First half 2021 sees high prices but continued high demand


Meat prices are once more a big topic of discussion, but inflation is not isolated to meat. Food prices in both the retail and restaurant settings are seeing significant price increases. In June, food prices overall were up 2.2% year over year, according to the Bureau of Labor Statistics (BLS). This is on top of the 3.4% increase in 2020. June saw much bigger price increases in the restaurant world (+4.0%) than at retail (+0.7%). BLS is forecasting continued inflation of between 1.5% and 2.5% in 2021.


Consumers are well aware of the inflationary conditions. According to the June IRI survey of primary shoppers, 81% feel prices are much (32%) or somewhat (49%) higher than before COVID-19. This has resulted in a total of 84% being somewhat (56%) or very (28%) concerned about food cost inflation. Stores’ promotional decisions, merchandising and price perceptions are likely to grow more important as a result. IRI and 210 Analytics analyzed the meat department performance in the first and second quarters along with the month of June deep dive. The report is made possible by Marriner Marketing.


Price per volume

Across all measured meat and poultry items in the IRI universe, both fixed and random weight, the average price per pound volume stood at $3.89 in the first quarter of 2021 and rose to $4.08 in the second quarter. This constitutes an increase of 4.8% and 2.3%, respectively, versus the first and second quarters of 2020. However, prices were much higher in 2020 already amid supply constraints. When comparing first and second quarter prices to 2019, the increases were 8.7% and 13.3%, respectively. Both fresh and processed meat prices were up.


Midyear 2021 Results

March, April and May 2020 meat sales broke one record after another. It comes at no surprise that the meat department could not match those numbers in the first half of this year, but they are not far off, either. In the first quarter, the meat department generated $19.5 billion, up 0.4% from 2020’s astounding numbers. In the second quarter, meat sales totaled $20.1 billion, which was off 9.7% but included the peak buying period of 2020. That averages to first-half-of-the-year dollar sales being down 5% versus year ago. However, when compared to the pre-pandemic 2019 normal, meat sales remain elevated, at +16.7%.


The same pattern holds true for volume sales. While volume sales were down in the first and second quarters of 2021 when compared to 2020, volume sales remained elevated when compared with the 2019 pre-pandemic normal. First quarter pound sales were up 7.9% and second quarter sales increased 2.6% over 2019. Meat is still much in demand in 2021, compared to pre-pandemic.


Top 10 growth contributors, 1H2021

When comparing the first and second quarters’ dollar sales to that of 2019, the list of growth giants emerges. The top three biggest contributors in absolute dollar gains compared with 2019 were beef loin, ground beef and bacon. Each added more than half a billion dollars compared to their 2019 performance. The biggest grower in pound sales in the first half of 2021 was bacon, with an additional 57 million pounds sold. Sales strength is no doubt related to the 80% of meals still being consumed at home, according to the June IRI primary shopper survey.


While still down when compared to the big 2020 sales spikes, June sales came within single digits of their 2020 performance and even exceeded the prior year results in the first week of June. Compared to the pre-pandemic normal of 2019, sales increases are still in the high double digits, ranging from +10.2% the second week of June to +25% the third week of June.


Both dollars and volume have seen month-to-month improvement since March, now within 3% of the 2020 levels. And both are still up versus the 2019 pre-pandemic normal. Volume tracked 1.8% ahead of June 2019 and dollars,16.9%.


The June through September grilling season will be an interesting one to watch. The 2020 season was heavily impacted by the lack of large gatherings. This year, 35% celebrated the Fourth of July with a get-together of friends and/or family, which was up from 22% last year, according to IRI research of primary shoppers. Others took trips (up from 5% to 9%), watched parades or fireworks (up from 6% to 14%), etc. This resulted in those without special holiday plans dropping from 58% last year to 41% this year. This is a good sign for continued strength in grilling occasions, despite higher per pound prices.


Assortment

In the first quarter of 2021, assortment was still down about 3% from 2020. Lapping the big drop in assortment seen in May 2020, assortment increased 6.2% over the second quarter of 2021. This number may end up being a bit higher still once all new item codes have been tallied. However, when compared to the pre-pandemic assortment of 2019, the meat department still averages 18 fewer items per store as labor woes in processing plants and at retail continue.


Fresh meat by protein; lamb sees sales gains

Small but rapidly growing in popularity, lamb was the only protein with sales gain in the first and second quarter of 2021 compared with 2020’s juggernaut performance. Shoppers continue to see variety as in June 2021, lamb dollar sales exceeded June 2019 levels by 41.6%. Overall in fresh meat, most proteins have moved within 5 percentage points from the 2020 June sales levels. Of the big three, chicken came the closest at -3.0%. Beef, however, had the highest percentage increase when comparing the June results to 2019 at +21%.


Processed meat: bacon, packaged lunch meat drive growth

Strong bacon and packaged lunch meat sales drove June gains for total processed meat. Bacon sales increased 1.7% over June 2021 and packaged lunch meat increased 1.2%. The other areas are down versus 2020, but up when compared to the pre-pandemic 2019 baseline.


Grinds: growth for ground chicken, plant-based meat alternatives

Two grinds — ground chicken and ground plant-based meat alternatives — managed to grow sales versus the 2020 sales peaks, at +6.7% and +5.3%, respectively.

Ground beef was the No. 2 meat item in terms of absolute dollar growth during the first half of 2021 when compared to the 2019 pre-pandemic normal. Demand remains strong, generating $868 million in the four June weeks, up 12.9% versus 2019.


Plant-based meat alternatives

After a strong 2020, meat alternative sales have slowed to single digits year-on-year for the first half of 2021. In June, dollars dipped below year ago levels for the first time since the start of the pandemic.


Source: IRI, Integrated Fresh, Total US, MULO, % change vs. YA

June volume sales too have slowed to below year-ago levels, at -0.9%. Year-to-date sales, however, remained in the positive, up 4.8% versus 2020. Demand also remains strong compared with 2019.


What’s next?

June brought continued normalization of grocery shopping patterns. The share of the consumers who are ‘"extremely" concerned about the COVID-19 pandemic dropped to 22% of the population. That is the lowest level since IRI started to track consumer concern among primary grocery shoppers as of mid-March 2020. The share spiked as high as 67% of the population by the end of March 2020.


This lesser concern has resulted in consumers feeling more relaxed while shopping for groceries in-store, spending a little more time and being more open to search for new items and meal ideas.


Patterns are, however, not all the way back to normal. Americans are still cooking more at home, at 80% of all meals, which explains the continued high demand for foods and beverages when compared to the pre-pandemic normal of 2019. Likewise, people are spending more time in store than they did in most of 2020, but the average is still down by four minutes versus pre-pandemic.


Consumers are re-engaging more and more with restaurants. As of June, 81% of Americans have purchased restaurant food, often a combination of in-restaurant dining (46%), outdoor restaurant dining (17%), takeout (50%) or delivery 20%). At least some of the increases in on-premise dining are replacing food delivery or pickup that became popular in 2020.


Consumers are expecting back-to-school spending to be big this year, with 43% expecting they will spend more this year than they did last year in addition to 47% believing they will spend about the same. Of parents shopping for back-to-school items, 43% believe they will do most or all in-store and 42% expect they will spend equally in-store and online. That provides grocery retailers with an important opportunity to draw people to the store as they prepare for the upcoming school year.


The number of in-store grocery trips as a share of total trips continued to hold steady in June, at 85%. The 15% of trips that happened online include 9% for in-store or curbside pickup and 6% for home delivery. The meat department has continued opportunity to close the gap between center-store and perimeter items in months to come.

The next performance report in the IRI, 210 Analytics and Marriner Marketing series will be released mid-July to cover the June sales trends. Please thank the entire meat and poultry industry, from farm to store, for all they do.


Source : Meatingplace Editors (meatingplace.com) (14/07/2021)


Image : vecteezy.com