Brought to you by: The Power of Meat 2016 An in-depth look at the meat department through the shoppers eyes Presented by: Anne-Marie Roerink Study made possible by: The Power of Meat 2016 1
Meat = prime differentiator 60% of shoppers name a supermarket as their primary channel for meat High primary shopper conversion (86%) High secondary shopper pickup from supercenters Profit leaders focus on fresh Higher sales derived from produce, meat and deli Along with higher margins Greater inventory turns Lower shrink The Power of Meat 2016 Independent Grocers Financial Survey 2016 2
As goes meat, as goes the basket Largest fresh department 17-25% of total store sales $300 spend per household per year Lucrative: a basket builder Important to protect meat purchase for total store success Growing: outpacing total store $ growth vs. lbs. and identifying pockets of growth Inflation vs. deflation Fresh meat $50B 2015 $ 97% HH penetration +4.5% 2015 $ growth +0.7% 2015 lbs growth FMI The Power of Meat 2016 Source: IRI, 52 weeks ending 12/27/2015 3
2016 versus 2015: an upside down world Dollars Pounds 2015 +4.5% +0.7% 2016* 0.0% +3.1% * 52 weeks ending June 26, 2016 The Power of Meat 2016 4
But some big winners too Conventional Value-added Natural Organic $ lbs -1.2% +1.4% +18.3% +27.7% +2.0% +3.1% +19.7% +26.3% First half 2016: 0.0% in $ +3.1% in lbs The Power of Meat 2016 Source: IRi Freshlook w/e 06/26/16 vs Yago 5
The Power of Meat 2016 Consumer survey among 1,400 shoppers 11 years and running Updates on long-standing trend lines New topics Real-life overlay Insights into the entire path to purchase The Power of Meat 2016 6
Transparency and traceability Provenance Natural/organic MEGA TRENDS INFLUENCING THE MEAT PURCHASE The Power of Meat 2016 7
Label claim growth in the past 5 years $ CAGR Unit CAGR Organic 30% 23% Hormone/antibiotic presence 29% 25% Natural 27% 22% Vitamin/mineral presence 15% 8% Preservative presence 13% 9% Saturated fat presence 12% 5% The Power of Meat 2016 Source: Nielsen, Total U.S. Food, 2011-2015 8
So many claims or data points The Power of Meat 2016 9
But it is the story that sticks Event execution: National Beef Stampede winner In-store experience Award winning Animal welfare The Power of Meat 2016 10
Local, country or import The Power of Meat 2016 11
Price versus USA Choice: domestic vs. imported Price> Country of origin Willing to pay a little more for U.S. Willing to pay significantly more for U.S. All 42% 54% 4% Willingness to pay more for USA rises along with age and income 63% 60% Boomers High-income The Power of Meat 2016 12
The story may be branded programs % of packages in the meat case in 2015 Supplier brand Private brand No brand 2002 45% 22% 33% 2015 46% 51% 4% The Power of Meat 2016 Source: Sealed Air National Meat Case Study 2015 13
Long-term rise of brands fresh Supplier brands Private brands No preference 2007: 71% 2010: 74% 2016: 25% 2016: 21% 2016: 54% 2007: 16% 2012: 12% 2007: 13% Preference when purchasing fresh meat The Power of Meat 2016 14
Long-term rise of brands processed Supplier brands Private brands No preference 2012: 63% 2007: 37% 2016: 40% 2007: 53% 2012: 25% 2016: 18% 2016: 42% 2007: 9% Preference when purchasing processed meat The Power of Meat 2016 15
Mega trend: Natural and organic The Power of Meat 2016 16
Considerable uptick in availability % of total packages 2004: 22% 2015: 38% 2004: 0.2% 2015: 3.8% Prices for organic rising fast: Organic: +9.6% vs. Conventional: +5.2% The Power of Meat 2016 Source: Sealed Air National Meat Case Study 2015 & Nielsen 17
Continued growth for natural/organic meat & poultry Purchased natural and/or organic meat/poultry? (in past 3 months) 68% 20% 48% 40% Intent upcoming year 28% plan to spend more 66% about the same 6% less 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Purchased Did Not Purchase The Power of Meat 2016 18
Determination pre-trip or in-store Promotional research Circular trends PRE-TRIP PLANNING WELL-RESEARCHED LIST ITEMS The Power of Meat 2016 19
Majority decides on meat/poultry items at home At home In the store Behavior varies 47% 36% 17% Millennials 41% 33% 26% Boomers 52% 39% 9% Power of Meat 2016 20
Meat/poultry promotions remain important 78% Check meat/poultry promotions at primary protein store: 39% Every time 39% Sometimes 11% Hardly ever 11% Never 59% Check meat/poultry promotions across stores: 18% Every time 42% Sometimes 22% Hardly ever 19% Never Power of Meat 2016 21
Paper circular still on top; but big gains in digital 2016 Change vs. Millennials Boomers 2015 Paper circular at home 63% 43% 76% Paper circular at the store 51% = 49% 54% In-store only promotions 39% 47% 37% Electronic circular 26% 31% 23% Special digital meat promotions 24% 30% 22% Smartphone in-store 16% N/A 25% 9% Store app 14% = 24% 5% The Power of Meat 2016 22
Purchasing decision tree Meat case versus full-service counter Packaging innovation PURCHASING DECISION HIERARCHY CHANGING The Power of Meat 2016 23
Renewed dominance of price Price/pound Total package price Appearance Nutrition Prep. knowledge Prep. time/ease 4.4 4.2 4.0 3.0 2.8 2.7 The Power of Meat 2016 24
Price/pound Package price Appearance Nutrition Prep. knowledge Prep. time/ease The Power of Meat 2016 25
Price per pound has universal, long-standing appeal, but interest in total package price rising 4.4 Price per pound 6-item ranking scale Importance rises along with Age (Millennials: 4.0 Seniors: 4.8) HH size (Singles: 4.3 4+ people: 4.5) 4.2 Total package price Dominant factor for Millennials & singles Impacting package size variety, fixed weight packages and price ceilings The Power of Meat 2016 26
Preparation knowledge marginal at best > 50% manage but no expert or need help Cooking fresh product Marinating, seasoning Discerning quality and freshness Nutrition Wine pairing/meal creation >70% of Millennials The Power of Meat 2016 27
Don t know? Digital research >> Mom Digital Family/friends Cook book Meat associates Just try 41% Websites: 36% Social media: 5% 25% 13% 7% 5% The Power of Meat 2016 28
Interest in how to 2013 2016 Would absolutely use 29% 49% Would maybe use 54% 42% Would not use 17% 9% The Power of Meat 2016 29
Preparation knowledge/time will increasingly influence the meat department Prep. knowledge Prep. time Millennials 65+ 2.8 2.7 2.9 3.1 1.6 1.5 Convenience meats Meat as ingredient versus center-of-plate Muscle cuts versus quick items Cooking instructions/recipes More help/advice The Power of Meat 2016 30
Home-cooked meals containing meat/poultry Meal trends Heat-and-eat and ready-to-eat Value-added meat MEAT CONSUMPTION & PREPARATION The Power of Meat 2016 31
Home-cooked is in, but how about meat? Eating out Takeout Home cooked Home cooked Home cooked Home cooked Home cooked 3.7 contain meat/poultry Greater variety of and switching between proteins $ +2.1% +2.3% -4.2% -5.4% +5.6% Lbs +2.9% +3.3% +6.1% -3.7% +6.9% The Power of Meat 2016 32
Being part of the solution Recapture fresh meat opportunity as centerpiece of home dinner occasions Develop quick/simple preparation opportunities for oven, stove top and slow cooker Get in front of the case Education of millennials drives purchases Use CRT beef to save production time Redeploy hours to sales floor The Power of Meat 2016 33
Shoppers take to convenience solutions Ready-to-eat 2016: 82% Heat-and-eat 2016: 79% Value-added 2010: 68% 2010: 60% % buying 1+ time/year 2015: 32% 2016: 50% The Power of Meat 2016 34
Combined with a rise in consumption frequency Ready-to-eat 2016: 47% Heat-and-eat 2016: 52% 2010: 33% 2010: 29% % consuming at least once a week The Power of Meat 2016 35
Value-added is a promising segment Buy? 28% Sometimes 9% For special occasions 8% Only in a time crunch 50% Hardly ever/never User profile signals careful consideration at the store-level
Department score card Shopper suggestions on improvements IMPROVING THE MEAT DEPARTMENT The Power of Meat 2015 37
Meat department scores highest in cleanliness Average satisfaction Cleanliness The freshness/appearance Overall trip experience In-stock availability Variety of package sizes/cuts Prices Friendliness/knowledge of staff Staff availability 4.14 4.13 4.10 4.00 3.98 3.76 3.50 3.41 Very strong attributes Opportunity The Power of Meat 2016 38
As the hours tick by Variety In-stock position Cleanliness Service Appearance Trip satisfaction Trip spending Willingness to recommend Keeping department conditions up important for department and store financial success Staff for when your customers are shopping The Power of Meat 2016 39
No greater detractor to satisfaction than lack of cleanliness Overall trip experience CLEANLINESS Willingness to recommend Average basket All 4.10 4.04 $26.38 3.07 3.47 $24.38 The Power of Meat 2016 40
What do shoppers mean by cleanliness? Clean aprons, in fact, clean white aprons The Power of Meat 2016 41
What do shoppers mean by cleanliness? Hats, hair nets, gloves and good personal hygiene gloves The Power of Meat 2016 42
What do shoppers mean by cleanliness? Bags, hand cleaning stations and wipes The Power of Meat 2016 43
What do shoppers mean by cleanliness? Packages that are not leaking/bled through >Half would rather buy Leak-proof Freezer-ready Resealable The Power of Meat 2016 44
What do shoppers mean by cleanliness? Clean refrigeration equipment Other comments Being able to see the backroom Lack of clutter Good organization The Power of Meat 2016 45
On the other hand, item and package variety has greatest ability to drive satisfaction VARIETY OF PACKAGE SIZES/CUTS Overall trip experience Willingness to recommend Average basket All 4.10 4.04 $26.38 4.80 4.43 $28.00 The Power of Meat 2016 46
What do shoppers mean by variety? Package sizes Species/cuts Claims/attributes The Power of Meat 2016 47
Employees can be a great loyalty driver Received help/suggestions Did Did not Used Service counter Did not use 62% 43% 59% 41% 19-point swing in very satisfied 18-point swing in very satisfied The Power of Meat 2016 48
Leveraging the service counter advantage 76% Have access to a full-service counter at primary meat/poultry store; 27% use counter exclusively 97% Use meat case; average of 70% selected from case 38% 62% 17% 83% 83% Believe case-ready is just as good or better Not as good Equal/better 2008 2016 The Power of Meat 2015 49
What do shoppers mean with good service? Having available, friendly and knowledgeable staff The Power of Meat 2016 50
What do shoppers mean with good service? Introducing the managers/wearing name tags Get in front of the case: educate and sell Only 7% of customers currently look to the butcher for advice Staff for when your customers are shopping your store The Power of Meat 2016 51
What do shoppers mean with good service? Offer to break packages/provide custom cuts Cut-to-order event The Power of Meat 2016 52
What do shoppers mean with good service? Education on types of cuts, uses, and preparation Beef and Pork cutting charts State Beef and Pork councils The Power of Meat 2016 53
What do shoppers mean with good service? Recipes, meal suggestions, meal stations The Power of Meat 2016 54
Satisfied shoppers higher spending & more loyal Long-term relationship: Repeat purchasing Resist lower-priced competitors The Power of Meat 2016 55
In closing Success starts and ends with meeting shopper needs The Power of Meat: One size fits no one In-store experience is crucial Staff for when your customers shop your store Execute the basics Cleanliness, service, quality, consistency Create differentiated offerings Tell your story Redeploy labor from production to selling Get in front of the case Be the Meat Destination in your market The Power of Meat 2016 56
Visit us at our booth: 525 Top 10 handout For questions or additional information aroerink@210analytics.com Michael.D.Flack@supervalu.com Greg.Opsal@supervalu.com The Power of Meat 2016