Topsy-Turvy Meat and Seafood

Anyone in the grocery business can tell you what a topsy-turvy year it has been, especially in the meat and seafood categories. With supply chain disruption, Covid-19 continuing to rear its ugly head and plenty of other issues and opportunities, it has kept meat managers on their toes.

Let’s take a look at the trends of 2021 and how they have shaped what we’ve done.

Meat Sales During the First 11 Months of 2021

Year-to-date meat sales are now within one percentage point of the record 2020 levels. When compared to the pre-pandemic normal of 2019, sales average between 16 to 19 percent above typical levels.

Importantly, while inflation certainly plays a role in these high dollar gains compared to the pre-pandemic normal, the retail supply chain continues to move more pounds through the system when compared to 2019. Year-to-date, meat department volume sales were down 6.8 percent compared with 2020, but still average 3.6 percent more than in 2019, with above-average gains for processed meat, at 4.5 percent.

Meals continued to be home-centric in November. According to the IRI primary shopper survey, the share of meals prepared at home remains around 80 percent despite more people working away from home and most of the nation’s schoolchildren being back to in-person education.

While retail prices for most categories rose to their highest point in many decades, the cost of eating out at restaurants rose even faster. Shoppers are very aware of widespread inflation. According to the IRI November survey, 90 percent of primary shoppers reported grocery item prices being a little (42 percent) or much (48 percent) higher. Among consumers who noted higher prices, 92 percent are extremely (41 percent) or somewhat concerned (51 percent) —translating into 83 percent of primary shoppers being aware and concerned of the inflationary conditions. Consumers pointed to categories across the store as areas where they have noted higher prices, led by the meat, produce, and dairy categories. In response, 61 percent of consumers have made changes to their grocery selections. Looking for money-saving measures, including stocking up, is the most common response, followed by cutting back on non-essentials and switching to store brand alternatives.

Beyond inflation, COVID-19 continues its grip on shopping patterns. During the early months of the pandemic, as many as 20 percent of trips were online. This dropped to a low of 11 percent in July of 2021 and the share has ticked back up every month since. In November, the online share of trips increased to 17 percent. Yet online shopping remains a complimentary trip for most consumers. Only 4 percent of survey respondents believe they will buy all their groceries online in the next month. This compares to 19 percent who will only buy some or a little online. This underscores the importance of a strong omnichannel strategy to optimize the share of total dollars. While shopping in person, fewer people browsed for new items or ideas and 17 percent spent less time in the store than pre-pandemic.

November sales are typically dominated by the Thanksgiving holiday, which tends to push an above-average share of dollars to the fresh departments. In 2020, Thanksgiving was very home-centric. Many fewer people traveled, parties were smaller and Thanksgiving sales patterns were vastly different. This year, more people planned to celebrate Thanksgiving and party sizes were expected to be bigger. At the same time, celebrations remained mostly home-centric though many restaurants and grocery delis offered turnkey holiday meal solutions, and shoppers planned to shop earlier. The Transportation Security Administration (TSA) reported its highest passenger volume since the onset of the pandemic, at about 88 percent of the pre-pandemic volume.

Other changes also point to a reversal in the normalization of shopping and consumption patterns. During the height of the pandemic, as many as 20 percent of trips were online. This dropped to a low of 11 percent in July. In October, the online share of trips increased to 15 percent. Yet online shopping remains a complimentary trip for most consumers. Only 4 percent of survey respondents believe they will buy all their groceries online in the next month. This compares to 21 percent who will only buy some or a little online. This underscores the importance of a strong omnichannel strategy to optimize the share of total dollars, particularly in meat and poultry. Fresh sales in general under index in online baskets.

Inflation

The consumer price index increased 6.8percentin November 2021, the largest year-over-year increase in 39 years, according to the Labor Department. IRI-measured price per volume within the Total US Multi-Outlet (grocery, club, mass, super-center, drug, military, and other retail food stores) also shows that prices continued to rise over and above their elevated 2020 levels for food and beverages, indexing at 107 for each of the November weeks.

The average price per pound in the meat department, both fixed and random weight, stood at $3.46 in November, up 12.2 percent versus last year. In November, the price per volume was greatly impacted by whole bird turkey. The average price per unit increased from $5.37 in October to $5.87 in November.

Year-to-date, price inflation is more moderate, with an average price per pound of $4.04, up 6.4 percent versus a year ago. Fresh meat has experienced above-average inflation, particularly in recent months.

On the fresh meat side, beef had the highest year-on-year inflation in November versus a year ago, at 17.3 percent. Pork and lamb also increased by double digits, at 14.6 percent and 10.6 percent, respectively. Fresh exotic, which includes bison, mostly kept the line on prices with an average of $5.17 per pound. The increase in the price per unit was also the mildest in November, at 2.3 percent.

In processed meats, bacon had the highest inflation in November, at 19 percent, followed by breakfast sausage and processed chicken —all three in the high teens.

While year-to-date volume remains above 2019 levels, volume sales pulled even with the pre-pandemic normal in November, while being down 7.4 percent versus last year. Supply chain issues pressuring in-stock positions likely also affected volume sales in November 2021.

The volume performance varies widely by species. November volume sales for beef were down by 10.8 percent and even with November 2019. Bacon, frankfurters, and breakfast sausage had similar results. Exotics, including bison, was the only area to move more pounds in November 2021 versus 2020, at 1.9 percent.

Fresh Meat by Protein

The overall gain in fresh meat sales was supported by beef, chicken, pork, lamb, and exotics. After a strong start to the season, turkey dollar sales ended 2.1 percent below their November 2020 levels, but still well ahead of the November 2019 levels.

Processed Meat Processed meat grew over and above the 2020 and 2019 sales levels, with contributions by all but frankfurters. Bacon and packaged lunch meat are the two biggest sellers within processed meat and their gains easily offset the declines seen in hot dogs.

Grinds —Renewed Growth for Ground Beef

Grind sales have been strong since the third quarter. In November, ground beef generated $853 million, 6.1 percent over a year ago and up 19.4 percent versus 2019. Ground pork recorded the strongest growth, at 14.8 percent year on year. While ground lamb sales are down, supply constraints may be influencing these results.

Seafood Across the Store for the First 11 Months of 2021

Both frozen and fresh seafood sales exceeded the $6.5 billion mark in the first 11 months of the year. Frozen seafood remains the largest and increased dollar sales by 2.4 percent, but backslid a little in units and volume. Fresh seafood recorded the best dollar performance during the first 11 months of 2021, at 4.9 percent.

Behind the year-to-date view is a roller coaster ride of big increases and decreases in sales gains. Sales during the last few months have alternated between slightly below and slightly above year-ago levels. But compared to 2019, frozen seafood remains at 35 to 40 percent above typical levels each month and fresh seafood remains at about 30percentabove 2019 levels. November did mark the lowest increases of 2021when compared to 2019.

Finfish sales were significantly higher than shellfish in November. Additionally, finfish sales were up 4.3percentand shellfish sales were down 8.5percent. However, much of this picture is driven by inflation. In November 2021, prices for finfish were 18.6percenthigher than those in November 2020. Prices for shellfish are elevated also, but by a lesser 7.4 percent.

Departments across the store are dealing with out-of-stocks and SKU reduction amid significant supply chain disruption and constraints. In fresh seafood, this is affecting fresh shellfish especially. Compared to November 2020, the average number of shellfish items are down 8.1percent. Finfish is holding steady in assortment, which also contributed to the higher gains.

Fresh Salmon Topped in Sales and Growth in Top 10 Species

Salmon near single-handedly drove fresh seafood success in November. The only three areas with sales increases versus November 2020 were fresh salmon, shrimp, smoked salmon, and oysters. Salmon sales were 2.5 times that of number two, crab. Additionally, salmon recorded the highest November growth, at 11.5 percent. Oysters have been a solid performer since the onset of the pandemic, but their sales volume kept them out of the top 10 before. Smoked salmon moved up from 10th to 9th with November sales of $7.4 million, which was 6.6percentmore than last year. All species were up against 2019 with the exceptions of tilapia and scallops.

By type, frozen fish was the largest category in November, at $218 million. The second-largest segment, frozen raw shrimp, grew verses 2019 and 2020.

What’s Next?

The IRI primary shopper survey found many examples of consumers encountering inflation and out-of-stocks.

• 37 percent encountered issues with availability on their list trip. Highest out-of-stocks were reported for toilet paper, canned goods, carbonated soft drinks, paper towels and milk.
• In response to not being able to buy what they came for, 39 percent of shoppers spent their money elsewhere and 29 percent ended up not purchasing the planned item at all —underscoring the significant impact of out-of-stocks on sales.

-29 percent went to a different store and another 10 percent went online and bought it from another store
-29 percent forewent the purchase
-28 percent bought a different brand or variety
-22 percent returned to the store later

Frozen Seafood Sales in November 2021

Frozen food was one of the strongest performers in 2020 and success continues into 2021. While November is typically a big month for fresh, frozen food sales gained 2.3 percent versus a year ago, with strong performances by meals and animal protein. Frozen seafood had the biggest gains when compared with 2019 and processed poultry gained the most when comparing the November 2021 results to last year. Of the frozen protein offerings, seafood was by far the largest with sales of $492 million in November 2021.

While the upswing in new COVID-19 cases in the latter half of 2021 has reversed some of the normalization seen in the first half of the year, concern levels are not quite what they have been. This explains the small reversals in areas such as online sales, browsing for new items, and time spent in-store, but not anywhere near the levels seen at the onset of the pandemic.

Consumer mobility remains high, especially in the area of virtual versus in-person education:

• 81 percent of the nation’s children attend school in person full time, another 4percentare in a hybrid system.
• 15 percent of parents now pack food to bring to school more often that they did pre-pandemic. In contrast, 19percentnow do school lunch more often. Sixty two percentgo about school lunch the same way they did pre-pandemic.
• 9 percent of parents pack more drinks to bring to school as water fountains remain off limits in some schools.

Restaurant engagement, at 82 percent, remained high in November, driven by takeout and delivery:

• 58 percent of primary shoppers have gotten takeout, a few points higher than in the summer, and 22 percent have ordered home delivery.
• 50 percent have dined inside at a restaurant and 15 percent have eaten outdoors at a restaurant.