This fall, life is expected to be close to normal for workers and schoolchildren as the number of people attending work or school virtually has plummeted since the pandemic reared its ugly head.
For supermarket delis, that means an increase in meals needed for employee lunches and sandwiches for lunchboxes — and that starts with deli meat and cheese.
Fernando Figueroa, category manager at Bashas’ Family of Stores, based in Chandler, Ariz., expects a strong performance from the deli meat/cheese category with school getting back into session and employees returning to in-person work environments.
“With large numbers of employees returning to the office and inflation across nearly all industries being so high, we expect employees to bring their own lunches to work or go home for lunch more often,” Figueroa said. “Sales are good compared to the last two years. Some of it is a result of cost increases, which have also had an impact on individual unit sales, which are down slightly.”
Diane Cleven, vice president of deli at Greensboro, N.C.-based specialty grocer The Fresh Market, noted that cheese and meat posted historically strong sales during the pandemic at stores, and while cheese sales are not as strong as they have been the past two years, they are trending higher than in 2019.
“Now that things have more or less normalized, we are seeing our deli meat sales return to pre-pandemic levels,” Cleven explained. “There is also a great deal of inflation in deli meats, so retails are much higher than they were pre-pandemic. This is having an impact on tonnage.”
Market data bear that out. Although sales of deli meat were up 7.4% and deli cheese up 3% year over year through June, unit volume was down 7.5% and 2%, respectively, according to IRI.
According to Geoff Wexler, vice president of deli and prepared foods at Schnuck Markets, based in St. Louis, the deli meat and cheese categories are becoming increasingly important to customers as they look to balance their budgets.
“Promotional items and value are becoming increasingly important and retailers need to provide options,” Wexler said. “We are seeing a balance between value — loafs like bologna, salami, ham — and innovation in the unique bold flavors like ichiban chicken and pit-smoked hams. Customers are partaking in both ends of the spectrum.”
Stores are experiencing a spike in box lunch orders — reaching their pre-pandemic level or higher — and catering orders have bounced back, now that a majority of offices are open again, said Jason Belcher, foodservice director at Dorothy Lane Market, based in Dayton, Ohio.
“We also see a back-to-school spike with lunch meat and cheeses, and really our whole store sees the impact,” he added. “Everyone getting back from vacations and then gearing up for school to start creates more family time, I feel. People are eating at home more and then getting their lunches packed for school the next day.”
More than sandwiches
Snacking items have continued to grow, giving a lift to the deli meat/cheese category.
“Lunchables are not just for kids anymore,” Bashas’ Figueroa said. “More and more alternatives for adults have been popping up and have proved to be quite popular. Deli meats and cheeses continue to be affordable for customers and profitable for the business.”
Grab-and-go items are another area where pre-sliced meat and cheese continue to see an uptick. In June, the segment exceeded deli service sales by $4 million, with specialty cheese up 2.8% versus a year ago, according to IRI data.
“We are seeing solid growth on prepackaged charcuterie snack packs that feature a single-size portion of meat, cheese, dried fruit and crackers,” The Fresh Market’s Cleven said. “These are convenient and have good shelf life. We also do very well with variety packs of Italian or Spanish meats. These are great to use for a charcuterie board made at home.”
For Dorothy Lane Market, the biggest area for growth is charcuterie. “We are looking to bring in a few new lines to offer more selection for our customers,” Belcher said.
Bashas’ stores do well with deli meat and cheese by ensuring a great everyday low price and promoting the items that generate customer interest — and in turn, sales, according to Figueroa.
“We get customers thinking about this category for easy meal solutions by promoting our deli meats, cheese and snacking items in our ads; adding promotional signage specific to this category in stores; and positioning ourselves as having great solutions for easy lunchbox planning through local media interviews,” he explained.
Retailers can deliver value and innovation via a two-tier marketing approach, noted Schnucks’ Wexler. “It’s very important to show our parents how to best utilize our offerings,” he said. “Informational signage and digital promotions deliver both value and knowledge.”
Dorothy Lane Market gets the word out about its deli products mainly through its monthly newsletter and credits its social media team for their marketing efforts. The grocer usually markets with a back-to-school theme in the weeks leading up to the beginning of school.
“As far as merchandising, we want to go big,” Belcher said. “Large platters of product and large displays of our products and really let the food shine.”
Grocery stores should be gearing up for deli meat and cheese sales increases for lunchboxes and quick dinners, especially as activities increase for the little ones, said Whitney Atkins, vice president of marketing at the International Dairy Deli Bakery Association (IDDBA).
“Be ready for that quick grab-and-go meal shopper that wants to provide a meal at home, but lacks the luxury of time to prepare,” she said.
To have a successful deli meat/cheese category, a store needs to have great balance and room for the items that sell through faster.
“You cannot over-SKU,” Bashas’ Figueroa said. “You need to have good everyday prices, as well as a good cost, and you also need to promote the items that will bring customers into your stores. Shrink is your enemy. You have to have some, but too much can kill the category.”