Though sales of conventional proteins still generate the vast majority of meat category dollars, meat and poultry with “free from” and other health-oriented claims continue to garner interest from consumers with an increasing interest in nutritious eating.
Indeed, meat department dollar sales of claims-based selections rose 1.8% in 2019 versus an 0.8% increase for conventional items, according to the "Power of Meat 2020" report. Yet, because the report notes that the claims-based segment only accounts for about 18% of total meat department sales, substantial expansion opportunities exist. The Power of Meat 2020 is published by the Washington, D.C.-based Foundation for Meat and Poultry Research and Education and the Arlington, Va.-based Food Marketing Institute and 210 Analytics.
And those numbers were reported prior to the coronavirus pandemic, which has boosted overall meat sales and interest in better-for-you and local varieties.
Rollouts of meat and poultry products with “free from” and other ethical claims, including “no antibiotics,” “cage free,” “no hormones,” “no steroids” and “humanely raised” had a 35.8% compound annual growth rate (CAGR) from 2017 to 2019, reports Innova Market Research, an Arnhem, Netherlands-based food and beverage research firm.
Also on the upswing are selections with a “GMO free” designation, which had a 43.9% CAGR in launches from 2017 to 2019, and products with organic claims, with a 9.8% CAGR during that period, Innova states.
“Poultry is the real ‘sweet spot’ for these claims," said Tom Vierhile, Innova vice president, strategic insights, North America.
Indeed, Innova reports a 47.9% CAGR in launches of poultry with a GMO-free designation from 2017 to 2019, along with a 26.2% CAGR in rollouts of organic poultry during that timeframe.
“Supermarkets may be wise to highlight more of these specifics when trying to connect with consumers who are looking for more natural and less processed meat and poultry,” Vierhile said.
Retailers, meanwhile, can make their product assortments more attractive by adding niche brands “that tell a compelling story” alongside the national and store brands in meat cases, noted Anne-Marie Roerink, principal at 210 Analytics, a San Antonio-based market research and marketing strategies firm.
“Consumers love farm-to-fork stories and they value learning more about how, where and by whom the livestock was raised,” she said.
In addition, supermarkets can potentially generate more activity by incorporating claims-based meat into value-added assortments, such as grass-fed pre-formed burgers or chicken kabobs made with organic chicken, according to Roerink.
“There is great overlap between shoppers who look for time-saving solutions and those who prefer claims-based meat,” she noted. “Integrating the selections in stores that have high penetration in either segment can be a double win on margin and sales.”
Because many shoppers still are unclear about the benefits of claims-based meat and poultry, educating consumers on the attributes can further propel product popularity, Roerink said.
She noted that shoppers in the focus groups that she operates often report that they find claims confusing or perceive the monikers to be marketing gimmicks.
Boost the customer base
Creating wider interest in the category is important as there currently is a limited number of “core believers” who are willing to pay the typically higher prices for claims-based meat and poultry, Roerink said.
But with pricing and margins on such products substantially higher than for conventional selections, including claims-based items in promotions can spur trial by non-users, Jim Wisner, president of Wisner Marketing Group Inc., a Lake Forest, Ill.-based retail consultancy, told SN.
“Supermarkets can sell at a lower margin and still make more money from shoppers who are trading up,” he said. “But retailers need to get the prices closer to that of conventional meat and poultry. Doubling the price is too expensive, but consumers might go for a dollar or two more per pound.”
Though higher-income households are the typical purchasers of claims-based meats, Wisner said such consumers still are very price sensitive and supermarkets should make their pricing competitive with that of other retailers. This could particularly become an issue as consumers enter a coronavirus recession and are watching their budgets.
“Even affluent shoppers are not going to buy blind,” Wisner said.
Supermarkets, meanwhile, can also drive trial by using loyalty card data to target-market the customers who typically purchase other natural and organic products, Wisner said, noting that methods can include direct mail and digital advertising.
Other techniques for spotlighting claims-based meat and poultry include weekly ads, social media, in-store signage and shelf tags, according to Tom Buttes, director of meat operations for Chandler, Ariz.-based Bashas’ Supermarkets.
While he agreed that the higher cost of selections remains a merchandising challenge, Buttes said prices will likely fall as category sales increase and suppliers increase production. Until then, manufacturers and retailers must educate customers on the quality and health benefits of products, he said, while offering price promotions in weekly ads and staging in-store demos.
“Our customers are looking for less processed foods in their diets,” Buttes said. “We have seen the fastest growth in organic meats and ‘never-ever’ products.”
In addition, retailers can make it easier for customers to locate selections by situating products with natural, organic and grass-fed claims together in the meat department, said Mel Coleman, Jr., vice president of Coleman Natural Foods, a Westminster, Colo.-based supplier of natural and organic meat and poultry.
Discounts, meanwhile, will encourage experimentation and help validate the higher product prices, he said.
“Price-sensitive consumers may be hesitant to spend more on meat and poultry if they don’t understand why they are paying a premium,” Coleman said, adding that point-of-sale signage is an “ideal” tool for explaining product benefits.
“But the only guaranteed billboard in a store is the packaging, so it is important to make sure it tells a clear and differentiating story at quick glance,” he said.