Bolstering the Lunch Meat Category

Breakfast may have been dubbed the most important meal of the day, but that’s not to say lunchtime is insignificant. Lunch is a key meal in upholding consumers’ blood sugar levels throughout their busy days, and because lunch meat offers a convenient source of protein—whether enjoyed on a sandwich, in a salad or simply on its own—some would argue that it should be considered a lunchtime staple.

Yet the $9 billion U.S. lunch meat industry is struggling, with both dollar and volume sales for the category overall declining year over year, according to New York-based market research firm Nielsen. As such, retailers and manufacturers have the opportunity to reinvigorate the category by tapping into key consumer trends occurring across the store and understanding the lunch meat shopper at a deeper level, including their preference for deli or packaged meats.

Protein-Powered Growth

To bolster the sluggish lunch meat category, retailers and manufacturers can connect to other growing parts of the store, specifically fresh departments. In a relatively flat U.S. FMCG market, fresh foods have driven almost $1.5 billion in sales gains over the past year, according to Nielsen. Deli lunch meat can be found in the same basket as other fresh categories that are growing, such as cheese, lettuce, carrots and bakery bread. However, packaged lunch meats are associated with center store areas that are struggling. To help build overall sales, retailers should turn to packaged brands that can highlight fresh attributes and build new partnerships with other fresh categories.

Related:Building a Meat Case for Premium Convenience

It’s no secret that consumers’ focus on fresh foods is related to an increased desire for overall health and wellness, and lunchtime is no exception. Health claims, such as antibiotic-free and all natural, drove volume sales last year, with sales of antibiotic-free deli bulk lunch meat rising 52.8%, according to Nielsen. But these claims remain a small percentage of the overall category. By communicating important health and wellness claims that resonate with shoppers, brands and retailers can help revive this struggling market.

Antibiotic-Free Claims Show the Largest Growth in Lunch Meat

Total U.S. performance

Source: Nielsen; 52 weeks ending Jan. 27, 2018

Fresh, healthy foods may be a priority, but consumers are also seeking convenience across categories and channels, including the lunch meat category, in which grab-and-go is on the rise, driving 11% of total deli bulk meat dollar sales, according to Nielsen.

While 88% of grab-and-go dollars are driven by the top five brands, private label holds the largest share, with sales rising year over year. Although private label has a much bigger presence in deli lunch meat, its share is gaining among packaged meats as well. Understanding what’s driving shoppers to buy boy deli and packaged meats can help manufacturers and retailers navigate this changing landscape.

Deli vs. Packaged Lunch Meat

More than half of all lunch meat shoppers (52%) are “packaged-heavy” shoppers, according to Nielsen, which means they spend at least 70% of their category dollars on packaged lunch meats. On the other hand, just 29% are “deli-heavy” buyers, spending at least the same share of their dollars at the deli counter. Despite being a smaller group, deli-heavy buyers account for a greater proportion of dollars than packaged-heavy buyers.

Retailers and manufacturers must understand what’s driving these shoppers to buy to engage both groups and drive growth across the category. For both deli and packaged shoppers, meat type, flavor, price and size rank as the most important attributes. However, deli shoppers prioritize customizability and flavor, while price and packaging considerations are deemed more important for packaged shoppers. As such, messaging in the deli should center around quality and customizability, while packaged products must be meticulous on price.

By understanding what motivates lunch meat buyers—whether they prefer deli or packaged—marketers have the opportunity to tailor their promotions against those factors. Combining those promotions with changes to the category based on trends from across the store could put this protein back on the lunch menu.

Deli-Heavy Buyers Are Heavy Buyers

Heavy buyers are defined as those that spend at least 70% of their category dollars on either deli or packaged products.

Sources: Nielsen FreshFacts Total U.S., 52 weeks ending Jan. 27, 2018; Nielsen Homescan Panel, 52 weeks of data ending Dec. 23, 2017; Nielsen Homescan Panel Survey, fielded Q1 2018