In the short term, grocery retailers will need to get creative to keep fresh meat sales strong under intense inflationary pressures. Longer-term, supermarkets need to make sure they keep their eyes fixed on the youngest consumers and their (very different) meat buying patterns.
Those were among the takeaways of a recent webinar hosted by the North American Meat Institute (NAMI), sponsored by Amcor and led by Melissa Rodriguez, Circana’s principal for retail and consumer protein.
It’s finally settling in with many consumers that they need to adjust their fresh perimeter spending because of inflation, Rodriguez said. And that’s especially true for the meat department.
“It’s definitely changed. People are becoming more sensitive as inflation has kicked in. They’re really starting to shop around and make some tradeoffs.”
That reality has changed how many retailers are handling meat department promotions, Rodriguez said.
“Sales on promotions are going up, but lift is going down. The price is already elevated, and many people aren’t thinking of promotions as being the best deal.”
As an example, Rodriguez said that “2 for $10 is the new 2 for $7.” Even on a promotion, that $10 charge will scare many shoppers away. Instead, they’ll find they’re willing to settle for 1 for $6 instead.
“We’re not seeing a lot of prices ‘rolled back,’ per se,” she said. “Dollar sales continue to grow, they’re up 5.5%, but we expect that to soften. And there’s softness in volume sales.”
Ninety-one percent of consumers say groceries cost more than they did a year ago, Rodriguez said. In her own three-person household, she said what used to be a $130 weekly grocery bill now is $170-185. Many shoppers who used to shop at traditional grocery stores only are now also shopping at club stores, discount stores or other channels.
Nearly one in four consumers — 24% — say they’re buying less meat and poultry. There are pockets where prices are going down, chicken and pork in particular, Rodriguez said. But even when many prices fall at wholesale, that hasn’t necessarily been reflected in retail prices.
Some consumers have switched from beef to chicken to save money, but for the most part, they’re buying less, and sometimes because pack sizes are smaller, Rodriguez said. At the grocery store she shops at, for instance, she may see similar prices on a packaged meat product, but it’s closer to three-quarters of a pound, whereas in pre-inflationary times it would have been a pound.
Suppliers, retailers and consumers need to get used to the idea of a new normal, Rodriguez said. Prices aren’t likely to go all the way back to where they were pre-pandemic. That said, they could fall to some “happy medium” by the latter part of this year.
That said, there are certain pockets of higher-priced meat products that are still strong. Marinated and value-added products continue to grow, and products that boast health and wellness, sustainability or free-from claims are also selling well.
Grass-fed and organic sales, however, have fallen a bit, Rodriguez said.
Youth revolution
In the webinar Rodriguez also took a look at trends to keep an eye on further down the road.
The most important thing for suppliers and their retail partners to watch is the upcoming generational upheaval. In 7 to 10 years, Rodriguez said, millennials and Gen Zers will make up half of all American shoppers.
Younger shoppers don’t shop the way their older counterparts do. Ground turkey, for instance, is the fastest-growing fresh meat category among millennials and Gen Zers.
Other ground products are also selling well among the younger set. When it comes to chicken, they prefer dark meat.
And they’re bullish on plant-based options. Plant-based sales have suffered disproportionately from the inflationary pressures, but the category will remain a force long-term because of the millennial and Gen Z interest in it. And if plant-based is done right, retailers can’t ignore the price premium it commands.
Thirty percent of millennials and 60% of Gen Zers say they want to eat more plant-based products. But that’s not necessarily a reason for meat producers to panic. Most buyers of plant-based also buy plenty of meat products, Rodriguez said.
“Plant-based is an addition, not an exclusive.”
One increasing criticism of plant-based has been the large number of ingredients in some plant-based products. Over the next two years, look for more plant-based producers to tout the fact that their products have ten or fewer ingredients, Rodriguez predicted.
The challenge for retailers going forward, Rodriguez said, is to figure out how to keep their current customers while also adding new, younger, ones.
Retailers have to learn to speak better to younger consumers “in their language,” Rodriguez said.
“They’re connected consumers, they’re digital natives. And they care about holistic health, sustainability and transparency.”
Top takeaways
On the supplier side, producers of branded meat products can expect more competition from private-label options, as retailers look for ways to keep prices under control. If retailers have a strong store brand program, they may complement it with one branded option instead of two, for instance, Rodriguez said.
Vacuum packs increased; others, like wraps, declined. Multiple servings in a pack are more common.
Herd sizes are projected to be down by 2.4 million in 2024, so look for lower beef volume.
Beef cuts make up half of the top ten meat cuts. This becomes more important as retailers think of strategies going forward, Rodriguez said. For instance, different geographic regions are buying different cuts. Chicken wings are huge in the south but not nearly as big elsewhere, to name just one example.
Dark meat now makes up almost a quarter of the chicken category and should continue to grow. Chicken thigh sales are nearing $1 billion, and wing sales are up 71%, despite prices going up 33%.
Ground meat sales grew from $11 billion in 2017 to $14 billion in 2022.
Egg roll bowl
Demand for grounds continues to surge as consumers seek convenience and value. One dish that relies on ground meat and that has exploded on TikTok is egg roll bowls.
Makes 4 servings
Ingredients
- 1 lb ground turkey
- 1 T olive oil
- 1/2 tsp salt
- ¼ tsp pepper
- ½ onion, finely diced
- 3 garlic cloves, minced
- 1 bag Cabbage slaw mix
- 1 tsp ground ginger
- 1/4 cup soy sauce
- 2 tsp sesame oil
- ½ tsp sugar
- 1 T chopped green onion
- 1/4 tsp sesame seeds
Instructions
- Heat skillet over medium/high heat and season with olive oil. Add ground turkey and cook through until no longer pink, breaking up the meat as it cooks. Season with salt and pepper.
- Add onion and sauté until tender, 5-7 minutes, stirring occasionally. Add the garlic and cook another 30 seconds, while stirring.
- Add the cabbage mix, ginger, soy sauce, sesame oil, and sugar. Continue to saute for 5-7 minutes, or until the cabbage is tender.
- Garnish with green onion and sesame seeds.
This article is an excerpt from the July 2023 issue of Supermarket Perimeter. You can read the full feature on protein trends and more in the digital edition here.
