Inflation-squeezed U.S. shoppers still hungry for meat

Even with consumers closely watching their dollars, the meat category remains strong as shoppers find options to fit their budgets and tastes and retailers serve up more variety and engaging promotions, according to the “Power of Meat 2023” report from FMI-The Food Industry Association and the North American Meat Institute (NAMI).

Meat department sales rose 5.7% to a record $87.1 billion in 2022, reflecting gains of 4.6% to $57.7 billion for fresh meat and 8% to $29.4 billion for processed meat, based on IRI data in the study, prepared by 210 Analytics. With dollar sales lifted in part by inflation, unit sales for the department fell 3.2% year over year to 13.7 billion, including decreases of 2.4% for fresh meat and 4% for processed meat.

Still, meat fared better in units and volume than overall food and beverages, the report said. By volume, meat department sales declined 2.5% to 20.3 billion lbs., with fresh meat down 2.1% to 13.9 billion lbs. and processed meat down 3.6% to 5.9 billion lbs.

From: 2023 Power of Meat report, FMI-The Food Industry Association, North American Meat Institute, 210 Analytics

Meat department by the numbers

Importantly, meat department household penetration came in at 98.3% for 2022, dipping just 0.2% from 2021 and 0.4% from 2021. Annual meat shopping trips per buyer were a solid 49.5 last year, down 4.5% versus 2021 but up 4.9% from before the pandemic. Meat spend per trip was $15.68 in 2022, up 7.3% year over year and 20.5% from 2019, in part reflecting inflation.

Americans, too, are regularly shopping for meat and poultry in other parts of the store. Of more than 1,600 shoppers polled for the Power of Meat study, 56% also buy meat from the frozen cases; 44% from ready-to-eat options in the deli; and 43% from fully cooked, heat-and-eat selections in the refrigerated section.

“At the end of the day, it is very important to keep in mind that while consumers are spending 25% more on food and beverages today than they did prior to the pandemic, we are still selling a percent more in pounds versus that same number,” Power of Meat 2023 author Anne-Marie Roerink, president of 210 Analytics, said in a keynote this week at the Annual Meat Conference (AMC) in Dallas. “So we continue to do extremely well, and the demand for meat continues to be very strong.”

From: 2023 Power of Meat report, FMI-The Food Industry Association, North American Meat Institute, 210 Analytics

Beef continued to dominate fresh meat sales, accounting for more than half of dollar sales at $30.6 billion for 2022. But by growth, beef dollar sales ( 1% year over year) were well behind other fresh meat staples like chicken ( 15% to $15.6 billion), turkey ( 6.8% to $2.9 billion) and pork ( 2.5% to $7.3 billion).

“If we look on the fresh side of the business, that is by and large driven by beef, the biggest seller. But if we look at growth versus the size of the pie, chicken had a very good year despite double-digit inflation, with just a tiny little bit of volume pressure. You’re also seeing some fairly big volume declines for areas like lamb, bison, etc. But we have to keep in mind that those niche areas had tremendous growth in 2020 and 2021. So they are still far above their pre-pandemic normal,” Roerink said. “I would also be remiss not to mention the power of grinds. We continue to see ground beef be the No. 1 seller in beef and ground turkey No. 1 seller within turkey. We see strength in pounds for both chicken and pork.”

She noted that more retailers are implementing grind sets with various options in small brick packages.

“We see a lot of innovation in mini-meats and grinds. If you think about it, grinds are a wonderful way for consumers to try something different without a whole lot of risk. Everybody can do something with grinds,” Roerink explained. “We also see a lot of innovation in mixing and different things such as pork and beef that, in part, addresses inflation. We're able to bring that price per pound down a little bit. Different types of flavors also come in—ribeye burgers, short ribs, brisket burgers. Again, those are a great way to add flavor and differentiation in an area where maybe differentiation is a little bit harder. But also keep in mind that if I'm not in a market for a ribeye steak tonight, maybe having some ribeye grinds is a fantastic option that still brings ribeye to the plate in a more cost-effective way. We see a lot of innovation still in grind flavors, patties and everything else. And they continue to do well.”

From: 2023 Power of Meat report, FMI-The Food Industry Association, North American Meat Institute, 210 Analytics

In processed meats, both bacon and packaged lunchmeat generated 2022 dollar sales of $6.4 billion, yet growth for the latter ( 14.4%) far exceeded the former ( 0.8%), according to IRI data in the study. Next by dollar sales growth in processed meat were frankfurters at 11.3% to $2.9 billion, breakfast sausage at 10.6% to $2.2 billion, processed chicken at 8.7% to $624 million, dinner sausage at 8.3% to $4.9 billion and smoked ham at 3.2% to $1.6 billion.

“On the processed side, we saw a little bit more inflation, and that resulted in a little bit more volume pressure as well,” Roerick said in her presentation. “Bacon always was the big seller, and it’s now actually outdone by packaged lunchmeat, which had very high inflation but continued demand, with just a little bit of volume pressure, too. A lot of innovation kept a lot of feet going down those processed meat aisles as well. We saw innovation in flavors, with things like ranch bacon and tastes like chicken parmesan sausage.”

More promotional punch

Lingering inflation still has meat shoppers favoring price, and value is where much of the category’s promotional focus needs to be, according to the Power of Meat report. Total food and beverage price per unit was up 12.4% year over year in 2022 and 24.3% from 2019, including 9.3% and 25.2%, respectively, for the meat department. Price per unit rose 3.7% for beef and 15.9% for chicken last year and grew by 22.9% and 28.9%, respectively, from 2019.

Higher pricing pushed consumers to research promotions more often as well as change the amount (78% of those surveyed), kind (76%), cut (74%) and brand (71%) of meat and poultry they buy. To drive meat savings, 35% of shoppers search for coupons, 33% seek out meat markdowns, 49% check out in-store signage for promotions, 35% look in a store app for specials, 25% peruse digital circulars and 18% go on social media to find meat deals.

From: 2023 Power of Meat report, FMI-The Food Industry Association, North American Meat Institute, 210 Analytics

In terms of shopping habits to foster savings on meat, 42% of consumers said they buy only what they need, 35% stock up on meat and poultry when it’s on sale, 33% buy whatever is on sale, 21% purchase less premium or lower quality meat, and 17% buy less meat with claims (organic, grass-fed, etc.). Also, 34% purchase small packages and 38% buy bulk or larger value-packs of meat (28% purchase both). The study found that 38% now prefer private brands for fresh meat and 32% for processed meat.

“We can literally do everything right in our marketing, merchandising and operations and still not make the sale,” said Roerink. “So, therefore, I think we need to be looking at that higher step. How can we look at when people decide to go out to dinner or make meal at home, if they decide to make a meal at home, how do we win the trip and win with our brand? And more than anything, how do we win the most meal occasions when people cook to make sure meat as part of that?”

Indeed, retailers have stepped up their game in promoting meat for a holiday, special occasion or event, with items or packages offering a restaurant experience or quality. Besides Thanksgiving, winter holidays, Easter and birthdays, grocers are zeroing in on meal- and experience-focused promotions such as Mother’s/Father’s Day, Valentine’s Day, summer holidays, the Super Bowl, the World Cup, etc.

“We seek enormous creativity in the meat departments, more than I've seen in many, many years. The traditional dollar-off or percent-off promotions are now starting to be very difficult to do sometimes. So we're starting to see promotions that are just one day or just a weekend or just three days,” Roerink told AMC attendees. “In BOGOs, we see tremendous creativity where it's not just a good old buy one, get one, but maybe it's buy one, get 40% off or buy this brand and get a discount on the private brand or things like buy two and get one free. In bulk, we see much more creativity. Instead of just saying this is a ‘family pack’ or ‘value pack,’ we're now seeing retailers show exactly what the discount is on that purchase.”

From: 2023 Power of Meat report, FMI-The Food Industry Association, North American Meat Institute, 210 Analytics

Channel shifts

Where are consumers buying their meat these days? Less at the traditional supermarket than in the past as shoppers visit a mix of stores to get the meat they want at the price, quality and convenience they want, the Power of Meat study showed.

Nineteen percent of meat shoppers buy most of their groceries in one store and mainly shop for meat in another store. Currently, supermarkets remain well in the lead, cited by 52% of survey respondents as their primary meat purchasing channel. But that’s down from 71% in 2007, 66% in 2013 and 57% in 2018. That compares with 26% for supercenters in 2023 (22% in 2018), 9% for club stores (7% in 2018), 4% for hard discounters/limited-assortment grocers (5%) in 2018, 3% for specialty/organic grocers (4% in 2018) and 2% for online (1% in 2018).

By channel, supermarkets accounted for 40.3% of meat dollar share in 2022 (41.2% in 2021), while mass chains and supercenters saw their share climb to 22% from 20.9%, the report said. Meat dollar share only edged up or declined in other channels for 2022, at 12.6% for warehouse clubs (12.5% in 2021), 7.2% for discount grocers (7.4% in 2021), 2.3% for online (2% in 2021), 2.2% for specialty stores (same as in 2021) and 1.7% for health/organic specialty stores (1.9% in 2021).

“In terms of channels, we continue to see great strength for supermarkets. However, if we compare that to one of the earlier years of the study, you see how much ground supermarkets have lost to channels such as supercenters, club stores, specialty organic—though that one is definitely leveling off—and online as well,” Roerink said.

The Power of Meat research revealed that, of the 51% of meat eaters who buybgroceries online with some regularity, 75% have ordered meat or poultry for delivery or pickup. That translated to 48% of the meat-buying population ordering meat online with some consistency, up from 14% in 2019.

“Online absolutely continues to be an opportunity for growth, not necessarily in the number of people that buy online. That seems to have plateaued around 60% to 62%,” according to Roerink. “However, those who are buying online continue to add meat a little bit more frequently as they become more comfortable with ordering online and have had good experiences.”