Non-Traditional Protein Options Gain Steam in the Meat Department: Retail Meat Review
Consumers may be eating meat less often, but they’re also eating it differently, which presents great opportunities for grocery retailers.
Total meat sales topped $67 billion for the year ending Dec. 29, 2018, according to Chicago-based Nielsen. While that’s a 3.1 percent increase in dollar sales over the prior year, 2018 saw a drop in volume, with nearly 19.4 billion pounds sold, a year-over-year decrease of 1.5 percent.
Fresh meat sales rose 3.4 percent to nearly $45.9 billion, with a 2.3 percent drop in volume. This pattern of more dollars but fewer pounds was common to most categories within fresh meat. A notable exception was meat alternatives – sales rose 22 percent to nearly $8.8 million, with volume climbing almost 20 percent.
While meat alternatives represent a small percentage of overall sales compared with traditional animal proteins, growth levels continue to indicate a gradual shift in consumers’ eating behavior.
“Interestingly, 72 percent of ... alternative-meat dollars is still coming from the frozen department,” notes Meagan Nelson, associate director of Nielsen’s fresh growth and strategy team. “All meat alternatives are still less than 2 percent of the sales we have for fresh meat overall.
“There are also tofu, jackfruit and other plant-based products in this space,” Nelson adds, “as well as [products like] Beyond Meat.”
Meanwhile, the leading animal proteins – beef, chicken, pork and turkey – all gained in dollar sales while losing volume.
“Interestingly, one of the largest drivers of the pounds decline in fresh meat across the four primary proteins was ground meat, and that was entirely driven by beef,” Nelson observes. “Beef was down across nearly every subcategory as beef retails rose 7.3 percent. Fresh beef accounted for 37 percent of the entire meat department.”
According to Nelson, growth in fresh meat was driven by chicken thighs and wings.
“Thighs saw pounds grow by 13.9 million in 2018 and wings, 8.9 million,” she says. “In pork, key growth happened in offals and value-added products, and for turkey, ground meat was the highlight.”
Sales of the “other meat” subcategory within fresh meat swelled by more than 45 percent, with a substantial increase in volume as well. But Nelson notes that this area is less than 1 percent of the total category. Specifics on what constitutes “other meat” weren’t available – likewise for the “miscellaneous meat” category, about 0.3 percent of total meat – but could be explained by the growing trend in “nose-to-tail” eating.
Meanwhile, organics continue to see growth and carry a higher price point.
“Organic across the four primary proteins grew 5.8 percent in pounds and carried an overall premium of $1.18 per pound,” Nelson says. Meat sales performance of the past year reflects how diversified grocery shopping has become.
“Just like consumers have so many choices of where to get their food – at grocery, restaurants, meal kits, delivery, etc. – they also have numerous options across the store to shop for meat as well,” Nelson says. “Deli has been a growth driver in store for many years now, and we are not seeing any signs of a slowdown soon. As we saw beef decline in the meat department, at the same time, we saw fully cooked beef in the deli department soar, with 16.2 percent growth in pounds – 32.7 million pounds in 2018.”
Meat is also found in meal kits designed to make shopping and cooking dinner simpler.
“In 2018, we found that households that purchase meal kits have risen to 12 percent, up from 9 percent in 2017,” Nelson observes. “In produce, over 5 percent of packaged salads contain meat and saw 1.9 percent growth in units last year. As options proliferate as retailers and suppliers work to provide convenience and new solutions for consumers, cross-department understanding is critical.”
Ups and Downs
More than 40 percent of retailers responding to Progressive Grocer’s survey said that their meat sales increased in the past year. Twenty-seven percent reported a decrease in meat department sales, while 31 percent said that sales were consistent with the prior year.
Tony Orlando, owner of Tony O’s Supermarket & Catering, in North Kingsville, Ohio, reported a drop in his meat department sales in 2018, consistent with an overall trend that he says was common to all but deli and wine sales.
“The economy is horrible, and we had deflation in pricing from the year before,” Orlando remarks.
Meanwhile, Eric Otis, senior deli/dairy specialist at a Fred Meyer store in Bremerton, Wash., tells Progressive Grocer that meat sales at his Kroger-owned supermarket increased over the prior year, crediting a new department manager, as well as “proper use of company programs and guidelines.”
For the coming year, Orlando is expecting his meat sales to start climbing again, “as I’m very aggressive in promoting the department.” Otis also has a positive outlook, explaining that “the forecast on meat sales right now goes hand in hand with the influx of naval ships in port. The Kitsap County area is home to several bases and ports.”
Respondents to Progressive Grocer's survey appear bullish on meat as well for 2019: More than 60 percent said that they expect sales to rise, with 36 percent anticipating no change and only 2 percent predicting a decline in meat sales.
Business of Service
An overwhelming number of survey respondents – more than 80 percent – reported employing butchers in their stores. Indeed, amid stiff competition for consumers’ grocery dollars, retailers are promoting full-service meat departments as a point of differentiation, as well as pride.
“We custom cut anything they want, and can tell them how to cook it,” Orlando asserts. “I also follow up with them for special cuts, after the sale. We are old-fashioned in our service, for sure.”
The meat department can and should be a key point of engagement with shoppers to demonstrate a retailer’s prowess in delivering solutions and advice for any meal occasion.
“Lean meats are always popular,” Orlando says. “Boneless chicken breast continues to shine, and specialty cuts, like our custom dry-aged beef, are growing. I did a video blog tutorial on our dry-aged beef, which boosted sales another 30 percent overnight in that category.”
Regarding his level of service, Orlando adds, “I’ll walk them through the store and help pick out items to complete their meal. I pretty much do it all.”
Otis explains that his Fred Meyer store provides customers with meal solution ideas via audio messaging, recipes and sampling, along with seasonal cross-merchandising.
“Priorities for meat sales are price, presentation and visual quality,” Otis says. “This is so for both service and self-service counters.”
Offering products that target specific needs is a must. More than half of the survey respondents said that demand has increased in the past year for smaller portion and pack sizes, with none reporting such demand letting up. Retailers responding to Progressive Grocer’s survey also reported strong demand for items such as value-priced cuts, like grinds and flat irons; value-added products like marinated, seasoned and stuffed meats; and meat from animals not treated with antibiotics.
Otis adds: “Sales of alternatives to animal proteins are a challenge to our location. We are in a very competitive market area for those rings.”
Social media and online marketing are gaining ground among survey respondents as effective ways to promote the meat department. Still strong are tried-and-true methods like product sampling, temporary price reductions, mix-and-match bundles and buy-one-get-one deals.
“This is a very difficult business today, and being in a rural, poor county, it takes a lot of creativity and a solid effort in finding great values for my customers to stay in business,” Orlando notes. “My advantage is my experience in serving the customers properly, and always trying to exceed expectations.”
Despite the latest food trends, price still matters “big time,” Orlando asserts. “The people in our area will drive here for my crazy deals, and they appreciate our custom USDA Choice or Prime meats we sell. Our competition cannot match what we do, and we beat them on pricing on every single meat and deli item, which is why I’m still here.”
Progressive Grocer’s Retail Meat Review survey was fielded online by EIQ Research Solutions in November and December 2018 to supermarket retailers involved in the meat/seafood category. A total of 52 responses are included in these results, split between operators of fewer than 75 stores, and 75 or more stores. By title, 40 percent are category managers, merchandisers or buyers; 27 percent are from the c-suite; and 4 percent are store managers, with the remainder serving in various capacities, including marketing, consulting and analysis. Among the respondents, meat represents up to a quarter of their total sales.