Fresh Market Categories on Solid Ground

Shoppers showed a preference for fresh foods over the latest 52-week period.

Standout fresh categories this year included fruits, deli, seafood and vegetables.

“It has been another strong year for fresh. Even despite price increases, shoppers continue to put more fresh foods in their baskets,” said Kelli Beckel, senior marketing manager at Nielsen.

15 KEY FRESH MARKET CATEGORIES

Supermarket dollar sales and percent change for the 52 weeks ending June 16, 2013, by Information Resources Inc., except for Fresh Market Perishables, sales in key U.S. grocery, mass/supercenter and club chains, including 18,000 stores nationwide for the 52 weeks ending May 25, 2013, by Nielsen Perishables Group.

Dairy Aisle
1-Milk — $10.5B, -2.5
2-Natural Cheese — $8.1B, 1.6
3-Yogurt — $4.8B, 5.0
4-RFG Juices/Drinks — $4.3B, 2.3
5-RFG Fresh Eggs — $3.5B, 3.7
6-Breakfast Meats — $3.5B, 1.8
7-Luncheon Meats — $3.4B, -2.6
Perishables
8-Deli — $21.1B, 5.6
9-Fruits — $19.9B, 9.3
10-Vegetables — $18.1B, 4.0
11-Beef — $16.6B, 3.1
12-Poultry — $10.5B, 6.9
13-Bakery — $10.3B, 4.7
14-Seafood — $6.1B, 6.9
15-Pork — $4.8B, 1.4

The SN Category Guide features sales data showing top perishable product performance. IRI provided data for the 52 weeks ending June 16 for dairy products including milk, natural cheese, yogurt, refrigerated juices/drinks, luncheon meats, refrigerated fresh eggs and breakfast meats.

In dairy, yogurt continues to be a growing sales generator with a 5% dollar sales increase in supermarkets. Although drug stores only make up a small portion of total yogurt sales, dollar sales grew 43% in this channel.

The guide also features sales data for fresh departments from the Nielsen Perishables Group based on information from 18,000 grocery, mass/supercenter and club chains for the 52 weeks ending May 25. These categories include in-store deli, vegetables, fruits, beef, in-store bakery, poultry, seafood and pork.

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Milk, Natural Cheese, Yogurt, RFG Juices/Drinks, RFG Fresh Eggs

Milk

Got milk? Many consumers don’t, as dollar sales fell across all retail channels in the 52 weeks ending June 16, 2013, according to data from IRI.

“Sales have been declining fairly steadily on a per capita basis for maybe 25 or 30 years,” said dairy market analyst Jerry Dryer.

In addition, non-dairy milks continue to gain popularity and are squeezing dairy milk out of the case. Sales of kefir/milk substitutes/soy milk grew by 15.1% in the same 52-week period.

“It’s not a dairy case anymore. It’s a refrigerated case,” said Dryer.

Natural Cheese

The cheese category keeps growing. In the 52 weeks ending June 16, 2013, supermarket dollar sales climbed 1.6% to $8.1 billion.

The success of cheese is no surprise, said dairy market analyst Jerry Dryer.

“The cheese business in general, from the cheesemaker all the way through to the retailer shelf,

[has] been very responsive to consumers,” said Dryer.

That includes adding new flavors and varieties.

“We’ve made cheese very convenient — slice and dice it and shred it and pack it in all kinds of different packaging configurations,” said Dryer.

Tastes may be fickle, with sales of cube cheese down 10.4% but sales of refrigerated grated cheese up 27.4%.

Yogurt

Yogurt’s booming sales growth of the past few years shows little sign of slowing.

Supermarket dollar sales jumped 5% to $4.8 billion in the 52 weeks ending June 16, 2013, according to data from IRI. The latest upswing follows supermarket sales increases of 5.3% in 2012 and 8% in 2011.

Once again, though making up a small segment of the total pie, a particularly bright spot for yogurt was drug stores, where dollar sales surged 43.4% from a year ago.

Unit sales at supermarkets and multi-channel outlets did not show the same gains as dollar sales, as higher-priced Greek yogurt continues to hold the spotlight.

Wal-Mart Stores debuted a Greek yogurt under its Great Value brand in September 2012. 

After earlier missteps with its Greek yogurt, General Mills’ Yoplait launched a reformulated version in July.

Competitor Dannon Oikos Greek yogurt was the top-selling new food or beverage in 2012, according to a previous report from IRI.

Last month, Starbucks announced a partnership with Danone to create Greek yogurt parfaits that will debut in U.S. Starbucks locations in spring 2014 and enter grocery stores in 2015.

RFG Juices/Drinks

Refrigerated juices in the dairy case have bounced back from flat sales last year. In the 52 weeks ending June 16, 2013, supermarket dollar sales increased 2.3% from the previous year to $4.3 billion with unit sales up 1.3%, according to data from IRI.

The category continues to see strong growth at drug stores, with sales up 12.4% for the same 52-week period after an increase of 8.1% in 2012.

Aside from another banner year for cranberry cocktails and drinks, which saw sales skyrocket 161.2%, the data show consumers are moving away from cocktail mixes and grape juice and increasingly opting for juice and drink smoothies and vegetable juices and cocktails.

With more consumers eating on the go, smoothies can serve as a meal replacement or hearty snack.

Some suppliers seem to think the dairy case is the place to be for juices. In the past year, innovations from new players and old standbys have attempted to draw consumers away from shelf-stable juices in favor of refrigerated drinks.

Ocean Spray made the jump from the juice aisle to the refrigerated case for the first time with its Premium Cranberry and Blueberry Juice Beverages thanks to a partnership with PepsiCo’s Tropicana, while Tropicana separately introduced three fruit and vegetable juice blends under the label Tropicana Farmstand.

The ad campaign for Tropicana Farmstand called attention to the juices’ position in the refrigerated case with the tagline “Deliciously Chilled.” A Tropicana spokesperson said in a statement that initial consumer response to the products had been positive.

RFG Fresh Eggs

Consumers appear to have put their health fears around eggs behind them. The category saw gains across all retail channels in the last year.

Dollar sales at supermarkets rose 3.7% in the 52 weeks ending June 16, 2013, according to data from IRI.

Though many other fresh categories experienced stronger growth at drug stores than at other channels, the same could not be said of eggs, where dollar sales only increased 0.9% for the same 52-week period. Drug stores still represent a very small segment of the total.

In addition, egg substitutes are back in vogue after recent declines, with sales up 4.5%.

Despite the rise in dollar sales, unit sales of eggs are down across all retail channels. One possible explanation is that consumers are showing more interest in products with environmental and other claims, such as organic, cage-free and local, which often cost more.

The U.S. organic egg market share grew 55% from July 2011 to November 2012, according to a report from the World Society for the Protection of Animals based on U.S. Department of Agriculture production data.

In December, Safeway announced that all its cage-free and organic eggs had earned the Certified Humane label from non-profit Humane Farm Animal Care, making it the first major U.S. retailer to make such a demand on its egg producers.

HFAC recognized Safeway, Harris Teeter, Whole Foods and Costco for their commitment to such products earlier this year.

Breakfast Meats, Luncheon Meats, In-Store Deli, Fruit, Vegetables

Breakfast Meats

Consumers are still bringing home the bacon. In the 52 weeks ending June 16, 2013, dollar sales of breakfast meat at supermarkets rose 1.75%, according to data from IRI.

The category saw significant growth at drug stores, where dollar sales climbed 18.8% and unit sales jumped an impressive 83.7%, although the channel accounts for a sliver of total retail dollar sales.

Bacon sales topped $2.5 billion in the same 52-week period, a 1.6% increase from a year ago.

That’s good news, since bacon is the most profitable category in the store, according to Paul Weitzel, managing partner, Willard Bishop.

While some of the sales increases can be attributed to higher prices, suppliers have done a good job of catering to consumers’ health concerns, according to Mintel food analyst Sarah Day Levesque.

“But we’re seeing a lot of trends towards introduction of healthier products, so ‘low in’ products — lower sodium, lower fat, lower calories,” said Levesque.

There has also been innovation around existing products.

“Turkey bacon’s been around for a while but really trying to improve the quality, the feel, the texture of turkey bacon,” said Levesque.

Luncheon Meats

Luncheon meat is losing ground. Dollar sales declined across all retail channels in the past year.

Supermarket dollar sales fell 2.6% and unit sales dropped 1.9% in the 52 weeks ending June 16, 2013, according to data from IRI.

Sales of sliced luncheon meat were down 2.8% from a year ago, while non-sliced meat sales were essentially flat.

The perceived unhealthiness of lunchmeats is one of the biggest factors for declining sales, as consumers seek to avoid the high fat and sodium content as well as the processed nature of the product, said Mintel food analyst Sarah Day Levesque, who authored a Mintel report on lunchmeat in June 2013.

Consumers are also eating out more and making sandwiches less, she said.

Moreover, consumers often prefer sliced meats from the deli counter to what they see as “slimy lunchmeat in a package,” said Levesque.

Retailers need to reassure customers on the quality of lunchmeat in order to stop the slide in sales, Levesque said.

“I think making sure that consumers can actually try the products, with tastings or samplings within the store will be helpful,” she said.

Mintel research also shows that there is strong consumer interest, particularly among men, in premium private-label lunchmeat.

Decreases in category sales could hurt retailers. Lunchmeat is one of the top 10 most profitable categories in the store, according to Paul Weitzel, managing partner at Willard Bishop, a retail consulting firm.

“When you look at the volume that they generate and the profit that they generate and the fact that they don’t take up a lot of space, still think we’ve got to do I think a better job at finding more display space and off-shelf promotion,” said Weitzel. 

In-Store Deli

It’s blue skies for the deli department. Deli brought in $21.1 billion in sales and 5.6% increase in dollar sales in the 52 weeks ending May 25, according to data from the Nielsen Perishables Group.

Retailers have been expanding their prepared food options for shoppers who want fresh meals, but are short on time.

Deli prepared chicken sales were up by 4.6% on average. Deli entree sales were up 3.3% dollars on average per store, per week.  

“We’re really watching deli prepared breakfasts, whose sales are still on a small base but posted 34% volume growth,” said Kelli Beckel, senior marketing manager at Nielsen.

Prepared food snacks are also an area to watch. Prepared snacks are “increasing in line with consumers’ tendency to replace full meals with numerous smaller snacks,” she said. 

While bulk meat brings in big dollars, it continues its slow sales decline. Bulk meat is down 2.9% in average dollar sales per store.

Nielsen Perishables Group FreshFacts data represent 18,000 U.S. grocery, mass/supercenter and club chain stores.

Fruits

Berries continue to be the darlings of the fruit world. Although volume was down slightly since last year, dollars sales per store, per week are up 4.3% on average, compared with last year, according to data from the Nielsen Perishables Group.

Berries brought in an average of $3,737 dollar per store each week, making the fruit even surpass packaged salad in produce popularity.

The fruit category packed a lot of punch this year. The category represented $19.9 billion in the 52 weeks ending May 25, with a 9.3% increase in dollar sales and a 4.5% increase in volume. This suggests that while prices are climbing in fruit, consumers are willing to pay for the healthy snack.

Nielsen Perishables Group FreshFacts data represent 18,000 U.S. grocery, mass/supercenter and club chain stores.

Vegetables

Shoppers have been eating their vegetables, or at least buying them. Dollars and volume sales were up for the 52 weeks ending May 25, according to data from the Nielsen Perishables Group. The category pulled in $18.1 billion in overall sales, with dollars increasing by 4% and volume gaining 2.8% compared with last year.

Vegetable sales have been on an upward swing over the end of 2012 and into 2013. The first quarter of 2013 showed strong sales growth, with a 4.8% increase in dollars per store, per week compared with last year. The fourth quarter of 2012 had a 1.8% decrease in sales and the third quarter had a 3% decrease in sales.

Packaged salad continues to attract customers looking for convenience greens. The product led the category with a 3.7% increase in dollar sales per store, per week versus a year ago.

Potatoes, on the other hand, took a big hit with a 8.8% decrease in dollar sales despite only a 1.2% loss in volume.

Nielsen Perishables Group FreshFacts data represent 18,000 U.S. grocery, mass/supercenter and club chain stores.

Beef, Poultry, In-Store Bakery, Seafood, Pork

Beef

The effects of the drought are still impacting beef. While dollar sales increased 3.1% to $16.6 billion in the 52 weeks ending May 25, 2013, volume was down 2.4%, according to data from the Nielsen Perishables Group.

This is likely due to higher beef prices passed on to retailers and consumers as farmers struggled with inflated feed prices and smaller herds during the drought.

The higher prices may have some consumers turning to other proteins, all of which boasted volume gains in the same 52-week period.

Unit sales also dropped significantly on a per store, per week basis for all the major beef subcategories. Volume of fresh ground beef, the most profitable item in the department, fell 5.9% on average, while loin volume declined 8.6% and round volume tumbled 8.8%.

Dollar sales per store of the main beef products also declined or stayed flat.

While per store, per week sales improved in the first quarter of 2013 over the previous quarter, dollar sales were still down 1% from the previous year.

There may be some relief this year. The latest report from the U.S. Department of Agriculture’s Economic Research Service predicts beef prices will increase just 2% to 3% in 2013, which is lower than its previous forecast.

Nielsen Perishables Group FreshFacts data represent 18,000 U.S. grocery, mass/supercenter and club chain stores.

Poultry

Poultry brought in $10.5 billion last year, with a 6.9% dollar sales increase over the 52 weeks ending May 25, according to data from the Nielsen Perishables Group.

Chicken breasts had an average of $5,143 dollars in sales per store, per week over the year, holding volume sales nearly even despite a 2.7% dollar sales increase.

Chicken wing volume fell 12.7%, likely due to higher prices, since the category still had a 2.4% increase in dollar sales during that time.

While dark meat is considered an emerging food trend, the dark parts of the chicken didn’t have universal sales success.

Chicken thigh sales grew a healthy 10.5% in dollar sales on average per store, per week, with a 5.1% increase in volume. However, chicken legs and drumsticks saw a 5.4% drop-off in volume sales but stayed even in dollar sales.

Ground turkey prices were up by 8.2% compared with last year. The higher prices haven’t affected sales, which held steady over the year. 

In the latest three quarters, poultry sales were strongest in the fourth quarter of 2012. Poultry brought in $12,434 on average per store, per week.

While the chicken industry took smaller margins through the recession compared with other proteins, it’s now reflecting higher production costs in wholesale and retail prices.

Nielsen Perishables Group FreshFacts data represent 18,000 U.S. grocery, mass/supercenter and club chain stores.

In-Store Bakery

In-store bakery sales topped $10.3 billion in the 52 weeks ending May 25, 2013, an increase of 4.7%, according to data from the Nielsen Perishables Group.

While higher prices contribute to that growth, it’s not the only factor, according to Jonna Parker, in-store bakery specialist, Nielsen Perishables Group.

“There’s actually a quality renaissance going on as well.”

Among individual products in the bakery, consumers appear to prefer smaller items. Dollar sales of cakes and breads fell 2% and 1.6% respectively, with volume also down.

On the other hand, in terms of dollar sales, rolls jumped 5%, cookies grew by 3.5% and doughnuts gained 0.9%.

In rolls, retailers are carrying more items to appeal to consumers who want to dress up their sandwiches and burgers, Parker said.

“We saw an 8% increase in the average number of items carried in the rolls category, which is huge.” 

Nielsen Perishables Group FreshFacts data represent 18,000 U.S. grocery, mass/supercenter and club chain stores.

Seafood

Seafood is holding its own against the other proteins, despite having the highest average retail price of any fresh department. The category grew 6.9% to $6.1 billion in the 52 weeks ending May 25, 2013, according to data from the Nielsen Perishables Group.

Volume also saw a significant bump of 7.5%, the most of any category tracked by Nielsen.

Consumers buying more seafood signals a shift from the recession, when category sales took a big hit.

At the store level, dollar sales of perennially popular fin fish increased 1.8% per store, per week, to $2,490. Unit sales grew 4.8%.

Another customer favorite, shrimp, saw dollar sales go up 5% and volume jump 5.5%.

However, those gains may not last. A deadly shrimp disease in Southeast Asia is squeezing global supply and driving up prices. It remains to be seen how much of a price hike consumers will tolerate.

Nielsen Perishables Group FreshFacts data represent 18,000 U.S. grocery, mass/supercenter and club chain stores.

Pork

Pork lagged behind growth in other proteins, but still saw gains at retail.

In the 52 weeks ending May 25, 2013, dollar sales increased 1.4% to $4.8 billion, according to data from the Nielsen Perishables Group. At the same time, volume jumped 5% from a year ago.

Low prices may be a factor in the disparity between dollar and volume changes. Despite fears of price hikes due to the recent drought, pork prices rose just 0.6% from June 2012 to June 2013, according to data from the U.S. Department of Agriculture’s Economic Research Service.

Dollar sales of loin, the top seller in the pork category, slumped 3.3%, bringing in $3,291 per store, per week, while average volume per store was flat.

Shoulder butt experienced the opposite. Volume per store, per week jumped 6.7%, but sales remained flat at $563 on average.

Pork did not fare well at retail in the first quarter of 2013. Average dollar sales per store, per week fell 3.5% compared to a year ago, to $5,010. Volume per store increased just 0.2%.

Nielsen Perishables Group FreshFacts data represent 18,000 U.S. grocery, mass/supercenter and club chain stores.

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