares of vendors at 75 booths in the exhibit hall and at a tasting event. The best products delivered on multiple trends, including great taste, convenience, on-the-go snacking and — fittingly — protein. Here are just a few:
► Smithfield is rolling out a new product that hits on the key trends of on-the-go snacking and protein: Ready, Snack, Go is a five-flavor line that teams ham or turkey rolled up with cheese in a convenient snack that delivers 9 grams of protein at 90 calories per serving. Smithfield’s Keller Watts said the product is aimed at providing fast convenience for adults and younger consumers.
► Buddig’s Old Wisconsin brand displayed its new Natural Cut meat snacks line in a merchandiser ready for the grocery sales floor, with packaging emphasizing protein. Tom Buddig said that the company aims to display the product alongside protein bars and other nutritionally dense products in areas not commonly associated with meat snacks, a category that’s seeing significant growth.
► Tyson Foods has expanded its Crafted Creations line to include chicken products in addition to seasoned beef and pork selections. The boneless/skinless breasts and thighs, along with drumsticks, come in bold flavor mashups like Orange Peel, Spicy Tomato Beer and Smokey Barbecue.
Meanwhile, Tyson has extended its clean-label Open Prairie brand to include pork. The company’s Kent Harrison explained that the line is made from vegetarian-fed pigs raised without gestation crates or antibiotics.
► Cargill was premiering its Today’s Kitchen line of value-added proteins “built around the consumer’s need for convenience and gourmet taste,” according to Cargill’s Brian Bell. Parmesan-crusted chicken cutlets and beef pinwheels with spinach and garlic herb butter shared space with kabobs and flavored burgers. Further, Cargill was showing off a bold new look for its Honeysuckle White and Shady Brook Farms turkey brands. The packaging relaunch features more prominent nutrition facts and color added to the farm scene to drive home the brand’s family-farm message.
► Pre Brands offers grass-fed beef with a clean label. CEO Lenny Lebovich said the company operates by “finding what the consumers want and [working] backward.”
Case in point: the brand’s clear flippable packaging that allows shoppers to see both sides of their steak before purchase. Focusing on health and taste, Pre offers ribeyes, strip steaks, sirloins, tenderloin and grinds, with no added hormones or antibiotics.
“We built a supply chain to deliver a great eating experience,” Lebovich said, noting that the company is focusing on mainstream grocers. “They need someone to build this equity for them.” With products currently sold in nine states, Lebovich added, Pre is “not going to invest without proper alignment with our customers.”
“We cannot mass-merchandise anymore. Retailers who continue to market to the middle will continue to struggle.”
—Sherry Frey, Nielsen Perishables Group
“The meat department has a huge opportunity to influence in the store. It’s a chance to help a new generation learn how to cook, shop and buy.”
—Chris DuBois, IRI