“A sobering 41% of respondents to a recent Nielsen survey [conducted in March] said they are purchasing fresh meat less often because of higher prices,” according to the market research firm.
In particular, sales of fresh beef and pork have dropped 6% each in volume in the year ending Feb. 28, 2015, as a result of a 15.5% price hike for beef and a 14.1% increase for pork, according to Nielsen.
The result is overall volume sales of fresh meat have been flat, and the 3% increase in annual dollar growth for the category in the past five years has primarily been due to an average 5% rise in retail prices, it notes.
While 37% of consumers are offsetting the price hikes by buying less expensive cuts of meat, the vast majority are simply buying less meat less frequently, or skipping it all together, Nielsen data revealed.
In particular, 28.5% of consumers surveyed by Nielsen said they are buying smaller amounts of fresh meat, 41.5% are buying it less often and 3.8% are foregoing it.
Considering consumers typically build their meats around protein choices and that nearly 70% of total store sales are “highly connected to the meat department,” those changes in shopping behaviors are having a ripple effect throughout the grocery store, Nielsen notes.
In particular, sales in the center of the store, such as pasta and canned vegetables, are “suffering as a result of lackluster meat sales,” according to Nielsen.
This may be because the higher meat prices have driven 11% consumers to buy more heat and eat meals and 4% to buy more fully cooked meals from the deli, which reduces the need for individual ingredients sold in the store center.
It also may be because trips to the store for fresh meat have fallen 5% in the past year, which could reduce the frequency of consumers picking up other center-of-the-store items at the same time to fill out a meat-centered meal, Nielsen said.
Consumers’ shift away from fresh meat is not bad news for all categories. Rather, dairy, plant-based protein and seafood could attract disgruntled meat shoppers.
Almost 15% of consumers told Nielsen they are buying other sources of protein in response to the higher prices of meat, including quinoa and Greek yogurt. Seafood sales also likely will rise marginally in the next five years, according to IBISWorld. But, it attributes much of this increase to recent publicity surrounding seafood’s contribution to a healthy life versus as a lower cost alternative to fresh meat.
Moderating meat sales
Retailers and manufacturers can fight the decline in meat and related food sales by cross-promoting and merchandising related food sand goods storewide, Nielsen suggests.
For example, it recommends moving paper goods, condiments and salty snacks into the meat department to illustrate meal solutions related to grilling.
Retailers should not over rely on promotional activities though, Nielsen cautions. Rather, they need to correct everyday meat prices for strong, long-lasting sales.
“In order to get the price right every day, retailers should manage their price gaps between suitable cuts of meat in order to discourage consumers from switching while maximizing overall sales,” the research company said.