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Promotional Drop: Meat Trends Today

Promotional Drop: Meat Trends Today

Meat and poultry prices are expected to continue rising in 2012, but analysts believe there may be new ways to help customers cope

Last year posed a lot of challenges for supermarket meat departments. In 2011, drought, rising feed costs and strong export demand crimped domestic supplies of beef, pork and poultry, pushing prices up across the board. Pork and beef were hit particularly hard, with fresh pork prices up 10.6% and fresh beef up 11.5% compared with 2010, according to FreshLook Marketing/VM Meat Solutions.

According to recent forecasts from the U.S. Department of Agriculture, red meat and poultry production is expected to continue falling in 2012 and 2013 before flocks and herds are rebuilt. The agency doesn’t expect price inflation to be as steep this year, but prices certainly aren’t expected to ease, either. Currently, USDA is expecting meat and poultry price increases in the 4% range for 2012.

With consumers still struggling through a sluggish economic recovery, supermarkets are finding themselves between a rock and a hard place. Margins are getting squeezed and promotions are losing their power. However, industry analysts are pointing to several new trends and ideas that could help retailers weather this difficult climate.

“The overall impact of promotions has weakened because of the increase in prices,” noted Sherry Frey, vice president of account services for the Perishables Group, a division of Nielsen. “One of the biggest things that we’re seeing in terms of consumers is overall, they’re purchasing less volume per trip. And, overall for fresh meat we’ve seen the trips down, so there’s less trips to the meat case. In general, the meat case is being affected by consumers buying less, less often.”

In fact, the percent of fresh meat and poultry products sold on promotion during 2011 decreased across the board. According to Perishables Group FreshFacts data, turkey sold on promotion was down 8.6%, beef was down 4.6%, pork was down 3.1% and chicken was down less than 1%.

Frey added that some retailers seem to be having success promoting across proteins. If customers are making fewer trips to the meat case, then the most successful meat departments are going to find ways to encourage those shoppers to walk away with more items after each trip.

“One of the areas of opportunity that we think retailers have is utilizing cuts on sale to get additional products and proteins in the basket,” she said. “Buy a pound of chicken breasts — an item that has high household penetration — and get a dollar off of a pork rib. Use products to get additional products into the basket. Rather than that consumer coming in for that one hot deal on one product and only purchasing that, encourage the purchase of two products for two different uses in that same shopping trip.”

Shoppers also continue to express interest in meal ideas and serving suggestions, Frey said. Advertisements and promotions that feature recipes and recommendations for the consumer “always do better than just images of raw meat.”

 

Man About Town

Recent research from Chicago-based Midan Marketing has indicated that these types of ideas and serving suggestions might be especially important for a growing segment of male shoppers who are participating more in household cooking and grocery shopping.

It’s a demographic trend being driven by Generation X and older Generation Y adults, according to Michael Uetz, managing principal for Midan.

“It’s about being involved,” he said. “Involved with the entire family … and a lot of that revolves around meal planning and meal preparation. That’s why we see more men getting involved, and we don’t think that this is a [short-term] trend at all, we see it really as the new norm.”

Some retailers are already noticing this new “Manfluence,” as Midan calls it, in their stores. For example, proprietary research by Schnuck Markets recently indicated that 6% more men were doing the primary grocery shopping for their household compared with five years ago.

And men shop the meat case differently than women, Uetz explained. Many are new to cooking, they tend to be less price sensitive, they want to get in and out of the store quickly, and they are more prone to impulse buys when not carrying a shopping list. All of these factors make them great targets for recipe ideas and meal bundles.

“He’s more likely to want something that’s quick and easy to put together but still makes him look like a hero when it’s time to eat,” Uetz said. “We believe that if we give him the right information and the right products at the right place, and he sees the potential, he’s going to be very likely to buy.”

Rebuilding volume sales and margins for the meat case will continue to be a challenge this year, Uetz agreed, since prices are expected to keep inching up. But, he argued, there is an opportunity for retailers that put into perspective the relative bargains that their meat departments continue to offer.

“Help them understand the value that they get from home preparation … The key is the value proposition and how we explain to them the opportunities,” he said.

As the economy slowly recovers and restaurant expenditures begin picking up, it could be a good time to remind shoppers that grilling a premium steak at home is still a significant bargain compared with eating one at a restaurant.

Midan will discuss these trends in the first installment of a new research platform called The Consumers’ Case. A series of webinars on current meat case trends will kick off with “Breaking the Pattern” on March 20.

 

Proper Portions

Changing U.S. household sizes is another demographic trend that meat departments should pay close attention to, noted John Lundeen, senior executive director of market research for the National Cattlemen’s Beef Association. Whether it’s empty nesters, young singles, roommates or couples without children, the number of one- and two-person households is on the rise. Family packs and value bundles certainly still have their place, but members of these smaller households will be looking for smaller portions. And, other shoppers may be looking for smaller portions to purchase out of economic necessity.

“This is a big consumer trend,” Lundeen said. “There’s a big plurality of one- and two-person households in this country. We have to have an offering for those households. Then, there’s folks that are still in larger traditional families, and we need to have a beef offering for those folks as well.”

NCBA has offered retailers a variety of tools to adjust to these trends, including its Beef Alternative Merchandising program, which encourages butchers to try utilizing new, often smaller cuts, such as a two- or four-pack of boneless 4-ounce filets.

Frey’s data confirmed the growth of smaller-portion products as well.

“Larger package sizes, they grew last year, but they’re down lately because of the overall ring,” she noted. “Where we’re seeing more growth is in smaller package sizes. It makes sense when you think about the fact that 60% of U.S. households are now one- or two-person households. And, smaller package and portion sizes have a smaller overall ring. I think it continues to be an area of opportunity for retailers.”

On a brighter note, Frey added that while many consumers are still very much mired in the recession, about one fifth of U.S. households increased their shopping trips and their shopping dollars last year.

She also pointed to convenience products that grew during the past year — prepared chicken, pizza and prepared entrees all grew for deli departments, and fully cooked meats and value-added beef, pork and chicken all grew for meat departments.

“We are seeing that some of those premium products — premium because they’re higher priced or because the consumer has the value of convenience — are actually growing, even in this climate. It’s not only about consumers leaving categories because of price.”

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