Live from MeatCon: Meat For a Changing World
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 first day of the Annual Meat Conference, hosted by the North American Meat Institute and the Food Marketing Institute, Feb. 21-23 in Nashville, Tenn.
Social, economic and age divisions are among the challenges facing meat retailers, according to the team from the Nielsen Perishables Group presenting “Polarized Consumers Are the New Norm.”
Sherry Frey, SVP at the Perishables Group, said a focus on health and wellness, and a populace dealing with obesity and a host of chronic ailments are “changing consumers’ perspectives on how they’re eating – they want food as medicine.”
Health and wellness is a growth driver across the store, with that growth being driven by new items in many categories, Frey said. 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.
Meanwhile, the oft-forgotten Generation X’ers are not indexing high for overall meat spend, but the “natural” claim ranks high among this demographic, Frey said.
While protein is driving growth across the store, meat is not getting its due credit as a protein source. Frey cited a survey showing consumers saying they think peanut butter has as much protein as chicken or pork.
Meanwhile, the market is facing “unprecedented income inequality,” said Mikael Olson, associate client director at the Nielsen Perishables Group.
Households with incomes $70,000 and over 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, something the Nielsen Perishables team predicted in its presentation last year.
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.
When prices are higher, Olson noted, the affluent are less likely to change behavior; they may seek values in the club channel. Those less affluent wait for sales, or trade down or out of category, resulting in meat purchases declining more rapidly among less affluent households.
While both groups spend less on steak when prices are high, those less affluent buy grinds or use meat as an ingredient vs. center of plate, while the more affluent buy cuts like roasts, ribs and brisket. Olson said grocers need to “not just put these cuts on the shelf, but make them work smarter for us.”
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 alternate 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.
Additionally, top-tier brands are struggling while smaller, nimble companies are thriving. Frey explained that “digital has become the big equalizer” for start-ups to connect with consumers.
Frey encouraged retailers to target specific audiences with this polarized landscape, and to look to produce and deli/prepared for cross-promotional ideas.
“We cannot mass-merchandise anymore,” she asserted. “Retailers who continue to market to the middle will continue to struggle.”
Up and Coming Meat Offerings
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 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).
The vast majority of new food experiences start at restaurants, Li noted; 51 percent of the latest “new things” come from restaurants, with just 24 percent from grocery stores.
A rise in alternate 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.
Further, Li argued against referring to cuisine simply as “ethnic” – foods have become too specialized and such generalizing doesn’t appreciate the nuances of a diverse food culture.
The industry should focus on individual foods rather than cuisines in general. He added: “Consumers are concerned more about the dish than the ingredients.”
Li predicted that “foodservice will start entering the home at an increasing rate,” noting that investments in online food ordering have gone from $25 million to more than a billion since 2012. He also cited a study showing people are more excited about restaurant leftovers than most food prepared at home.
The term “fresh” is overused, Li said – focus on specific qualities, like grass-fed and wild-caught. “Stress the benefits first – what the product will do for you,” he said.
Regions have become too broad, so the industry should look to local tastes to connect with consumers.
A More Connected World
Climate change poses the most significant impact for the food industry, argued Andrew Winston, a business strategist who discussed “The Big Pivot: Doing Business in a Hotter, Scarcer, More Open and Connected World.”
Business is being impacted by unavoidable demographic shifts, urbanization, shifts in global economic power, climate change and scarcity of resources, and tech breakthroughs.
More businesses are investing in renewable energy and low-carbon technology, Winston noted. The long-term cost of everything is rising, with a continued pressure on resources due to rising demand, especially from China, which is using greater amounts of the world’s raw materials, including half of the world’s pigs. The carbon footprint of meat, especially beef, is higher than for plants, and also requires vast water resources.
Winston said world leaders have identified the top five issues facing humans: water, failure to mitigate or adapt to climate change, extreme weather, food crises and profound social instability.
These are among things that companies must deal with as the cost of doing business, he said: “It’s not philanthropy anymore.”
Millennials would agree, since as Winston noted in a Deloitte study, 87 percent of this growing segment of the workforce say business success should be measured by more than just money; 56 percent have ruled out working for employers who don’t share their values; and Millennials are more likely to buy sustainable brands and work for socially conscious employers.
Meanwhile, 77 percent of Generation Z, the next in line, say companies should make “doing good” central to business.
Businesses need to practice “proactive transparency,” Winston said, noting that more companies are getting ahead of consumers by sharing details of their business practices.
Other concurrent workshops focused on adapting to the speed of technology in connecting with consumers, and new and emerging government regulations regarding food safety, labeling and FDA initiatives and priorities.