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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 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.”