2017 Consumer Trends Report: Knowing what they don't want
The tipping point on meat raised without antibiotics may have been reached, as more processors and restaurant chains listen to consumer demand.
Of all the changes taking place in the meat and poultry industries now, perhaps the biggest change is something that’s undetectable to the consumer. It’s not a change in the cuts of meat, or the way that products are packaged or prepared. It’s in the way the animals are raised — specifically, without antibiotics.
The antibiotic-free meat market, which has been tied in with the natural, organic, grass-fed and other “sustainable” niches of the meat industry, has seen sales growth, but its sales have paled in comparison to conventionally raised meats. Changes in consumer attitudes and purchasing patterns may be leading to a sea change in the meat industry. Sales of organic groceries have seen double-digit growth, whereas the rest of the grocery store is growing at a much smaller rate, reports Maryellen Molyneaux, principal at the Natural Marketing Institute.
“The demand actually goes from consumer awareness, which is changing. That change is happening not just with the leader groups. It’s happened with the middle-mainstream groups,” she says, explaining that the NMI divides consumers into five segments.
The Well Beings segment, which accounts for 20 percent of the population, makes healthy eating a priority and is ahead of the curve in purchasing natural, organic or antibiotic-free food. The middle-market groups include those who are trying to eat better and those who look for “magic bullet” solutions to healthier living.
Molyneaux notes that 67 percent of consumers surveyed by NMI said that it was important that their grocery store carried meat and poultry products that are free of hormones, and 66 percent felt the same way about antibiotics.
“There is more of the middle mainstream that has adopted this topic of importance,” she says.
Molyneaux adds that the organic market may be a big opportunity for the meat industry, primarily because the term “natural” doesn’t have a legal definition. There is more regulation behind the term “organic,” giving it more value in the eyes of the consumers.
Several processors and food companies have adapted to consumer demand for antibiotic-free meats, including Progresso, Foster Farms, Perdue Farms and numerous smaller meat brands. Perdue, which eliminated the use of antibiotics that could be used for humans two years ago, eliminated the use of animal-only antibiotics this year.
“Stopping the routine use of human antibiotics was a big step, and addresses pressing concerns in the medical community,” said chairman Jim Perdue in October. “But it didn’t answer the basic consumer question: was this chicken raised with antibiotics? ‘No Antibiotics Ever’ is the only claim we promote to consumers, because it answers all their questions with clarity and transparency.”
Along with growth of antibiotic-free options at the retail level, foodservice chains and individual restaurants have touted changes to their supply chain to provide antibiotic-free meats. Chipotle and Panera Bread Co. were at the forefront of this movement, but the conversion to antibiotic-free meats has spread to quick-service restaurants like Subway.
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Earlier this year, barbecue chain Dickey’s Barbecue Pit announced its “No B.S. (Bad Stuff)” Initiative. The company is now sourcing only humanely raised, raised-without-antibiotics chicken, and CEO Roland Dickey Jr. says that the initiative will eventually carry over to its beef and pork products as the supply chain allows.
The announcement about its chicken was made in August, and Dickey says that the response from consumers has been very positive. The reasoning behind the switch goes beyond public demand, though. He calls it “doing well by doing good.”
“We absolutely believe it’s the right thing to do. It’s not just a trend; it’s the right thing,” he explains.
There was a supply cost increase that came from sourcing chickens raised without antibiotics, but it was a risk that the company and its franchise owners were willing to take.
“Our stores are 98 percent franchised, so it had to make good business sense for our owners. It’s got to drive additional transactions if we’re going to be able to support the increased cost, but it has,” he adds.
Dickey notes that the only pushback he got about the move was from within the chicken industry, where he says he heard everything from “It’s a mistake” to “You’re not going to make any money” to “You’re crazy.”
“There’s a lot of conventionally raised chicken out there, and the chicken processors don’t really want to move,” he says. “I understand that they have a very established business model. But consumer tastes are changing, and restaurants, from QSRs to high-end restaurants, are going in this direction.
“We can do better; everyone can do better. I think you’re going to see antibiotic-free and sustainable meats everywhere five years from now,” Dickey adds.
Molyneaux says that, as far as antibiotic-free and hormone-free meats, the tipping point has already occurred in the meat and poultry industry.
“Whether it’s quick-service or it’s full-service upscale, you’re going to continue to see more opportunities for organic placement in there, more organic dishes, certainly more antibiotic- and hormone-free meat and poultry,” she says.
Making space on the plate for meat
Dickey says that while consumers are interested in more natural food, they are not necessarily looking for low-fat meals anymore.
“I think people have a better understanding of what makes them fat and what doesn’t, and what combinations do and don’t,” he says. “What we’re seeing is, when people want to indulge with something that’s high fat and high carbs, they want it to be much higher quality.”
As a response to that need, Dickey’s has changed its sandwich buns to a brioche bun. It also improved the quality of its top-selling macaroni and cheese recipe, making the sauce similar to an alfredo sauce. As a result, mac & cheese sales have increased 25 percent.
Dickey’s has altered its menu within the last couple of years as consumer demand for certain products has changed. Ham was removed from the company’s menu as an everyday item due to decreased sales, and turkey was removed in areas where it was not a strong seller. Dickey’s will continue to offer a whole-carcass turkey during Thanksgiving (the Cajun turkey now outsells its traditional smoked turkey) and a bone-in spiral-cut ham, but it will add a prime rib option for people who want beef during the holidays.
Consumers have more of an interest in the production methods used on their meat and poultry products than ever before, but their love of meat has not diminished. The Power of Meat 2016 Survey, released by the Food Marketing Institute and the North American Meat Institute, indicated that price continues to drive meat purchases; specifically, per-pound price and total package price.
“As pricing comes down due to increased supply, meat-based protein becomes more attractive to consumers who may have been putting less meat in their shopping cart due to price,” notes Danette Amstein, principle at Midan Marketing. “One shift that we’re expecting is that consumers will be eating more meat. USDA baseline projections, which provide a long range view of the U.S. farm sector, show that production of beef and pork will expand steadily between 2016 and 2025, driven by lower feed costs and strong meat demand domestically and abroad.”
Amstein points to a couple of opportunities for meat companies in the coming year. For instance, bone-in cuts with longer bones, such as tomahawk steaks, have become an exciting part of menus, and retail establishments are following this trend. She says that these cuts can be a higher margin item for meat departments.
The interest in ethnic cuisine also continues, as people continue to seek out authentic flavors from different regions of the world.
“For example, according to the Datassential MenuTrends report on sandwiches released earlier this year, banh mi, a Vietnamese pork-based sandwich, has seen a 700 percent growth in penetration over the last few years,” Amstein says.
A characteristic of ethnic cuisine is that meat is more often used as an ingredient than a main dish. Midan research showed that 2014 was the first year that fresh meat used as an ingredient surpassed its use as a center-of-the-plate item.
“Millennials are a key driver of this trend because their lifestyles and eating habits are different than prior generations,” Amstein says, adding that the trend isn’t expected to disappear anytime soon. “It’s important to recognize and embrace this trend as an opportunity to merchandise beef and pork cuts as ingredients, so we can continue to meet consumers’ needs and provide ways to incorporate meat into their diets.”
Meat and poultry products also will be facing increased competition from non-meat items, or “clean meat.” Companies such as Beyond Meat and Impossible Foods have been touting burger patties that look, cook, smell and taste like actual meat. Tyson Foods recently bought a minority ownership stake in Beyond Meat, calling it an opportunity to get exposure to a fast-growing segment of the protein market. Amstein points out the Millennials are much more likely to try a meat substitute (43 percent versus 12 percent), and more than four in 10 Millennial shoppers have consumed meat alternatives in the past 12 months.
That said, Millennials — the largest age group in the country at 74 million strong — are spending more on meat, and their consumption is on the rise, Amstein says.
“However, we believe Millennials’ commitment to meat is in the hands of the meat industry,” she says. “Unlike other generations, Millennials seem to value causes over products. As long as the meat industry offers products that deliver on the attributes they hold dear, Millennials will remain loyal customers.” NP