A recent Nielsen study noted that sales in the meat department are pivotal to sales throughout the grocery store. “During the first half of 2014, rising prices contributed to volume declines in fresh pork and beef in North America, and in recent months, this trend has accelerated with steeper price increases and larger volume declines,” notes the report. Chicken prices have remained relatively stable, but beef and pork prices are expected to continue to escalate.
Changes in the meat aisle can have a ripple effect on sales and consumer behaviors across the store. Previous Nielsen research indicated a direct correlation between increased prices of fresh staples like pork and beef and decreased volume for products that would complement those center-of-plate items. In addition, meat department sales are strongly connected to sales in many non-fresh aisles including dairy, grocery, beverages and household. This strong interconnectivity confirms that meat pricing issues aren’t just protein problems.
“History has shown that when the shopper has to spend more money on their staple meat items, they have to cut purchases elsewhere in their basket,” noted the report.
Nielsen’s study reveals that “shoppers are coping with rising meat prices in a variety of ways. Since 2011, consumer-switching between different cuts within a particular protein has become more common. But consumers have also changed how they switch between proteins. For example, for most shoppers buying fresh ground beef, the biggest substitute for the product isn’t another beef cut; it’s the generally lower-priced boneless/skinless chicken breasts.” This could be an opportunity for fresh pork to take more of a foothold.
The report notes that at retail, meat is an important indicator of total store health. Meat department sales (not including frozen meat) account for $53 billion annually and 11 percent of store sales. Nearly all U.S. households make a meat department purchase in a given year (compared to 26% of households shopping frozen meat) and meat department baskets are among the most valuable to the store, with a 70 percent higher ring than the average basket. The meat department’s ability to make or break sales across the store makes the current climate all the more concerning.
According to the report, more than 70 percent of U.S. adults stress the importance of protein (83 percent), healthy fat and whole grains (81 percent each) and calories (80 percent) when determining how to manage their health, specifically their diet and weight. And more than half of respondents in a recent health and wellness study want more protein, along with fiber, vitamins/minerals, calcium, antioxidants and Vitamin D in their diet. Pork, in particular, is one of the best sources of niacin.
“Manufacturers and retailers can reclaim sales and customers by understanding what consumers are shopping for and how they're buying based on their dietary needs,” said the report. Manufacturers of consumer packaged goods can help combat the ripple effect by collaborating with retailers and fresh suppliers on value-focused solutions, the report continued. Retailers can also focus on the important health benefits of meat and feature less expensive alternative cuts that may resonate well with different cultural groups to keep shoppers in the store with full baskets.