Three months since grocery retailing experienced two of the biggest sales weeks at the onset of coronavirus in the U.S., many consumers are growing fatigued with their quarantine cuisine and bored with tried-and-true recipes. Restaurants have reopened, albeit with social distancing measures in place, and reservations and transactions are steadily gaining back lost ground. Grocery shopping patterns continued to evolve the second week of June. In most areas, stores had better in-stock position for fresh meat, resolving purchase limitations for some if not all meats. Prices remained elevated, which resulted in high dollar gains of 15.9% — the 15th week of double-digit gains since the onset of the pandemic — despite of going up against the Father’s Day 2019 sales bump that fell one week earlier than in 2020. 

Volume demand also remained above last year’s levels, albeit by just 0.9%, its lowest gain since the first week of March. Shoppers may be dipping into the meat supply they had built up in their freezers and are also highly engaged with seafood, frozen meat and frozen seafood sales, that have all been highly elevated for weeks.

Year-to-date through June 14, meat department dollar sales were up 24.1%, boasting double-digit growth for the months of March, April and May. This reflects an additional $6.5 billion sold versus the same time period in 2019. Year-to-date volume sales through June 14 were up 15.7% over the same period in 2019, reflecting an additional 1.2 billion pounds of meat and poultry sold versus the same time period in 2019.

Dollar versus Volume Gains
During the second week of June, the gap between volume and dollar sales narrowed 2.5 points versus the week prior, to 15 percentage points. Volume sales were down for beef and pork, but the +5.3% volume gain in chicken along with robust gains for the smaller-selling proteins offset those losses for a small overall gain of +0.9%.

Source: IRI, Total US, MULO, 1 week % gain versus YA

The longer, four-week look ending June 14 also shows double-digit volume/dollar gaps for fresh beef and pork, that in turn caused a double-digit volume/dollar gap for total meat. Both turkey and exotic meat, which includes proteins like bison, show higher volume than dollar gains over the four week look. This is a clear sign that at least some consumers are shopping other proteins amid the high beef and pork prices.

Source: IRI, Total US, MULO, 4 weeks ending June 14, 2020 versus YA

Assortment
Consumer comments on the Retail Feedback Group Constant Customer Feedback system contained many fewer comments on meat out-of-stocks and inventory, safe for specialty items. “I was happy to see and purchase organic ground beef, but I never see any other organic meat.” Another wrote, “I was expecting there to be a few things I could not get given that it was a weekend and the general situation with the meat right now, but I did get the main things I needed.”

IRI’s measure reflecting the average number of items sold per store indeed showed improvement to 305 — its highest level since the second week of May. But this still reflects 42 fewer items than the same week last year.

Christine McCracken, Executive Director Food & Agribusiness for Rabobank, is expecting the supply landscape to continue to develop in the upcoming weeks. “Plants continue to run at nearly full capacity and production is ahead of last year. Beef and chicken harvest were both down from year-ago levels, whereas hog harvest is averaging more than 5% ahead of the 2019 pace. An increase of 2-3% in average animal weights was more impactful, however, resulting in an increase in production of all three major proteins. Beef production was up 1.5% for the week versus year-ago, whereas pork and chicken were up 8% and 1% respectively. However, the mix of products remains unfavorable as processors are unable to fully convert carcasses given ongoing labor and distancing measures. This has left a surplus of bone-in products in combos that are difficult for retailers to move.”

While assortment is improving, consumers continued to call out higher meat prices and fewer meat features on CCF. “Since COVID, myself and neighbors have noticed that far fewer items are on sale and prices are higher in spite of gas prices dropping.” Another shopper said, “Your prices on many products have increased beyond reasonable in the last month. For example, paper towels and meat.”

IRI’s insights on the average retail price per volume show significant upward year-over-year pressure on retail prices for the week ending June 14 for beef, particularly ground beef. Turkey and exotic meats have seen the most stable pricing amid the pandemic.

Source: IRI, Total US, MULO, 1 week and 4 weeks ending June 14, 2020

McCracken expects continued development in the price landscape in the coming weeks as well. “The surge in total meat and poultry availability in the past few weeks continues to weigh on carcass values and should translate into lower prices at the shelf in coming weeks. Expectations of larger meat supplies and lower prices have made buyers reluctant to build inventory and they continue to buy hand-to-mouth. Beef and pork supplies should remain ample over the summer months and retailers do not want to get burdened with high cost product. We expect buyer interest to strengthen as inventories run low, with especially strong retail sales of grilling items.” On demand coming out of foodservice, McCracken comments, “The reopening of foodservice in many parts of the country has helped, yet demand in the sizable Northeast market remains slow. At this point there is limited visibility around how quickly we could see a return to normal, which is putting additional pressure on popular middle meats and boneless skinless breasts. Pork ribs and butts continue to gain support with increased retail interest, whereas loins continue to struggle. Buyer interest in many beef items remains limited by higher costs, with the exception of a few items for Father’s Day.”

Meat Gains by Protein
The overall 19.4% meat department gain was fueled by double-digit gains for all proteins. The two smaller proteins, turkey (+20.9%) and lamb (+33.5%), had the highest percentage gains versus year ago, but beef easily had the highest absolute dollar gains (+$82 million), followed by chicken (+$31 million) and pork (+$21 million). Exotic meat sales gained just under $1 million versus year ago and had even higher gains than turkey and lamb, at +35.8%.

Grinds
While ground beef saw a dollar increase 25.8%, this was driven by higher prices and volume sales were down 5.2% during the week of June 14 versus year ago. Consumers looked for equally versatile but less expensive alternatives and smaller proteins stepped in. Ground turkey, chicken, pork and exotic meats, such as bison, all saw highly double-digit gains in both dollars and volume.

• Ground beef increased 25.8% in dollars but was down -5.2% in volume.
• Ground turkey, +17.9% in dollars and +15.4% in volume.
• Ground chicken, +21.5% in dollars and +14.3% in volume
• Ground pork, +21.7% in dollars and +13.3% in volume.

For the week ending June 14 versus year ago, these four ground proteins generated $274 million in sales, which represents an additional $55 million versus year ago.

The Pandemic Sales Performance by Area
Total meat department sales came in just under $1.4 billion for the week of June 14. Growth percentages for most of the proteins are tapering off compared with mid-March, April and May, but some of the smaller proteins continued to see high gains off their much smaller base.

Source: IRI, Total US, MULO, 1 week % change vs. YA

Market Shifts
Beef and pork have a much higher share of dollar sales both in the one week view comparing the week ending June 14 to year ago and the building calendar years in 2019 versus 2020. Pork also saw its share of volume rise, but beef’s volume share is down nearly one point. As chicken prices have been depressed, its weekly share is down, but its volume share is up compared to the same week year ago.  

Source: IRI, Total US, MULO, % of total meat department dollars | “All other” not reflected

What’s Next?
The meat landscape continues to evolve as supply and demand in foodservice and food retailing try to find their new balance. Meat shortages are getting sorted out and restaurants around the country are seeing consumers start to reengage with dining in, while takeout business remains robust. Grilling season is officially here, giving the meat department many opportunities to help consumers shake up their in-home cooking. Next week’s report will cover Father’s Day, a traditionally strong meat holiday, but high prices may have affected consumer demand. July 4^th is just around the corner and much like Memorial Day, about half of shoppers are expecting to celebrate the Fourth differently, with less travel and smaller celebrations.

Between the continued impact of COVID-19 and significant economic pressure, it is likely that demand for meat in retail will continue to track well above 2019 levels for the foreseeable future. 210 Analytics and IRI will provide sales updates weekly. Meanwhile, please thank the entire meat and poultry industry, from farm to store, for all they do to ensure supply during these unprecedented times. #MeatFeedsFamilies  #SupermarketSuperHeroes

Source: 210 Analytics/IRI