Optimism abounds for deli in 2024
Department expected to experience uptick in volume sold
March 21, 2024
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The supermarket deli has experienced both good and bad over the last year, though there is optimism that 2024 will see improved numbers in both sales and total volume.
Still, Arthur Ackles, director of perishable foods at Dave’s Fresh Marketplace, an independent grocery chain operating in Rhode Island, said that as a whole, the deli category has been flat.
“There is little innovation in this category as it relates to slicing cold cuts,” he said. “Fewer provisioners are competing with innovative flavors.”
He does see rising interest in low-salt, plant-based, and vegetarian options and expect all to continue trending up in 2024.
Whitney Atkins, vice president of marketing for the International Dairy Deli Bakery Association (IDDBA), noted that while rising prices due to inflation kept unit sales down in most deli categories at the end of 2023, prices seem to be dropping and early January sales have already seen improvement.
Jonna Parker, principal of fresh foods for Circana, said that consumers increased their trip frequency to the deli over the last year by 5% per household, which leads all other departments in the grocery store.
“The reason for this uptick in trip frequency is due to the increased engagement with shoppers because there is such a wider variety in the deli compared to years past, especially with prepared foods,” she said. “This shows no signs of stopping.”
She points to Circana’s Thought Leadership report that projects the deli department to increase 2-4% in units in 2024.
Solid risers
One area where deli continues to see solid numbers is in the entertaining segment, where trays, dips, and spreads lead the category. While it’s not unusual to see these numbers grow in December and January when people gather for holidays and special events, sales figures have been on the rise for more than a year.
According to figures released by Circana, in 2023, the segment recorded $4.3 billion in sales, a 3% year over year increase.
In 2024, The Fresh Market, a chain of supermarkets based in Greensboro, N.C., continues to focus on deli party platters and meals for pre-order, which provide guests with a one-stop shop for all of their entertaining needs.
“From holidays to game day, we have a variety of platters and meals for different sized groups,” said Diane Cleven, vice president of deli at The Fresh Market. “For example, the entrée selection in our Valentine’s Day Meal for two is customizable. And, our Game Day Meal, perfect for the Big Game in February, includes our wings platter, fresh house-made guacamole with chips, Philly cheesesteak egg rolls, and dessert. We will also continue to focus on high quality prepared foods that help make our busy guests lives easier.”
Another area that has been a boon to supermarket delis is in the prepared category. The $26.3 billion prepared deli segment took in during the past 12 months is more than 5.6% greater than the previous year, according to IDDBA.
“Complex charcuterie boards and snack trays continue to intrigue customers, demanding either already assembled for-purchase items or prepackaged ready to assemble options,” Ackles said. “Following up with suggestive marketing, easy template solutions, and education surrounding cheese facts and meat nuances can help the concepts come to life and thrive.”
Atkins noted that trays, boards, and other prepared items have shown strong growth throughout the past year and that has carried over to the early days of 2024.
“Prepared meats, sandwiches, pizza, and appetizers are among the largest gainers,” she said. “Deli-prepared foods can serve as a meal ingredient or replace the entire home-cooked meal.”
Deli cheese has been steady of late, which Atkins attributes to the fact that this deli division hasn’t experienced the same large price increases that meat has.
“That has led to a greater demand,” she said. “Specialty cheese drove unit growth confirming there are still opportunities for growth in premium subcategories.”
Overall, deli cheese saw a 2.1% bump this past year, totaling $8 billion in sales, with specialty cheese accounting for $5.2 billion of that figure.
“Retailers can continue to capitalize on the cheese category with emerging flavor profiles that can be easily sampled and utilized to upscale a meal or a snack tray,” Ackles said. “Highlight healthier food alternatives to promote different flavor profiles. Make dinnertime fun — offer demos of new items and highlight recipes the are fast and easy to create.”
Troubling signs
But it’s not all good news. Some deli items continue to see sales decreases.
For instance, sliced deli meat saw a decrease in both dollars and pounds at the end of 2023, dropping to $760 million in December, which was a 4.2% fall from the same period a year earlier, and a 3.1% drop in volume.
This can be attributed to the rising trend of consumers gravitating towards grab-and-go and pre-sliced meat.
For instance, at Dave ’s Fresh Marketplace, grab-and-go fresh sliced options that are prepacked continue to thrive and the grocer has seen huge sales of late.
“Customers appreciate and value food solutions that lean towards convenience,” Ackles said. “People are spending less time in the stores, so convenient solutions like these are growing in popularity.”
A challenge in the department is that environmentally friendly packaging is no longer an outlier, with the demand for packaging at minimum reusable, with biodegradable options right behind. This adds to the cost but with prices already on the upswing, it hurts sales.
“Labor issues also continue to plague us, with continuous training and development necessary to maintain high customer service levels,” Ackles said.
If prices continue to lower, expect the deli department to see strong sales in the year ahead, as consumers continue to find meal and snack solutions from the deli counter.