Meat’s Rare Moment

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Meat’s Rare Moment

02/15/2016

Despite a federal panel’s calls for consumers to eat less of it, meat still matters to the majority of Americans.

Sure, meat continued to take its share of lumps in 2015, thanks largely to high retail prices and heightened consumer interest in nonmeat options. But the people in perhaps the best position to ponder the retail meat sales climate in the upcoming 11 months foresee better days ahead. In fact, for the first time ever, retailers responding to Progressive Grocer’s 2016 Retail Meat Review were unanimous in forecasting no anticipated meat department sales declines in the coming year.

Indeed, nary a one of the meat department executives polled in this year’s study — which comprises the views of national, regional and independent retail meat executives from around the nation — predicted a decline in meat sales in 2016. This was despite the fact that meat sales fell among approximately one in 10 retailers surveyed most recently, and for one in four in 2014.

As the only study of its kind nationally, PG’s exclusive retailer-driven meat department research was amassed from a national cross-section of retail meat executives in response to an annual survey fielded in late 2015. The annual benchmark survey covers the breadth of industry trend indicators, ranging from same-store sales to category performance to the latest promotions.

The key question: Is the somewhat upbeat outlook a case of misplaced optimism for 2016, or does the meat department have reason to feel even a smidgen of confidence?

Answer: Perhaps a bit of both.

Consider that 46 percent of meat executives said meat sales would increase in 2016, yet the remaining 54 percent projected that meat sales would stay the same. For an industry that’s taken it somewhat on the chin, following a spate of higher wholesale prices, either scenario would be widely viewed as a positive.

But beware: Consumer eating habits — particularly around meat — are steadily evolving, as evidenced by retailers’ broadly projecting continuing higher sales of smaller, less expensive and perceived-as-better-for-you options. In other words, make your meat offerings more convenient, cheaper and what consumers consider healthier in 2016, or shoppers may look the other way.

In terms of key consumer segments, convenience-seeking Millennials seem to want it all in the meat department. In 2015, consumer demand for smaller portions of meat took a front seat to just about every other trend in the department. Not a single retailer surveyed by PG said the demand for smaller portions was decreasing. Rather, some 68.2 percent said smaller pack sizes were on the increase, while 31.8 percent said it was the same as the year before.

The smaller portions are the result of two evolving trends. For one, some folks aren’t ready to give up meat, but are simply trying to eat less of it, so they’re purchasing smaller portions. At the same time, aging Baby Boomers tend to eat less of everything — including meat — and often prefer to purchase it in smaller amounts. And let’s not forget about the sticker-shock reactions to historically high meat prices that set the tone for much of 2015, which found financially pinched consumers seeking value-priced meat. To that end, some 59.1 percent of retail meat panelists reported that shopper demand for value meat increased in 2015, while 31.8 percent reported status quo results. Only 9.1 percent of retailers said that value-priced meat demand dropped last year.

But perhaps the fastest-growing category of meat eaters is the consumer whose chief concern is perceived safety and improved nutrition. In a world where even fast-food kingpin McDonald’s recently boasted of plans to sell antibiotic-free chicken, supermarket chains find themselves under the very same pressure. That’s why 58.5 percent of meat executives said they saw increased consumer demand in 2015 for meat that was free of antibiotics, hormones, MSG and additives. That compares with the 26.8 percent who said demand for these better-for-you meats was the same, while only 14.6 percent said that sales of these meats — which are often pricier — were down last year.

Meat producers are keenly aware of this, and misperceptions are driving some to address the issue head-on. Indeed, with nearly 80 percent of Americans mistakenly believing that chicken contains added hormones or steroids, according to a recent survey commissioned by the National Chicken Council, the Washington, D.C.-based industry trade group is on a mission to hammer home the fact that no chicken sold or raised in the United States is given hormones or steroids.

“We know it’s on us, as an industry, to do a better job of providing more information of how our food gets from farm to table,” says Tom Super, a spokesman for the National Chicken Council.

Then there’s the ongoing national obsession with all things organic.

When even Walmart is now selling the kinds of products long associated with Whole Foods Market, it makes sense that organic meats are on the rise, in tandem with the category’s overall growth. Nearly half of all meat sellers surveyed — some 47.5 percent — said demand for pricier organic proteins increased last year, alongside another 35 percent who said that sales remained the same. Meanwhile, fewer than one-fifth of retailers —17.5 percent — said that organic meat sales decreased.

Consumers short on time, but long on the need to quickly feed their families, are increasingly rewarding retail meat departments that play up value. Some 43 percent of executives surveyed said the value-added category, which includes offerings like kabobs and marinated meats, enjoyed a jump in sales, while only 18.2 percent of retailers reported decreases in value-added meats, which typically cost more.

In other meat sales trends, 34 percent of retailers reported an increase in locally raised meats during the past 12 months, while sales of alternative proteins like bison, venison and ostrich posted negligible comparable growth.

As consumers became more acutely aware of high meat prices during 2015, retail category executives didn’t have to be all that inventive when seeking to sell more product. To that end, price cuts ruled the roost as the single best way to move meat off the shelf in 2015, with temporary price reductions (TPRs) topping the list. A close second was another consumer favorite: product sampling/demos, followed by “flash” sales events.

Among the less effective ways meat executives cited to promote meat sales in 2015 were direct mail, online promos and, yes, social media — but bear in mind that these options scored just slightly lower than the preferred methods noted above.

Another way to stand out: Tell customers all about your special services. More than nine in 10 meat executives said they did just that, according to the PG meat survey, underscoring that it’s more important than ever for meat departments to broadcast to customers that they can have their fresh meat any way they want it.

Retail meat execs also said there was almost nothing they wouldn’t do to try to stand out from the competition. Many said they promoted custom cuts to order. Others promoted in-store grinding of meat. Some said they educated customers on their meat preparation processes and even regularly made menu suggestions.

The skyrocketing price of beef was cited by most store meat officials as their biggest headache, but there were plenty of others, too.

In an age when foodborne disease outbreaks can rapidly go viral, meat department executives surveyed said they had plenty to worry about in this regard. “Bad media coverage of health and safety issues” was cited as the single biggest issue of one meat executive responding to the retail meat survey.

The growing number of time-strapped consumers eating their meals out instead of in was cited as a major problem by another meat retailer, while yet another executive noted the aging population — which was affecting not only his meat sales, but also his ability to pull together a viable workforce.

Moreover, the very notion of getting shoppers to purchase whole cuts from the retail meat department and then prepare a meal at home was challenging for many meat managers. Too many customers suffered from “a lack of time to cook meals,” lamented one supermarket executive in this year’s retail meat survey.