A Meaty Proposition

Supply is high but dollar deflation continues on. 

That seems to be the general consensus among industry observers regarding supermarkets’ meat case performance. That increased supply has caused a decrease in dollar sales, due to deflation, however overall fresh meat volume is up. 

“Due to supply issues, consumers have weathered rising prices at the meat cases the last couple of years,” says Kent Harrison, vice president of marketing and premium programs for Tyson Fresh Meats, based in Dakota Dunes, S.D. “As prices have stabilized, more beef and pork is moving out of the meat case and into the shoppers’ cart. Increased cattle production is driving beef volume up and price down, essentially staying along a consistent demand curve.” 

The pressure on pricing has impacted the supply chain and parts of it have been bleeding, add observers. “For example, the cattle feeding sector has been massively unprofitable, leading to further sell-off as rapidly as possible,” says Jay Theiler, executive director of marketing for Agri Beef Co., based in Boise, Idaho. “The market is searching for balance, but at the moment, the entire supply chain is extremely volatile and the deflation will probably continue.” 

While the constantly fluctuating commodity price levels on beef, pork and chicken can provide suppliers and retailers with obstacles; for consumers, it is a good time to buy meat. Harrison says that by moving away from price as the defining characteristic of the meat case and focusing on offering quality differentiation, especially through branded options, retailers will be able to overcome the pricing challenges. Understanding what consumers are after and how they shop the meat department is also essential.  

According to the Power of Meat 2016, published by the Food Marketing Institute and the North American Meat Institute, the inflation in beef and pork caused a greater level of shifting between and within species’ and re-emphasized the importance of both price per pound and the total package price to consumers in the last year. Following price per pound and total package price, consumers ranked appearance, nutrition, preparation knowledge and preparation time and ease as the factors that influence their purchase decisions in the meat department. 

“One of the ways the meat department has changed is that consumers have different expectations at the self-service case than they do at the meat counter,” Harrison says. “At the self-service case, shoppers are oftentimes looking to streamline their preparation process. This can manifest in two ways: they are either seeking items that are seasoned and marinated, and thus ready to cook, or they are seeking more information on the label, saving them the step of researching the product later.” 

Suppliers, like Tyson Fresh Meats, have recognized that consumers want ready-to-cook and convenience meat products, and those trends are reflected in the new innovations that are being brought to the marketplace. Tyson has introduced its Crafted Creations line of pre-marinated fresh meats that are pre-seasoned and marinated with specifically designed flavor profiles that complement particular cuts and optimize overall flavor, such as Boneless Pork Sirloin Filet with Green Chili Fusion or Beef Petite Shoulder Filet with Crushed Rosemary & Garlic, says Harrison.  

Smithfield Foods, based in Kansas City, Mo., offers a large portfolio ranging from fresh pork to packaged meats under its Smithfield, Nathan’s Famous and Eckrich brands. The company has also introduced products in response to increased consumer demand for convenience. “Our Smithfield Marinated Fresh Pork line is on fire as it is easy to prepare and delivers superb flavor,” says Roy Johnson, senior brand manager. “We have a new fall line of marinated and seasoned products that will be available in September and robust innovative product and packaging is in the pipeline.”

Product differentiation goes beyond pre-seasoned and marinated products. Officials at Agri Beef, which offers the Snake River Farms, Double R Ranch, St. Helens Premium Angus Beef and Ranch E Oro brands, have noticed more segmentation in the marketplace. There are groups of consumers that are looking for different things in the meat category, says Theiler. “One size fits all will not work,” he says. “We are seeing niche growth in the ultra-high quality (higher than USDA Prime) segment like American Wagyu or American Style Kobe Beef, as well as in segments related to product practices like beef raised naturally without the use of added hormones and/or antibiotics.” 

To meet shifting consumer needs, Agri Beef has introduced a full line of Snake River Farms American Wagyu beef cuts designed for retail, all of which are raised without added hormones. The company has also launched convenience items like its 2-pound Double R Ranch USDA Choice hamburger patty box with two pouches inside and Double R Ranch bacon-wrapped tenders. 

Meal Prep 

Consumers also want to understand how to prepare or cook specific products they see in the meat case. According to the Power of Meat 2016, fewer than half of shoppers consider themselves “very knowledgeable” on any of the protein preparation practices: preparing, marinating or discerning the freshness of poultry or meat. Of course, retailers, packers and suppliers can remedy this by educating consumers in the choice, purchase and preparation aspects of meat and poultry. 

Catelli Brothers, based in Collingswood, N.J., understand that consumers seek this type of knowledge. The company offers a full line of more than 100 case-ready cuts of milk-fed veal and American and Australian lamb that are easy to sell—at a variety of price points. “Consumers see more and more pre-packaged and ready to eat products that help them meet the needs of their busy lifestyles,” says Anthony Catelli, president and CEO of Catelli Brothers. “The customer is looking for easy to prepare products. We have supported this concept with a substantial database of recipes on our website in addition to a line of precooked meatballs.” 

Observers say that helping customers understand how to prepare certain meat and poultry cuts needs to begin before the customer enters the store. Suppliers and industry organizations—like the National Pork Board and the National Cattlemen’s Beef Association—that offer preparation materials and recipes for consumers online can drive customers to the store. However, observers say retailers can—and should—offer their own source of education. 

According to the Power of Meat 2016, nearly half of shoppers decide on specific meat and poultry items before going to the store. Additionally, more than three-quarters of shoppers check their primary store’s weekly ad prior to shopping, and 59 percent check promotions across different stores with regularity. While the paper circular is still the most used vehicle to check meat and poultry promotions, it saw significant declines, which is driven by Millennials who use digital sources including email, social media and apps, the Power of Meat 2016 reported.  

“The shopping trip is becoming time crunched, just like everything else,” says Patrick Fleming, director of market intelligence and innovation for the National Pork Board, based in De Moines, Iowa. “Retailers have to start talking to consumers before they get to the store so you can maximize their shopping trip. Now that digital is becoming a predominant footprint, it gives us more flexibility to talk to consumers individually to give them new ways of thinking about it, preparing it, and even for the younger generation that’s new to the category, an easy way to cooking it where they can’t fail.” 

While preparation knowledge, time and ease can influence a customer’s purchase decision; another trend that has taken off in the last decade is increased interest in transparency. “A more knowledgeable consumer wants to know where and how the meat they purchased arrived at the store they shop,” says Jim Rogers, vice president of sales and marketing for Creekstone Farms Premium Beef, based in Arkansas City, Kan. 

“Food transparency would include everything from a cleaner label and a local farm to organic and antibiotic-free,” adds Johnson. The Power of Meat 2016 revealed that while price is more important than antibiotic-free or hormone-free for many shoppers, these consumers still value having a transparent production process. Additionally, shoppers who purchase natural/organic meat and poultry place high value on having visibility into whether hormones, antibiotics and GMO ingredients were used.

“Retailers should provide as much information as they can on where they source their meat items from and use this information to set them apart from their competition,” Rogers adds. 

Having knowledgeable employees who are eager to assist customers at the self-service meat case or behind the meat counter is crucial for retailers looking to set themselves apart from the competition and create loyalty with shoppers. The Power of Meat 2016 study found that the impact of associates actively engaging with customers on two loyalty measures—trip satisfaction and willingness to recommend—is positive. 

Among shoppers who received product suggestions or recommendations from meat department associates, 62 percent surveyed were highly satisfied with the trip versus 43 percent who did not interact with associates. Likewise, 52 percent of these shoppers would absolutely recommend the meat department, versus 37 percent of those without staff interaction and 40 percent overall. 

“The butcher is viewed as the second most respected position in the store, behind the pharmacist,” says Theiler. “Those grocers that are investing in their butcher staff and on-going training are seeing the benefit of this focus in increased category sales.”

Personnel can also be used as consultants and salespeople can offer suggestions and answer questions, Rogers adds. Though store employees can help boost sales through suggestive sales tactics and resolving consumer concerns, observers say the merchandising and marketing of the meat case is the most powerful tool in generating dollar spend. 

One marketing option for retailers to explore, suggests Harrison, is a two-tiered strategy. “Let consumers choose between a good quality product and a premium option, which is a better quality at a higher price point that also offers a higher profit margin to the retailer,” he says. “For example, offer a USDA Select strip loin versus a USDA Choice strip loin, or branded product such as Certified Angus Beef or Chairman’s Reserve Beef.” 

Unique merchandising and non-seasonal advertising can also help retailers sell what is already in their meat case, Theiler says. “For example, roasts in the summer, upgrading trim to value-added products such as taco meat and cross merchandising to create more innovative and exciting products for the service case such as Kalbi marinated flanken style ribs and teriyaki marinated flank steaks,” he says. “We are also encouraging upgrading grinds for the service case to better compete with food service and the ‘better burger’ trend. All could bring slightly higher rings and better margins while meeting the consumer need for increased quality and convenience.” 

Additionally, Theiler notes that setting and merchandising the self-service case according to the type of cooking technique—as opposed to by name—makes it easy for consumers to find the type of cut they are looking for if they don’t know the individual characteristics of each piece.

Retailers can also capitalize on the marketing tools that suppliers have readily available. Agri Beef offers custom merchandising materials, research overviews and strong in-store support, including butcher training and demos. Creekstone Farms Premium Beef offers individual marketing plans, provides literature in the store and distributes educational support for consumers. The National Pork Board can provide retailers with in-store point of sale materials and on-pack labels, in addition to a variety of other support on its website, porkretail.org. Catelli Brothers supports retailers through discounted pricing for feature activity, as well as POS materials. 

Smithfield has developed a robust full-year shopper-marketing plan that includes traditional media executions. The company also works closely with retail partners to work on in-ad and in-store support with seasonal recipe photography and recipe recommendations. “The importance of shopper marketing and the positive impact it has on sales in the fresh meat case cannot be understated,” Johnson says.