The question on nearly everyone’s mind in the industry is how far everyday demand sits above the old baseline. From the two panic buying weeks to Easter, to the second surge of stocking up to Mother’s Day, the past two months have not seen a week that clearly reflects just everyday demand for meat and poultry.
Anne-Marie Roerink, president of San Antonio, Texas-based 210 Analytics, said the week ending May 17 could have come close, however, tight supply and purchase limits along with the reopening of restaurant dine-in facilities in many states altered the demand landscape yet again.
Roerink’s company and IRI are tracking the meat department weekly. Despite the supply pressure, dollar sales grew 26.3 percent the week of May 17 versus year ago and volume grew 13 percent. The volume/dollar gap remained unchanged at 13 percentage points.
Year-to-date through May 17, meat department dollar sales were up 24.8 percent, boasting double-digit growth for 10 weeks running. This reflects an additional $5.5 billion sold versus the same time period in 2019.
Year-to-date volume sales through May 17 were up 18 percent over the same period in 2019, reflecting an additional 7.6 billion pounds of meat and poultry sold versus the same time period in 2019. IRI found that along with sales, meat’s presence in social media was strong. Mentions of meat and related terms were up 66 percent versus pre-pandemic.
About 60 percent of meat’s multi-billion year-over-year gain is due to increased spend per customer. Millennial households were behind the biggest increases in meat spending since the onset of coronavirus, much like they drove growth (not spending) pre-pandemic.
Over 2019, Millennials represented $23 out of every $100 spent on meat/poultry, far behind Boomers ($35) and Gen X ($32), according to IRI National Consumer Panel data for Total U.S. All Outlets. However, Millennial spending pre-pandemic was rapidly gearing up, at 2.4 times the average, while Boomer spending was slowing down.
These patterns held up during the pandemic, as Millennials have been among the hardest-hit generations, with about 40 percent having lost their jobs as a result of Covid-19 or had their work hours reduced. Shoppers 35 and younger, with and without children, lower and higher income, increased meat/poultry spending by more than 50 percent, Roerink said.
Dollar versus volume gains
In point of sale data, the gap between volume and dollar sales remained 13 percentage points for the week ending May 17, which the researchers said signaled continuing pressure on pricing due to tightness in the supply chain.
Compared with the same week in 2019, the week of May 17 showed continued double-digit volume/dollar gaps for beef and pork. But for others—including chicken, turkey, lamb and exotic meats—dollars and volume started to track closer together. Several processed items, including sausage and frankfurters continued to show double-digit volume/dollar gaps also.
“Most beef and pork products are in tight supply given ongoing plant challenges, whereas chicken and turkey volumes are adequate-to-oversupplied,” said Christine McCracken, executive director of food and agribusiness for Rabobank. “We saw inventories of grilling items build in front of Memorial Day, whereas the slow ramp-up in foodservice has set a floor on chicken prices.”
|Latest 1 week ending May 17, 2020 versus comparable weeks in 2019||Dollar gains||Volume gains||Volume/dollar gap
Source: IRI, Total US, MULO, 1 week ending May 10, 2020
But supply is likely to continue to impact the dollar and volume performance in weeks to come.
“Beef and pork facilities continue to struggle, with cattle slaughter off 14 percent from year-ago levels and hog plants down 8 percent from the same period,” McCracken explained. “The huge backlog of animals created during the downturn is only getting larger, which should limit price increases in coming weeks. The situation in poultry is a little worse this week, with growing numbers of plants experiencing Covid-19-related disruption in the Southeast and production dropping 1 percent from the prior week.
“Grilling items gained support in front of the Memorial Day weekend, with grinds the clear winner. Chicken did not fare as well, with the ramp-up in foodservice demand still the primary demand driver for most items and much of the early loading now complete. We expect to see chicken prices strengthen in the coming weeks, however, as we begin to see the impact of 7 percent production cuts taken earlier this spring.”
McCracken noted also that higher prices are impacting export demand, with a sharp drop in shipments and some cancellations in the latest week. “Softer exports may not translate into significantly lower pricing, however, as cuts heading into these markets are not commonly found on our store shelves.”
Consumer comments on the Retail Feedback Group Constant Customer Feedback system point to restrictions and limited inventory continuing to impact purchases during the week of May 17.
One wrote, “The meat department had very little and, of course, now there are limits on the amount you can purchase. I’ll just have to come back later in the week.” Another commented, “The items I could not get were just due to the meat shortages and of no fault to the store.”
IRI’s measure reflecting the average number of items sold per store remained significantly down for meat, at 296.3. This is the first time the average fell below 300 and reflects 47 fewer items than the same week last year.
|Avg. weekly items/store selling||334.7||334.0||353.2||329.8||307.6||318.1||318.0||313.6||309.6||309.2||302.5||296.3|
Source: IRI, Total US, MULO, average weekly items per store selling
The supply chain woes have affected wholesale and retail prices. Shoppers called out higher meat prices and fewer meat features on CCF.
“I understand it is difficult to get meat, but I still feel the prices are a bit high,” said one. Added another shopper, “I check the circular every week and there was literally one meat item on sale, lamb. I have no idea how to make lamb, so that was totally useless. I get that there are shortages, but a few more items on sale to help those of us who have lost our jobs would be nice.”
IRI’s insights on the average retail price per volume also show significant upward pressure on retail prices for the week ending May 17 versus the same week in 2019 for ground beef and pork. The average prices per volume for turkey, lamb and exotic meats have mostly stabilized in the one-week view compared to mild inflation in the four-week view.
|Average price per volume
versus the same period year ago
|1 week ending May 17||4 weeks ending May 17|
|Average||Change vs. YA||Average||Change vs. YA|
Source: IRI, Total US, MULO, 1 week and 4 weeks ending May 17, 2020
Meat gains by protein
The overall 26.3 percent meat department gain was fueled by double-digit gains for all proteins. The two smaller proteins, turkey (39.5 percent) and lamb (40 percent), had the highest percentage gains, but beef easily had the highest absolute dollar gains ($131 million), followed by chicken ($39 million) and pork ($24 million).
Turkey’s strong week was driven by the combination of growth in ground turkey (33.8 percent) and whole turkeys (127.2 percent). The latter is driven by extended holiday promotions by several retailers and particularly Walmart’s “pay it forward,” no expiration gift card that can be used specifically towards a whole bird turkey or ham.
Buying frequency increases for grinds
Ground proteins were frequently among those items with purchase limitations in mid-March and again in late April and May. Popular due to their versatility and ease of preparation, grinds achieved big gains over the week ending May 17 versus the comparable week in 2019. Among them: ground beef increased 31.2 percent and ground turkey 33.8 percent. Ground chicken rose 27.1 percent, while ground pork was up 11.3 percent.
Ground beef has been a pandemic powerhouse, with an additional $1 billion in year-to-date sales through May 17 versus the same period in 2019.
Looking at four weeks ending April 19, which encompass the two panic buying weeks, household penetration for ground beef rose 7 points to 49 percent of U.S. households, according to IRI National Consumer Panel data for Total U.S. All Outlets.
The average household spent $5 more on ground beef than in the prior year, an increase of 30 percent. And the buying frequency increased, with 23 percent of buyers purchasing ground beef two or more times during that four week period, up 6 percent from 2019.
A look by area
Total meat department sales came in just under $1.4 billion for the week, with continued gains for the big three (beef, chicken and pork) that have seen double and triple-digit increases since the week of March 15. Roerink pointed out that processed meats, sausages, frankfurters and bacon continued to do extremely well also.
|2020 Weekly $ sales gains versus comparable 2019 week ending…||$|
Source: IRI, Total US, MULO, 1 week % change vs. YA
Significant differences are observed when comparing dollar protein shares between the first week of March, reflecting pre-pandemic sales levels, and the week ending May 17.
While shares are influenced by holidays and differ from week to week, pork and beef’s share continues to be elevated in the one week and year-to-date views, whereas chicken’s share is down in both. The same look at volume shows the effect of pricing, though increased volume shares for beef and pork as well.
|Dollar sales||Volume sales|
|Week ending 3/1/20||Week ending 5/17/20||Building calendar year 2019||Building calendar year 2020||Week ending 3/1/20||Week ending 5/17/20|
Source: IRI, Total US, MULO, % of total fresh dollars | “All other” not reflected
As states begin to enter their various phases, the economic and social readiness of consumers to re-engage with foodservice will become clearer. For the foreseeable future, it is likely that grocery retailing will continue to capture an above-average share of the food dollar with meat in a starring role.