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    Supermarket FRESH FOOD Business: The case for more meats

    As beef prices reach record highs, retailers need to stock up on alternative proteins or risk losing considerable sales and consumer interest in one of the supermarket's most influential profit centers.

    Occurring at a time when beef consumption has increased more than 3 percent in as many years and nearly 10 percent since its low in 1998, today's stampeding beef prices brilliantly illustrate the single most important theory of economics: the law of supply and demand.

    In this case, the contributing factors boil down to an accelerated demand for beef this past summer that coincided with curtailed supplies as a result of both a U.S. ban on Canadian cattle after the discovery of a case of mad cow disease and a decrease in U.S. production when cattlemen were hard hit by deflated demand three years ago.

    Despite the National Cattlemen's Beef Association's assertions that limited supplies will be short-lived and consumers' affinity for beef will endure indefinitely, the average per-pound price of beef sold in grocery stores in September was $3.34, up from $2.99 in September 2002, according to U.S. Department of Agriculture price surveys.

    Moreover, while long-term contracts have protected some retailers up to now, many others have been paying upwards of 40 percent more for beef this year, with prices averaging 11.5 percent higher than last year.

    Says Wayne Purcell, alumni distinguished professor and director of the Research Institute on Livestock Pricing at Virginia Tech University's Agricultural & Applied Economics department, "If and when it gets to the point where beef prices become prohibitively expensive, retailers must be prepared with ample displays of alternative selections," including, but not limited to, chicken and pork.

    Hamming it up

    Cautioning retailers against "picking on beef" by calling too much attention to the higher prices, Purcell says the message "could just as easily be addressed in displays by presenting some alternatives in different ways than they've been presented before."

    He continues: "I've also heard that part of what's happening is instead of just ramming up the retail prices of beef to reflect much of the increases that, I believe, came about primarily as a result of closing the Canadian border, some retailers have also been raising pork and chicken prices, which certainly makes sense to do."

    Purcell says it's also sensible that retailers seize the opportunities for alternative proteins, "because I know what consumers will do when they see a big price increase on their favorite item: They'll moan about it initially and may keep on buying it in the short term, but then they'll also start looking down the counter for other options." Further, in the winter, when there's always an uptick in home cooking, "it's a good time to get aggressive" by merchandising other meat products that are typically considered to be relatively high-priced, Purcell adds.

    Jon Lewallen, director of marketing, ConAgra Foods/Cook's Ham division, has no problem concurring with that sentiment. "With the higher prices of beef, a lot of retailers are looking for alternative feature opportunities, and we encourage them to look at bone-in ham as a solid option," not only at the holidays, but also during the rest of the year.

    Referring to the meat as a perennial destination item for retailers during the holidays, Lewallen says, "We're now in the process of generating volume on bone-in hams throughout the year with portions and thick-cut steaks. With a cost that's significantly less per pound than either steak or chicken, and with the same or better flavor quality and nutritional values, ham is a great choice for home chefs who are looking for something new."

    Noting another aspect of ham as a great alternative to beef, Lewallen reminds retailers of the importance of featuring ham steaks "just prior to the holidays throughout the year to generate total ham category sales. By moving them out of inventory, retailers can help drive margins and avoid precluding opportunities to generate sales between Christmas and Easter with good prices on ham steaks."

    Referencing Cook's POS merchandising program—which includes a variety of components that can be used as a whole or in parts, such as case dividers, case cards, posters, banners, and recipe cards—Lewallen says it not only helps retailers organize their meat cases, but also helps consumers trade up to higher price points.

    Once considered solely high-end fare for fine dining, lamb and duckling have begun to enter the mainstream marketplace. John Tucker, co-president of Milford, Ind.-based Maple Leaf Farms, says retail duck sales have increased 5 percent over the past decade, due in large part to the number of preroasted and precooked duckling products.

    The family-owned Maple Leaf Farms, a premier producer of duck products, dominates the market with high-quality value-added items, according to Tucker, who also serves as president of the Duckling Council, which represents producers of American white Pekin duck. The cornerstone of the council's efforts, Tucker says, "is working toward reaching the industry all the way down to consumers with our strategy for the 'Art of SeDucktion' public relations program."

    Noting the rising U.S. duck consumption over the past decade, Tucker says the primary goal of the "SeDucktion" campaign centers on enticing consumers to begin a "white-hot romance with American duckling by serving it for wedding anniversaries." Tucker cites Costco, Wegmans, and Raley's among the benchmark U.S. duckling retailers.

    Solid inroads

    With the per capita consumption of duck in the United States running between one-half and one-third of a pound, Tucker says, "It's not as large as in France or China, but it's becoming more popular all the time, and our sales reinforce that fact."

    From a wish-list perspective, Tucker says more availability of stocking is an obvious item, "as is having the understanding that this is a growing category." He also encourages retailers to take advantage of the promotional information and display support materials, recipes, "and our wonderful Web site—duckling.org—that can make their efforts much more meaningful and exciting."

    As an affordable protein option, Tucker says whole-body duck, which is available across the country, runs anywhere from $1.20 to $1.40 per pound, with duck breast costing between $5 and $6 per pound. "Duckling breast is a compelling dark-meat substitute because it's juicier and more satisfying than some of the other poultry products out there. It has all the appeal of a steak, but it's not quite as expensive," he adds.

    American lamb is also making solid inroads across the land, says Dan Borschke, executive director of the American Lamb Board (ALB). "Historically lamb is a meat protein that sells particularly well in the holiday season. However, since our share of the meat case is relatively small, we depend on tie-in promotions to help fund the program as well as cross-merchandise in other aisles in the store."

    Borschke says retailers have responded very positively to ALB's "Season's Favorites" partnership with Buena Vista Winery, which features a coupon on fresh American lamb delivered on Buena Vista wines, a sweepstakes prize to Sonoma wine country, recipes, and wine pairing recommendations.

    "Some of our lamb industry suppliers have enhanced the program by applying promotional materials of fresh American lamb at the plant level to ensure compliance at the retail level. It seems to be working," Borschke says, adding that the promotion has been further helped by an integrated effort in consumer advertising that mentions the partnership with the winery.

    Noting that ALB's ongoing media efforts include ads in a number of gourmet-cooking consumer magazines, Borschke says such publications were selected because of their strong ability to reach those the board has identified as a primary target: emerging epicureans. "Utilizing the current 'Meat Lovers Know' campaign, ALB's message will be in front of the best prospects in highly targeted environments," he adds.

    Denver, Colo.-based Coleman Natural Meats now offers an expanded line of lamb for consumers who want more natural choices at the supermarket, says Mel Coleman Jr., chairman of the company, which is known for its pioneering practices with natural beef.

    Citing research from Iowa State University's Agricultural Marketing Resource Center, Coleman says U.S. lamb consumption has remained steady over the past decade, with per capita consumption posted at 0.8 pounds—the equivalent of an entree portion of lamb—in 2001. The resource center, he says, identifies the East and West coasts as heavier lamb consumption areas because of higher concentrations of Greek, Hispanic, and Middle Eastern consumers.

    "Based on where our sales have been in 2002 as compared to where we're tracking in 2003, we're looking at about a 25 percent to 30 percent growth rate, part of which has come from introducing Coleman Natural Lamb into mainline supermarkets, where we're seeing enough growth to anticipate the same growth rate next year for that category," Coleman says.

    He continues: "As more and more Australian, New Zealand, and now Icelandic lamb permeates the U.S., we feel that a branded product for consumers seeking no antibiotic growth hormones is a perfect fit. Another thing is that it makes it easier for retailers to talk to one company and order pork, lamb, and beef to help them take advantage of efficiencies, logistics, purchasing, and the whole ordering process. It also allows us to put a little more marketing support behind educating consumers."

    Natural potential

    More than 1,600 grocery stores in 41 states now carry Coleman Natural Beef products, and 14 retail chains—including Wild Oats, King Kullen, Dorothy Lane, and the Whole Foods Northeast region—have selected Coleman Natural Lamb for their health-conscious shoppers, Coleman says.

    When asked about skyrocketing beef prices, Coleman says his firm is seeing the same kind of increases as the rest of the industry. "But we try to structure our contracts with our ranchers to level out the peaks and valleys, so that in down cycles in the cattle market, the rancher is still able to make a profit. When it goes really, really high, as it is now, we'd like to not be tied to that market so much, so that it can be evened out to where ranchers are making money all the time, rather than the typical cycle."

    With consumers now being forced to pay escalating meat prices, Coleman says it's also "a perfect time to encourage consumers to trade up to natural products because the price difference is not quite as great vs. conventional prices as it's been in past years."

    Bullish on the potential for growth "and [on] our ability to supply those needs," Coleman says natural lamb "is a great center-of-the-plate item. And I believe as people keep tuning in to more and more cooking and lifestyle shows, they'll try to go back to the kitchen and experiment with new foods rather than just trying to whip up a quick meal."

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