KANSAS CITY - Even as the United States faces the worst financial crisis since the 2008 recession and record unemployment as a result of the COVID-19, consumers are still finding plenty of value in premium and specialty products across the fresh perimeter.
A report released by Nielsen in April 2020 identified that consumers are willing to pay more for premium products that are high-quality/safety standards (49%), have superior function or performance (46%), include organic/all-natural ingredients (41%), are made with sustainable materials (38%), offer something no other product on the market does (37%), have social responsibility claims (30%) and originate from a specific region or country (21%).
These factors have increasingly come into play amid the pandemic as consumers seek sustainable, healthful products that cater to increased at-home eating. Premium products have experienced heightened demand amid the pandemic.
“Every category in the store is seeing examples of people going for a little splurge,” said Anne-Marie Roerink, president of San Antonio, Texas-based 210 Analytics. “Importantly, there is another driver of premium food sales as well and that is experimentation. We see this in specialty produce, fresh herbs, asparagus, etc., that are used to create fresh and upscale meals. We’re seeing it in meat, with the above-average growth of lamb, bison and high-end beef cuts. And we’re seeing it in dairy where specialty cheese have grown as fast as packaged cheeses.”
Shoppers want better ingredients for cooking at home
Since the start of the pandemic, Wendy Robinson, grocery manager and senior buyer of Oakland, Calif.-based Market Hall Foods has seen a drop in customers but not in sales at her specialty supermarket. It seems that as restaurant operations remain limited and people continue to cook more at home, they’re becoming more likely to spend a little extra on high-quality, premium ingredients that will make their food pop.
“We don’t have the capability of eating at restaurants and having that same dining experience where a chef is showcasing products for you,” Robinson said. “So consumers are spending that extra dollar or two to get that artisanal quality product that so much love has gone into because the flavor and taste is there.”
When selecting premium products, Robinson looks for two main things: the product has to taste good, and it needs to be made with clean ingredients. People are willing to spend an extra dollar when the quality is being shown, she noted. And in pandemic times surrounded by economic uncertainty, shoppers are being extra choosy and buying products they know they will enjoy.
That’s why it’s valuable for retailers to take the right steps in educating consumers about how they can use premium products in their cooking and the outcomes they can expect. Market Hall Foods has increased signage to give customers more product information; presented tasteless demos to show customers ways to use various items; and used small sample cups with lids for shoppers to take to try safely at home. Promos, specials and limited-time-offers are a help in driving sales, too, Robinson said.
Roerink of 210 Analytics has noticed double-digit gains in many premium products due to shoppers cooking more at home, too. Lending to that trend is the fact that many millennials have never cooked more meals at home than they are now, which is quickly driving experimentation with high-quality ingredients.
Making restaurant-quality meals at home is certainly a lot cheaper than ordering a meal from a high-end restaurant, Roerink noted. That’s why she suggests that retailers compare their meal kits and value-added meat and produce to restaurant prices and help guide shoppers know how easily they can prepare restaurant-style meals at home.
“It is important for grocers to give consumers the confidence and tools that they will not be wasting their money, but instead have a great eating experience and will do it again,” she said.
Melanie Bartelme, a global food analyst for London-based Mintel has seen that in the last few months, consumers have done a lot of trading up in products as they eat out less frequently.
“With the trading down of restaurants, people are saving money there,” Bartelme noted. “So they have more ability to say, ‘You know what? I am home everyday cooking for myself, I really want a nice sauce or I want a really nice restaurant-style soup,’ any restaurant-quality foods they can get to brighten up their days a bit. They’re buying things that can make their lives feel a little bit more special.”
Health and wellness driving premium foods
Premium products fall into four main categories, pointed out Shelley Balanko, senior vice president of Bellevue, Wash.-based The Hartman Group:
- Freshness attributes — whether a product is objectively fresh in terms of perishability or symbolically fresh because of something like minimal processing.
- Health and wellness — products that communicate functional or even emotional supplements fall into this category.
- Culinary distinction.
- Transparency and sustainability.
“A food or beverage item doesn’t have to have all four attributes, it just has to connect to at least one of those four key themes to resonate with a consumer as premium,” Balanko said. “With the pandemic consumers have certainly had a spotlight on all issues of health and wellness from a cultural standpoint because we’re talking about a massive public health crisis, but also from an individual resilience standpoint. Consumers now get that the pandemic is not a sprint.”
Consumers view healthy eating as somewhat of an insurance policy for their health, Balanko noted. And if that means paying a little bit more for a higher-quality, better-for-you item, then it’s justified if that healthier eating saves them from paying off an expensive hospital bill later in life. She suggested that retailers and suppliers play up to the investment aspect in marketing premium products.
The health and wellness trend in premium products is another one of those trends that was starting to form pre-COVID, Balanko said, and it has quickly accelerated since the pandemic began. There was a time when better-for-you foods and beverages weren’t considered premium because healthier foods were not considered to have better texture or taste. Now as consumers use attributes like natural and ethically sourced ingredients to define better-for-you products, those food and beverage items easily fit in with premium and specialty foods.
Better-for-you plant-based products have been shining amid COVID-19, noted Mintel’s Bartelme.
“Consumers really value freshness, which is something that leads to their perception across categories,” she said. “That’s a real advantage products that are already in the fresh perimeter have going for them in the first place and we’re also seeing more interest in plant-based eating as a result of COVID as people prioritize the healthfulness aspect as well as that of comfort.”
Premium shining across fresh categories
With cooking-at-home and healthy-for-you attributes leading consumer choices of premium products, there’s plenty of room for multiple fresh departments to shine.
Data from New York-based Nielsen released in October suggested that premium and specialty items in the produce department have had the most success since the start of the pandemic. In the 33 weeks leading up to Oct. 27, specialty vegetables saw an 18.6% increase year-over-year and fruits saw a 9.5% increase.
On the bakery side, Gilroy, Calif.-based artisan bread company Atoria’s Family Bakery has seen an increased demand for the company’s high-end flatbreads since April, and that heightened demand has yet to go away.
“Consumers have a back-to-basics mindset, focusing on simple ingredients and fewer processed foods when it comes to premium or specialty products in the deli bakery and across the entire store,” said Beth Gordon, online marketing director of Atoria’s. “They read nutrition labels, ingredient lists and brand stories to inform their purchase decisions.”
The company just released a vegan Cauliflower and Coconut Mini Lavash that is low-carb and keto-friendly with only 60 calories and 3 grams of carbs per serving, and made with eight pronounceable ingredients. The lavash can be used for making wraps, pinwheels, flatbread pizzas, paninis, or served with dips and chips for at-home eating occasions. The new product was specifically created to provide a lower-calorie, lower-carb option for a targeted group of health-focused shoppers looking to properly fuel their bodies and satisfy hunger.
Meanwhile, Chicago-based premium meat producer Pre Brands has also noticed an increase of consumers who are educated about the food they put in their bodies. Label claims-based sales have been skyrocketing in the meat department with gains in organic, antibiotic-free and grass-fed claims. According to the Power of Meat Mid-year report, 58% of shoppers have bought claims-based meat since March.
“While some trends assume consumers are shifting to eating less beef, when they do eat beef, they are willing to pay more for the best quality beef,” said Nicole Schumacher, chief marketing officer for Pre. “Whether the consumer's shift is due to worries about high fat and cholesterol or emerging concerns and lack of trust with how cattle are raised on large factory-style ranches, using hormones, antibiotics, and genetically modified crop feed, Pre provides them the confidence and consistency consumers are seeking.”
In the third quarter of this year, Pre saw a 118% year-over-year growth in the company’s steak segment attributed to customers seeking restaurant alternatives to cook nice meals from home. For the holidays, the company is introducing 100% Grass-fed and Finished Frenched Rack of Lamb.
“With smaller celebrations and preparing more meals at home, consumers are yearning for something new. They are also willing to step out of their comfort zone and try new recipes,” said Schumacher. “We've helped by providing some menu options and recipes to make the holiday extra special.”