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Retail Meat Sales Surviving the Recession

02 May 2011

As economies around the world are emerging from the recession consumers are reacting by remaining conservative in their shopping habits, writes TheMeatSite Editor in Chief, Chris Harris.

A recent survey of consumer habits in the US has shown that as the economy improves, fewer shoppers are changing shopping behaviour and they are less likely to make large purchases and they are looking carefully at how they spend and on what they spend.

Speaking at the recent American Meat Institute conference in Chicago, Merrill Shugoll from Shugoll Research and Michael Uetz from Midan Marketing said that the survey showed that conventional supermarkets are still the primary grocery shopping destination for US consumers, but mass merchandisers and club stores are often secondary stops.

They said that slightly fewer consumers are shopping for meat and poultry at mass merchandisers, such as Wal-Mart.

However, there were changes in the frequency that consumers were buying meat and poultry products, with two-thirds of consumers saying they have either increased their meat and poultry purchases or have held them the same.

While purchases of meat and poultry through the economic hardships have remained the same for the majority of US consumers, those who have cot their spending have done so by cutting down the amount of meat and poultry they are eating rather than buying cheaper cuts.

However, total sales of meat and poultry are increasing. Between 2005 and last year sales of red meat and poultry rose from 10.9 billion pounds to 12 billion pounds, peaking during the recession of 2009 at 12.2 billion pounds.

While dollar sales fell during 2009, the volume of meat sold increased.

Chicken is the meat that is winning the battle for the consumer with sales of 3.709 billion pounds last year a rise of just over one per cent on 2009, which had seen a rise in sales on the previous year of 7.7 per cent.

Michael Uetz from Midan Marketing said that prices for chicken meat have remained competitive at about $2.02 a pound.

Beef sales have also stayed strong through the recession peaking in 2009 with a rise of more than eight per cent on 2008 volumes and stabilising last year at 4.568 billion pounds. However, this was a rise on pre-recession figures in 2007 when volumes were 4.208 billion pounds.

With the rise in volumes of poultry meat being cold, beef saw its share of the meat market fall back slightly to 37.9 per cent last year compared to 38.9 per cent in 2007.

While average prices dipped in 2009 to $3.55 per pound, they have now risen to near pre-recession prices at $3.63 per pound.

 

Pig meat volume sales have shown a similar sharp rise in 2009, when there was a 10.3 per cent rise in sales, followed by a levelling off last year. Last year volumes were 2.536 billion pounds, compared to 2.282 billion pounds in 2007 before the recession.

Pig meat has also maintained its share of the red meat market at 21.1 per cent despite a fall in average prices between 2007 and 2010.

"Consumers are really focused on value," said Merrill Shugoll from Shugoll Research.

"They are asking 'Can I get the cut I want at a reasonable price?'"

She added that fewer consumers are buying the ore expensive cuts with sales in poultry meat of boneless and bone-in breast meat down 1.7 and 1.9 per cent respectively, while sales of drums, thighs and wings up by 5.3 per cent largely driven by the chicken wing market.

Beef consumers are saying that they are buying a lot less of the regular steaks and roasts, but as the economy has improved they feel that they can get other cuts at more reasonable prices. Sales of premium and regular steaks fell by 3.7 and 3.2 per cent last year.

Sales of premium ground beef from 90 per cent lean sirloin rose by 5.4 per cent while regular ground beef sales fell by 2.7 per cent on the back of health concerns.

"Consumers are looking for good value in the meat case by comparing prices of cuts," said Michael Uetz.

However, the retail meat industry has been facing rising costs because of the increases in the cost of fuel and feed and it will be facing a challenge to keep the retailer in the store rather than going back to food service for meat purchases.

"The recession will keep people eating at home and for retailers it is about providing value packs and good value sales.

"The retailer will have to capture the opportunity and increase focus on the customer," he said.

April 2011

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