Changing food shoppers’ attitudes and buying patterns have caused a major disruption in supermarket meat departments, Brian Diffenderfer, director of meat and seafood for Daymon Worldwide, told the marketing and sales managers at Chicken Marketing Seminar 2015.
Exacerbating this unsettling development is the unprecedented run-up to record beef prices coupled with the recent years of a soft U.S. economy. This combination has made consumers much more willing to shop for their family food needs at more outlets than their usual primary store. And, it is not just millennials leading the phenomenon, Diffenderfer added. Shoppers in few, if any, set of demographics have not shifted their approach to meat/poultry buying.
Decline in fresh meat shopping trips
For the year ending first quarter 2015, there was a 4 percent decline in the number of fresh meat shopping trips, 6 percent less fresh meat volume, and a 0.5 percent slip in households purchasing beef, pork and/or chicken, the speaker said citing Nielsen Perishable Group FreshFact data. More specifically, beef’s volume was off 6 percent while pork’s volume was down 5.7 percent. In comparison, chicken’s volume increased 2.6 percent despite a 3.4 percent rise in the average retail price.
Survey of retail meat managers
To better gauge what stores are doing to counter this disruption, Diffenderfer conducted his own mid-year survey of retail meat managers. Interestingly, he found that only 54 percent have a value-added meat program. He thought a higher percentage of managers would use such programs to spur margins and sales.
Of the 54 percent of with value-added meat programs, 85 percent use private brands. The most popular protein in the value-added programs was chicken (36 percent). Value-added programs in pork and beef were 35 percent and 29 percent, respectively.
Failures in value-added meat programs
Diffenderfer believes more retailers do not use value-added programs or do not find them as successful as they expected because the associates and management skill set needed are a notch above running a more traditional, basic program. Creativity is key to executing a successful value-added program. Also, it is important to have an aggressive, on-going culling of products that do not work or did work for a while but must be periodically updated, replaced or refreshed. Consistencies in quality, eye appeal, flavors and packaging follow creativity. Plus, associates must be trained to fully address customer inquiries and interactions must be accompanied by suggestive selling, he noted.
Value-added programs can be perceived as a win-win for the store and the customer. True value can actually be delivered to the home food prepared with value-added products. When the customer understands the convenience, portion control and variety of a fully- or semi-prepared meat or poultry product, the value equation becomes much easier to calculate for the consumer.
Although more and more shoppers are gaining their knowledge online, Diffenderfer is a very strong advocate for point-of-sale information. At the time when the purchase decision is being made, basic information in a simple, straight-forward manner must be in front of the meat/poultry shopper.
Although consumers think they are becoming savvier about their food purchases, the speaker finds the opposite to be the case. For example, 58 percent of consumers say “natural” means organic, according to a survey of 2,500 respondents. The same poll found 79 percent of consumers think food companies should provide more information to explain the way their products are produced and processed.
Organic and natural food products
Turning to organic and natural foods, Diffenderfer reported that 74 percent of consumers purchase organic products, 97 percent buy natural products, and 36 percent use organic foods at least once a month. Reasons for buying organic are concerns about chemicals/antibiotics; desire for healthier, tastier, higher-quality foods; and a way to better care for the environment.
More consumers would purchase natural and/or organic if these products were less expensive (36 percent), could be convinced they are worth the extra cost (28 percent) and were easier to find (8 percent). To maximize organic chicken sales, the price premium should be less than $2.00 per pound above conventional chicken, the speaker said citing Nielsen data.
Market opportunity for chicken in high beef prices
Beef prices may begin to ease in 12 to 14 months, Diffenderfer predicted. Until then, chicken’s window of opportunity will remain open to take advantage of one of its chief competitors. So far, food shoppers have traded over from beef to chicken in only a limited way, the speaker explained. Retailers are stymied by the on-going disruption to their operations because there continues to be a disconnect between the meat/poultry supplier and the food retailer. This disruption is proving to be more of a challenge than an opportunity.
Chicken marketers who can work more closely with their retailers will have a much better chance of turning the disruption from a challenge into an opportunity. Together they will find a favorable pay-off now and even when beef supplies and prices return to a more normal situation, Diffenderfer concluded.
Diffenderfer was on a two-person panel moderated by John Bartelme, former chief marketing officer for Perdue Farms and head of his own consulting firm.
Diffenderfer’s PowerPoint presentation at Chicken Marketing Seminar 2015 can be viewed at:http://goo.gl/i6b4nY.
