Wrapped Up

Calorie and cost consciousness is steering more consumers toward packaged meats.

A combination of economic conditions and new product launches addressing wellness concerns has been having a positive impact on the packaged meat segment.

Products with tags like “natural,” “extra-lean” and “lower-sodium” are hitting store shelves, ready to be snatched up by consumers who appear, for the time being, to be turning away from the deli counter for their lunchmeat needs.

Overall sales of packaged meat are up about 7 percent over the past four years, according to data from The Nielsen Company, based in Schaumburg, Ill. Dollar sales for the category were just under $10.5 billion for the 52 weeks ending June 12 in food stores (excluding supercenters) with at least $2 million in sales — a 1.5 percent increase over the same period a year earlier.

The packaged meat category posted modest year-to-year sales gains for this period through the recent recessionary period — 1.4 percent from 2007 to ’08 and 3.2 percent from ’08 to ’09. Unit sales are up 2.3 percent in the past year after dropping in the same period for each of the past three years between 1.1 and 2.3 percent, according to Nielsen.

Meanwhile, analysts at Chicago-based consumer research firm Mintel predict an 8 percent increase in prepackaged sliced deli meats by 2014.

The projected increases support industry observations that cost-conscious consumers have been opting for packaged meats over cut-to-order deli-varieties over the past few years. But price isn’t necessarily the only reason shoppers have been migrating from the service deli to the meat department for pre-sliced, packaged alternatives.

Convenience was actually rated the top motivator by 28 percent of respondents in a recent Counter Intelligence deli consumer study commissioned by Jennie-O, a brand of Austin, Minn.-based Hormel Foods. Value came in second, at 23 percent, followed by quality and lower everyday price (both 21 percent). Longer shelf life and better variety each were reasons given by 10 percent of Jennie-O survey respondents.

And though fresh-cut deli items often have a higher freshness perception among some consumers, the value proposition offered by pre-packaged deli meats is indeed compelling for frequent deli meat customers. However, while manufacturers of packaged meats wouldn’t argue the price assertion, they might take this type of shopper to task on the freshness and health angles, particularly in light of some new products being released by major brands.

“Health and wellness is a growing trend because consumers are more thoughtful about what they put into their family’s bodies,” says Jason Baskin, Hormel associate product manager for meat products marketing. “Hormel Natural Choice meats, which are 100 percent natural with no preservatives, have enjoyed record sales as a result of this trend.”

Baskin says Hormel’s Natural Choice line — which includes sliced lunchmeat, chicken strips and bacon — has brought incremental growth to the meat case. “[This line] grows retailer sales by converting shoppers who weren’t previously buying the meat case,” he says. “This includes consumers who must avoid nitrites, gluten and preservatives.”

Other products from Hormel aim for that convenience motivator. “Hormel has extended its role as the pepperoni market leader by launching several items that are ingredient- and snack-based,” Baskin says. “Items like Hormel Pepperoni Minis add zest to everyday meals, while Pepperoni Stix make it easy to give kids a tasty protein snack.”

Worth Its Salt

Dollar sales for sliced lunchmeat are up 0.8 percent to nearly $3.9 billion for the year ending June 12, according to Nielsen — a slowdown compared with a year ago, when the category posted a 2.5 percent gain over the previous 52-week period. Unit sales were up 1 percent in the past year after three years of annual declines ranging from 1.9 to 3.5 percent.

But confidence in future growth of the category may be leading manufacturers to beef up their offerings to retailers, especially where health concerns over sodium are concerned.

Meats with health claims are gaining prominence, reports the Madison, Wis.-based International Dairy-Deli-Bakery Association. Turkey is now tied with ham in popularity, each with 30 percent of deli meat dollar sales, and chicken is showing strong growth, according to the trade association’s “2010 What’s In Store,” which adds, “The trend is moving beyond meat type to the ingredients in the meats themselves.”

Claims like “organic,” “natural,” “gluten-free” and “low-sodium” are all appearing in greater numbers. Organics struggled a bit during the recession, with some purveyors reporting that shoppers were trading down from organic to “natural” or “antibiotic-free” lines, according to IDDBA.

Products sporting the other health claims, however, appear poised for growth as the food industry comes under increasing pressure to expand its healthier offerings. That pressure is coming not only from the government and nutritionists, but also studies like the one released this past May by the Harvard School of Public Health, which suggested that processed meats — including bacon, sausages and luncheon meats — raise the risk of heart disease and diabetes due to their salt and preservative content.

After a successful lower-sodium, sliced-to-order deli meat launch last year by Sara Lee, the Downers Grove, Ill.-based brand has expanded its lower-sodium offerings with Sara Lee Fresh Ideas Lower Sodium pre-sliced deli meats, which rolled out nationwide this past spring.

“In today’s health-conscious society, Sara Lee Deli is expanding its options for consumers searching for healthier food options without compromising taste,” says Sara Lee spokesman Jeff Grass. In 10-ounce packages carrying the American Heart Association’s heart-check mark, the line’s four ham and turkey varieties tout sodium levels 25 percent to 32 percent lower than USDA guidelines.

One would think the AHA would frown upon any foods sporting a “deep-fried” claim, but the association has granted its health-healthy certification to a new line of deli meats from Butterball that does just that.

Recognizing that taste trumps all other qualities of a food product, the Garner, N.C.-based poultry giant has launched two pre-sliced, deep-fried-flavored chicken and turkey products that meet the AHA’s criteria for saturated fat (no more than 2 grams per serving) and cholesterol (95 milligrams maximum). These products join the brand’s new deep-fried, roasted and smoked turkey products for the service deli.

“For years Butterball has committed to providing quality deli products with health benefits,” says Kari Lindell, Butterball’s director of retail marketing. “With our new deep-fried-flavored deli meats, families can indulge in a tasty, savory option while maintaining nutritious eating habits.”

Butterball’s new sliced meats also deliver no more than 480 milligrams of sodium and contain at least 10 percent of the daily value of one of six nutrients: vitamin A, vitamin C, iron, calcium, protein or dietary fiber.

Slicing for Safety

Other innovations straddle the line between traditional packaged meats and service deli items, drawing on advantages of the former to encourage greater sales of the latter.

Springdale, Ark.-based Tyson Foods recently introduced Tyson Deli Slices, positioned as a packaged, pre-sliced solution to reduce concerns regarding employee and food safety, and offer a higher-yield product with less waste. The pre-sliced product also frees up deli personnel for other tasks, though it would appear to rob the service deli of its sliced-to-order selling point.

Tyson says natural antimicrobials offer a safe quality product with a cleaner label. Its deli slices are gluten-free and most are also lower in sodium. Offered in 2-pound stacked packaging with an easy-open peel, Tyson Deli Slices are offered in three “tiers” ranging from basic to upscale and covering several variations of ham, turkey and roast beef.

Butterball, too, is employing packaging to improve deli operations, using the Cryovac Grip & Tear bag to reduce safety hazards related to opening deli meats with scissors or knives. “We saw the opportunity to make the job of deli employees safer and more efficient, providing them with more time to assist their customers,” Lindell says.

Still, for the foreseeable future, packaged meats are expected to outpace the service deli in sales, due to consumers’ concerns regarding value, convenience and price. As such, suppliers are taking the opportunity to make that experience tastier and more nutritious as well.

“Hormel will continue to develop products that elevate the eating experience,” Baskin says, “by being healthier, easier and more flavorful.”