Deli sales bolstered by prepared foods

Despite all the headlines about high grocery prices, restaurants are feeling the heat from inflation as well. And supermarket deli departments are the beneficiaries.

Elevated pricing at restaurants in the first half of 2022 has more consumers now seeing the value of eating at home, after many had eagerly returned to their favorite dining spots after the pandemic receded. In turn, grocery stores are seeing a big upswing in their deli-prepared foods sections as shoppers find convenient meal options at prices they can afford.

In its May category report, the International Dairy Deli Bakery Association (IDDBA) said sales in the deli prepared foods segment totaled $2.2 billion, up 10.1% in the past year and 44.4% from 2020.  

“Consumers remain home-centric in their meal preparation. However, that does not mean they are making everything from scratch,” Jonna Parker, team leader for fresh at IRI, said in the IDDBA report. “While the four areas within deli certainly have inflation as well, demand for deli-prepared solutions that provide a helping hand remained strong in May 2022.”

Abe van Beek, corporate executive chef for Gelson’s Markets, said the Southern California grocer’s deli department focuses on offering restaurant-quality prepared meals, creating bespoke flavor profiles and dishes.

“Understanding that our customers will need to reheat many of our items at home, we have worked hard to find packaging with the functionality to be oven able and microwaveable,” van Beek said. “We have designed our items to be sold independently as mise en place, as well as having curated many dishes using the same freshly prepared items.”

Overall, the deli category saw a 11.9% increase to $46.6 billion in sales year over year, according to NielsenIQ data for the 52-week period ended May 28.

One item that did particularly well for many supermarket delis was pizza, which saw $56 million in sales, up 8.6% year over year, according to the IDDBA data. The pizza segment benefitted as consumers embraced more value-added meals and grab-and-go offerings. Add in that more consumer shopping options are back after 2020 and 2021 COVID-related challenges, and the outlook for the pizza category remains strong.

Deli meats give sales lift

But it’s not just prepared items that are bringing in strong dollar figures in the deli category. The IDDBA report said deli meat gained 6.5%, thanks to a hefty 15.1% average price increase, while volume was down by 7.6%.

Service deli meat remained the largest of the three areas, but all growth was driven by grab-and-go and presliced deli meat. Grab-and-go increased in both dollars and units over a year ago.

Deli cheese also saw sales edge up 1.5% year over year to $720 million in May. Consumers’ increased interest in the segment has led to many retailers self-inventing holidays or offering “cheese of the month” types of specials.

Deli entrees recorded growth in both sales (up 17.7%) and units (up 6.6%), according to the IDDBA report, with soups and chili doing particularly well.

“The May 2022 deli entertaining and deli prepared numbers held up against both 2021 and 2020,” Parker noted. “As consumer mobility has returned with kids back in school, evening activities being back on, and more and more offices opening back up, the daily time pressure is back. With it, deli-prepared food sales were strong in May, up 10.1%. This increase was, however, slightly lower than the price per unit increase, at 12.9%.”