Consumers Noticing Higher Meat Prices

As the meat supply, labor and prices continued to dominate the headlines in consumer media coverage around the country, the week ending May 10 saw another enormous boost in both dollars and volume of meat. Following two weeks that saw sales up about 50% over the same week last year, the week of May 10 came in at 40.6%. Additionally, volume increased 27.8% vs. a year ago. Year to date through May 10, meat department dollar sales were up 24.3%, boasting double-digit growth for nine weeks running. Year-to-date volume sales through May 10 were up 17.6% over the same period in 2019. Removing the pre-pandemic months shows meat sales between March 8 and May 5 up 45.2% in dollars and 34.5% in volume.

Meat Department Dollar and Volume Growth vs. Comparable Week in 2019

Source: IRI, multioutlet, one week percent growth vs. year ago

The tightness in supply prompted continued waves of consumers stocking up on meat and poultry, fresh and frozen. Many stores continued to have purchase limits in place for certain cuts or a limit on the total number of meat packages that a customer could purchase. In its May 6 study, Datassential found that the occurrences of COVID-19 among meat plant workers may make a quarter of consumers nervous enough to purchase less meat, but it does not stop the vast majority of Americans from stocking their grocery carts with meat. The firm found that more than half (53%) of Americans had already stocked up on meat or planned to stock up soon. According to Datassential, 16% of consumers have one to two days worth of meat/poultry on hand in their fridge or freezer, 27% a week’s worth, 26% have two to three weeks’ worth, and 25% have even more than that. Across all survey questions, boomers are the least likely to panic purchase. Top products on the grocery list to stock up on are chicken, beef, bacon, sausage and pork chops.

In addition to stocking up, the week got a coronavirus-related spending boost from Mother’s Day. The National Retail Federation found that 78% of consumers say celebrating Mother’s Day is important to them this year, given the pandemic. In past years, Mother’s Day has been the most popular holiday for eating out—in fact, it tends to be the busiest restaurant day of the year. According to the National Restaurant Association, typically 2 in 5 consumers eat out for Mother’s Day across meal occasions, or more than 92 million Americans. With restaurants still limited to takeout or capacity restrictions for dining in, 2020 celebrations boosted food retail spending across departments. There is an important lesson in the spending boost for Mother’s Day and Easter before it: Consumers are celebrating, albeit differently than in prior years. The summer months include many holidays, including several meat powerhouse holidays like Memorial Day, Independence Day and Labor Day.

“Retailers are already shifting their attention to Memorial Day,” said Christine McCracken, executive director of food and agribusiness for Rabobank. “This is boosting support for ground product as well grilling items like ribs, loins and chicken breast. Chicken remains well-supported, particularly given the high cost of ground product.”

Dollar vs. Volume Gains

The recent week sales gains were achieved through increases in buyers, trips and dollars spent per trip, according to IRI National Consumer Panel data for total U.S. all outlets. Over the four weeks ending May 3, sales increased 36.4%, benefitting from a 18.3% increase in buyers vs. a year ago, a 13.5% increase in meat trips and a 17.9% increase in dollars spent per trip. In point-of-sale data, the gap between volume and dollar sales remained wide, signaling pressure on pricing due to tightness in the supply chain. The latest four weeks ending May 10 vs. the comparable period in 2019 showed double-digit volume/dollar gaps for all fresh proteins with the exception of chicken and veal. Turkey had the largest gap, at 15.4 percentage points. Bacon, buoyed by ample supply given lacking foodservice demand in recent weeks, is the only area in which dollars and pounds increased at the same rate.

But supply is likely to continue to impact the dollar and volume performance in weeks to come.

“Beef and pork plants are back online, but remain at least 15% short on labor,” said McCracken. “Workers vulnerable to the virus or with at-risk family members may be unwilling to return to their former positions. We expect absenteeism to fall, but anticipate labor constraints to limit processors’ ability to debone and trim. Growing supplies of commodity protein are already getting the Heisman from many retail buyers and will begin weighing on wholesale prices in the coming weeks. Beef production was up 14% from recent lows, but is still trailing 2019 production by 23%. Pork production is just 10% behind year-ago levels, although a lack of labor continues to limit value-added processing. Processors began redirecting a portion of their export volumes to the domestic markets this week. This will limit near term pricing gains in pork and improve available supplies of beef and chicken.”

Many consumers commented on the sparse inventory levels during the week of May 10 on the Retail Feedback Group's Constant Customer Feedback (CCF) system. “Hoping that ground meat will soon be more available. I understand that the shortage is due to the closures of meat packing plants due to coronavirus.” Another wrote in, “I was hoping to purchase a certain cut of meat that was on sale. When I arrived at the store, the signs stated that there were limits of two per customer. There were none available. I was disappointed. However, this is COVID-19 times and the world is crazy. Rationing is good, I thank you for it, and I will try again.”

IRI’s measure reflecting the average number of items sold per store remained significantly down for meat, at 302.5. This reflects the lowest levels of variety seen since the onset of the pandemic in mid-March and is 44 fewer items on average selling than the same week last year.

The supply chain woes have affected wholesale and retail prices. Shoppers called out higher meat prices and fewer meat features on the CCF. “I noticed the meat has almost doubled in price,” wrote a shopper.  Another noted, “Too expensive!!! I was unable to buy meat.” IRI’s insights of average retail price per volume sold also show significant upward pressure on retail prices for the week ending May 10 vs. the same week in 2019 for beef, particularly ground beef, and lamb. The upward pressure on the price per volume for turkey eased somewhat compared to the four-week view.

Meat Gains by Protein

The overall 40.6% meat department gain was fueled by double-digit gains for all proteins. Turkey and beef saw the highest percentage dollar gains. Beef easily had the highest absolute dollar gains ($236 million), followed by chicken ($59 million) and pork ($44 million).

Turkey had a particularly strong week driven by both ground turkey and whole turkeys. The latter is driven by extended promotions by several retailers and particularly a very unique one by Walmart, representing 33% of all whole bird turkey sales over the past two weeks. Walmart is offering a special, no expiration gift card that can be used specifically toward a whole bird turkey or ham. The card has a “pay it forward” purpose to honor and thank those for all they are doing during these troubled times and to provide for those who are financially challenged. The card extending beyond the Easter holiday is likely to drive elevated sales for whole bird turkey and smoked hams for a while to come. Smoked ham sales for last week was up 83%, driven by the gift card.

A Detailed Look by Area

Ground proteins were frequently among those items with purchase limitations in mid-March and again in late April and May. Popular due to their versatility and ease of preparation, grinds achieved big gains over the week ending May 10 vs. the comparable week in 2019:

Total meat department sales exceeded $1.6 billion for the week, with continued gains for the big three (beef, chicken and pork), which have seen double- and triple-digit increases ever since the week of March 15. Processed meats, sausages, frankfurters and bacon continued to do extremely well also.  

2020 Weekly Sales Gains vs. Comparable 2019 Week 

Source: IRI, total U.S., multioutlet, one week percent change vs. year ago

Market Shifts

Significant differences are observed when comparing dollar protein shares between the first week of March—when sales were much in line with 2019 and the early part of 2020—and the week ending May 10. While shares are influenced by holidays and differ from week to week, pork and beef’s share continues to be elevated in the one-week and year-to-date views, whereas chicken’s share is down in both. The same look at volume shows the effect of pricing, though increased volume shares for beef and pork as well.

Source: IRI, total U.S., multioutlet, percent of total fresh dollars | “All other” not reflected

What’s next?

Next week’s sales report, covering week 10 of coronavirus in the U.S., is likely to be a pivotal point in the process of establishing what the next several months will look like. Nearly all U.S. states have started to partially reopen or have plans to do so. The relaxation of these stay-at-home executive orders looks different from state to state and encompasses everything from the partial reopening of dine-in restaurants to the opening of hair salons and gyms to merely shifting from stay-at-home to safer-at-home. As states begin to enter their various reopening phases, the economic and social readiness of consumers to reengage with foodservice will become clearer.  

For the foreseeable future, it is likely that grocery retailing will continue to capture an above-average share of the food dollar with meat in a starring role.

210 Analytics and IRI will provide sales updates weekly. Meanwhile, please thank the entire meat and poultry industry, from farm to store, for all they do to ensure supply during these unprecedented times. #MeatFeedsFamilies  #SupermarketSuperHeroes

Anne-Marie Roerink is principal of 210 Analytics, which specializes in research for the food retailing industry and authors studies in meat, produce, bakery, deli, frozen, confectionery, snacks and retail operations. She can be reached at [email protected].