state of deli meat & prepared foods - iri · 2019-09-23 · entertaining. pre-packaged ....

IDDBA:State of Deli Meat & Prepared Foods

IRI Top Trends in Fresh Foods

IRI Fresh Center of Excellence

Sept 2019

© 2019 Information Resources Inc. (IRI). Confidential and Proprietary. 2

Meet The IRI Team

Jonna ParkerPrincipalFresh Center of Excellence

• Jonna recently returned to lead the new IRI Fresh COE focusing on client consultation in Produce, Bakery and Deli

• An innovator in the fresh foods space for two decades, she has continually advocated for consumer-driven decision making and big data analytics as a leader at an ISB/Deli manufacturer and the Perishables Group

• Her insights have been cited across the industry associations, including past IDDBA webinars and What’s In Store publications, as well as the trade and consumer media including Grocery Headquarters, NPR and USA Today

James CarlsonConsultantClient Insights, Midmarket

• Jim is a Consultant and Team Leader within the IRI Midmarket group, based out of Chicago

• Brings 8 years of experience with IRI in roles focused on business development, support and thought leadership for a range of small- to mid-sized brands across the store.

• Actively involved in supporting client relationships and IRI efforts in the Deli Department.


TODAY’S DISCUSSIONTotal Store Performance


We Are Witnessing the Biggest Revolution Food Has Ever Known

70% of Millennials say their smartphone is their most important shopping tool

total Click and Collect & 1st/3rd party delivery sales in 2018 for grocery categories.63% of CPG Omnichannel growth is driven by e-Commerce

$8.2B

Say SPEED is the #1 or #2 highest decision factor when deciding dinner

52% Snack 3+ times per day – +4 pts jump since 2015Consumers report eating many more, smaller meals since 2010

47%

77%of retail sales will be influenced by digital with 1:1 potential

Increase in average basket size, driven by price

FEWER store trips annually for groceries 9

5%

ONE-FIFTHof Millennials are Hispanic 70% Of Hispanics are under age 40

Gen Z (Born 1997 or later) influence more than

50%Of their households grocery shopping

New

Way

s to

Buy

New Consumers to Connect With

New

Meals to M

ake

Source: IRI Consumer Research, Updated April 2019


Fresh Perimeter Has Added More Than $7B Since 2014, but Growth is Slowing

Gap Fresh +2.9 pts F&B Minus Fresh

Gap Fresh -1.0 pts to F&B Minus Fresh

Source: Total Store View + Perimeter Market Advantage incl. Fixed Weight Fresh, MULO ending 12-2-18

Source: Total Store View + Perimeter Market Advantage, MULO ending 8-11-19, Perimeter includes both FW/RW definition, Sales change vs. Prior year by period

5.0%

1.3%1.3%2.1%

1.2%

2.0%

2014 2015 2016 2017 2018 L52 YTD 2019

Fresh Perimeter Food & Bev


15%Of total store growth

Within Multi-Outlet, Total Store Sales Continue to Grow; Fresh is Not Keeping Pace

TOTAL STORE SALES

$806B

$13Bvs. Last Year

22%Of total store sales but only… TOTAL FRESH PERIMETER

$180.1B$1.9Bvs. Last Year

Source: Total Store View + Perimeter Market Advantage, MULO 52-weeks ending 8-11-19


3.2%

-0.1%

BEVERAGES

2.0%

0.5%

FROZEN

1.7%

-0.4%

GENERAL FOOD

3.8%

1.8%

LIQUOR

3.0%

2.0%

REFRIGERATED

EDIBLES

1.9% 0.0%

PERIMETER

0.9% -0.3%$ % CHG VS. YAGO

UNIT % CHG VS. YAGO

1.9%

5.3%

PKG & FRESH BAKERY

1.6%

-1.1%

DELI CHEESE (RW+ FW)

1.3%

-0.2%

DELI MEAT (RW)

2.0%

1.9%

DELI PREPARED

1.0%

0.5%

PRODUCE

2.8%

0.0%

SEAFOOD

0.3%

0.3%

MEAT

0.0%

-0.8%

DAIRY

Many Center Store Food Departments Experiencing Both Dollar and Unit Growth, Unlike Most Perimeter Departments

LBs % CHG VS. YAGO

0.6%0.4%

-0.4% 0/6%

-0.7%

1.8%

Source: Total Store View + Perimeter including FW & RW Custom Departments, Market Advantage, MULO 52-weeks ending 8-11-19


6.0%

7.3%8.6%

4.3%

1.7%

2.5%

1.3%1.9%

4.4%

6.9%

1.5%0.6% -0.2% 0.9%

-0.6%

3.7%4.7%

1.2%

-0.3% -0.2%

0.0%

2013 2014 2015 2016 2017 2018 CYTD 2019

Sales Change vs. Prior Year

DEPT - DELI PREPARE DEPT-DELI MEAT DEPT-DELI CHEESE

Deli, Including Prepared Foods, Has Shown Slowing Growth Rates in the Latest Years

Deli & Fresh are at an impasse –what got us here, won’t get us there

Source: IR Market Advantage, Total Store View + P erimeter, MULO, data period ending 8-11-19

Growth rates are slowingAssortment, distribution stagnant


Deli MeatsGrab & Go and Charcuterie meats highlight how the Deli is being impacted by trends for convenience, snacking and entertainment.


Convenience/ Entertaining

Pre-Packaged Product (includes meats, cheeses,

spreads, dips and trays)

$9.7B Dollar Sales4.9% vs YAG

Behind The Glass

Bulk Meat and Cheese Sliced at Store

$6.0B Dollar Sales-3.2% vs YAG

FreshPreparedHot and Cold Full service

$11.9B Dollar Sales1.9% vs YAG

Source: IRI Market Advantage, Total US MULO, 52 weeks ending 8-11-19

TOTAL DELI = $28B in MULO sales, +1.8% vs. YA

Macro trends in convenience and snacking are reshaping the Deli and leading to new growth pockets.


The need for convenience has created three types of formats & merchandising strategies for Deli meat sales

Bulk Deli Grab & Go Pre-Packaged (UPC)


Traditional Bulk Deli Meat sales are experiencing declines across the board


BulkDeli Meats

$4.8B% Dollar Change

-3.3%$310MM-3.3%

Beef

$1.5B-3.9%

Ham

$583MM-2.4%

Turkey

$1.6B-4.4%

$180MM-1.5%

Chicken Salami

$382MM-4.9%

Bologna


Convenience formats, Grab & Go and Pre-Packaged Meats, are growing


Convenience /Entertaining


4.9%$2.9B

+0.8%

Hummus/ Spreads

$3.1B+7.3%

Pre-Sliced Meat

$990MM+0.5%

Dips/Sauces

$1.4B8.7%

$924MM+8.4%

Trays Specialty Cheese

$619MM+3.7%

Pre-sliced Cheese


Grab & Go has doubled its share of sales in the past three years. Convenience formats now account for nearly 40% of Deli Meat Sales.

DELI BULK

60%GRAB & GO 14%

PRE-PACKAGED25%

CHAT $ SHARE OF DELI MEATS

+$64 M

-$163 M

+$192 M

+$34 M

$ CHANGE VS. YEAR AGO

Total Deli Meats

Bulk

Grab & Go

Pre-Packaged (UPC)



Grab & Go is also creating more opportunity for retailers to grow Private Label Deli Meat sales

30%

70%

BULK DELI $ SHARE

PRIVATE LABEL NATIONAL BRAND

68%

32%

GRAB & GO $ SHARE

PRIVATE LABEL NATIONAL BRAND


60% 45% 38%

Buyer overlaps show a large majority of Grab & Go sales are from Deli Bulk buyers

Of Deli Bulk buyers are also shopping Grab & Go

Source: IRI Shopper Loyalty, Latest 52 WE 8-11-19

90%Of Grab & Go Trips and Dollars are from Deli Bulk buyers


Grab & Go is also achieving greater development with younger consumers compared to Bulk Deli

100

Source: IRI Shopper Loyalty, 52 weeks ending 8-11-19

75 79

113108

8688 93

120

100

61

Generation Z (Born 1997and After)

Millennials (Born 1981-1996) Generation X (Born 1965-1980)

Boomers (Born 1946-1964) Seniors and Retirees (Born1925-1945)

BULK MEAT Dollar Index GRAB & GO Dollar Index


Regionally, Grab & Go has the highest index where Bulk Deli is the strongest, while Pre-packaged is most developed outside of areas traditionally well developed for Bulk Deli.

Bulk Deli Grab and Go

Pre-Packaged (UPC)



Charcuterie meats are driving pre-packaged Deli Meat growth, with over +$50M in sales vs. year ago.


*Chart based on $ sales change vs. YA; top types of meat with > 1% share shown

$13 M

$13 M

$9 M

$9 M

$9 M

$8 M

$7 M

$7 M

-$5 M

-$6 M

-$7 M

-$11 M

-$22 M

-$35 M

PROSCIUTTO

GENOA SALAMI

VARIETY PACK

BEEF

SALAMI

ASSORTED

HARD SALAMI

PEPPERONI

BLACK FOREST HAM

CHICKEN BREAST

BOLOGNA

TURKEY BREAST & WHITE TURKEY

TURKEY BREAST

HAM

Top Growing & Declining Types of Pre-Packaged Meats


Charceturie Meats have achieved a “perfect score” (10 / 10 /10) at retail

>$10

Average Base Price per Pound2x the category average ($5 per pound) for

all prepackaged lunchmeats

Price Premium

+10%

Total Points of DistributionCharceturie meats have grown 10% in

segment distribution depth at retail vs. YA

Gaining Distribution

+10%

Dollars per $MM ACVCharceturie meats have grown 10% in

segment velocity at retail vs. YA

Growing Sales Rate



Charcuterie meats also show the strongest performance in markets historically well developed for Bulk Deli, as well as strong development in a few markets where Bulk Deli is not well developed.



TODAY’S DISCUSSIONPrepared Foods


Sold in the fresh departments- most often deli

Already cooked- heat or ready to eat

Called either prepared foods or retail foodservice

Includes entrees, sides, sandwiches, appetizers, combo meals & more

Sold hot or cold – UPC and non-UPC

Excludes packaged refrigerated meals and sides sold branded in meat, produce or dairy. Also excludes

“groceraunts” or franchise with separate register systems

$12.6B


$10,781$11,623

$11,999 $12,202$12,572

2,101 2,223 2,267 2,226 2,262

2015 2016 2017 2018 2019

Dollar Sales Unit Sales

Source: IRI Total Store View + Perimeter, 52 weeks ending August

3.2% 4.3% 1.7% 2.0%

Retail Foodservice Has Added an Additional $1.79 Billion in Sales Since 2015Retail Foodservice Annual Sales Trends (in Millions)Dollar Sales Growth vs. Prior Year

7.8%


Softening of Behind the Glass

Slower Trajectory Driven by Deli Market Maturity and Competition Increases

Plateau of Deli Expansion

Competition from Delivery & QSR

Premium = Mainstream


Demand is holding steady 53% said fresh meals and sides are

as important as last year in their food buying

“My local supermarket has a lot of different meals but they don’t

change very often. I buy a few things but its hard to find

healthy options compared to restaurants or frozen foods.”

- West Consumer

26% of consumers surveyed said prepared foods are the

most important to picking where they shop for fresh foods

Source: IRI Fresh Foods Survey and Consumer Interviews, 2019


Total Retail Food Service


2.0%

$1.8B-2.9%

Appetizers

$411M-0.9%

Dips & Sauces

$5.3B+1.5%

$319M+9.5%

Entrees & Prepared Meats

Sides Soups

$228M+1.2%

Salads

$1.8B+11.1%

$1.7B+1.2%

Sandwiches

Trays

Appetizers, Entrees, and Dips/Sauces continue to Drive Steady Growth for Prepared Foods / Foodservice

Source: IRI Total Store View + Perimeter, Retail Foodservice by Category, Dips & Trays RW Only, 52 weeks ending 8/11/19

$341M+0.8%


+14%

Hot Sandwiches Chicken Appetizers Jalapeno Poppers

Vegetable Entrees Pasta Side Dishes Chicken Entrees Beef Entrees

+50%

Egg Roll Appetizers

Within Each Category, There Continue to be Pockets of Strong Growth

Source: IRI Total Store View + Perimeter, Retail Foodservice by Subcategory with at least 25% ACV Distribution, 52 weeks ending 8/11/19

+20% +14%

+12% +8% +6% +5%

+13%


High Engagement With Deli Prepared Foods & Growing

Fresh Prepared Foods / Retail Food Service

HOUSEHOLD PENETRATION

84.4%0.5 % vs. prior year

SPENT REST OF BASKET

$52.83*

73%are REPEAT buyers

of fresh prepared foods

TRIPS ANNUALLY

11.1SPENDING PER TRIP

$6.66

$142MMto the department

If 20% of shoppers made just 1 more fresh prepared buying trip, it would be worth:

$1.1Bto the store

AVG $ PER HH ALL OUTLETS

$362.89*

Source: IRI Shopper Loyalty FSP data representative of Grocery Store shopping for Deli Prepared Foods, 52 weeks ending 8/11/19 & *IRI HH Panel Data FW+RW Perimeter for Deli Prep and Prepared Meals 52 weeks ending 8/11/19


Fresh Prepared Foods / Retail Food Service is Offered Across Numerous Retail Formats – with All Channels Showing Gains Over the Last 2 Years% of US Households Who Have Purchased Fresh Prepared Foods at Different Retail Channels

Source: Household Panel data FW UPC + RW Reference Guide. All Outlets 52 weeks ending 8/18/19

2.1

10

20.3

28.7

62.9

Internet

Convenience/Gas

Warehouse Club

Mass/Supercenter

Grocery Supermarkets


Who is More Likely to Spend More on Prepared Foods / Retail Foodservice?Households with Above Average Dollar IndexAll U.S. Households Buy Deli Prep Items, But Spending Varies HH Dollar Index vs. U.S.

- <90 / 90-110 / +>110

Booming with Confidence

Thriving Boomers

Rural

Hispanic

Singles and Starters

Significant Singles

Downtown Metro

Young City Solos

Power Elite

Source: HH Panel data UPC + RW Reference Guide. All Outlets 52 weeks ending 8/11/19, dollars spent on fresh prepared foods (RW+FW) per HH average

Cultural Connections

Asian

Boomers (Born 1946-1964)

Suburbs and Towns

High School Graduates or Below

Income $50,000 - $74,999

Completed Graduate School

Generation X (Born 1965-1980)


Deli Prepared Foods Sales Are Under-Developed in the Largest Regions –Great Lakes and the Northeast Opportunity to learn from the extremely well developed Southeast and West to boost sales


Great Lakes and Plains are also struggling to grow in Deli Prepared FoodsOpportunity to learn from the extremely well developed Southeast and West to boost sales

1.9%

1.1% -3.7%

-2.1%

2.9% 3.0%

4.3%

3.0%


Click & Collect has become more important for edible categories over timeShare of eCommerce Sales

Source: IRI eMarket Insights and Market Advantage, Latest 52 Weeks Ending 8/11/19

0.9

3.0

11.0

18.0

23.4

9.1

11.89.8 10.5 9.8

5.0

8.0 9.3

11.9 12.1

2015 2016 2017 2018 L52 Weeks

Edible Categories

Click & Collect Delivery/Ship Delivery Services


Prepared / Food Service Items Could be a Basket Builder Online – But Isn’t Today Search “SANDWICH” at Five Retailers With Grocery Delivery Programs & Well Developed In-Store Sandwich Programs

Worse Results Than 20182 mentioned deli sandwiches1 returned deli sandwiches

on the first page


Growth Lies in Engaging Younger Households Are younger consumers finding fresh prepared / retail food service options for them?


Cross-Store Competition for Sales is Real – Especially Among Younger Consumers Seeking Meals That Meet Their Lifestyle

Similar Deli Prepared / Retail Food Service Entrées trips are

2.4xmore likely to also include Frozen Entrées

MILLENNIALS co-purchase Frozen Entrees with Deli, and millennials are more likely to purchase Deli Prepared than the general population


Expanding Options in Pre-Packaged, Branded MealsBeyond traditional deli prepared/food service, third party manufacturers are increasingly offering options


$5,487$5,928

$6,515

$7,221

$7,831$8,175

$5,091

1,810 1,935 2,103 2,303 2,476 2,556

1,560

2014 2015 2016 2017 2018 L52 CYTD 19

Dollar Sales Unit Sales

Source: IRI Total Store View + Perimeter, 52 weeks ending 08-11-19P

9.9% 8.5% 7.5%

Refrigerated Meals category has grown $2.7 Billion in Sales Since 2014Refrigerated Meals Annual Sales Trends (in Millions)Dollar Sales Growth vs. Prior Year

8.0% 10.8%

7.3%


Total Rfg Meals

$8.2B

% Dollar Change

7.5%

$2.2B+13.0%

$313M+2.7%

Entrees Side Dishes Lunches

$2.4B5.6%

Entrees, Lunches and Side Dishes are Driving High Growth for Refrigerated Meals.

Source: IRI Total Store View + Perimeter, Retail Foodservice by Category, Dips & Trays RW Only, 52 weeks ending 8-11-19

$400M-3.3%

Pasta

$20.3M-5.1%

Pot Pies

$3.1B7.0%


+16%+$83M

Soups Handhelds (Non Breakfast)

Appetizers Prepared Salads Potato Side Dishes

+70%+$76M

Breakfast Sandwiches

Within Each Category, There Continue to be Pockets of Strong Growth

Source: IRI Total Store View + Perimeter, Retail Foodservice by Subcategory with at least 25% ACV Distribution, 52 weeks ending 8-11-19

+18%+$65M

14%

+9%+$102M

+7%+$60M

+6%+$31M

+6%+$130M

Lunches/Lunachables


Private Label has a varied presence across refrigerated meals categories ranging from 5% up to 34%, but overall Private Label growth is outpacing branded growth.

5% 13%25% 31% 34%

95% 87%75% 69% 66%

Lunches Pasta Side Dishes Entrees Pot Pies

Private Label vs Branded Share

Priv. Lbl BrandedSource: IRI Total Store View + Perimeter, Retail Foodservice by Subcategory with at least 25% ACV Distribution, 52 weeks ending 8-11-19

+13% -5% +13%+19% +11%

+5%

+5%+11% -12%

-3%

+13% -5%-3% +7%+6%


‒ Strengthening “why buy” against competition both outside the store and within the store

‒ Bring excitement and uniqueness back – shakeup stale assortment

‒ Better engagement with younger households- singles, couples and families

‒ Reconnect with the convenience of being adjacent to the rest of the store – both at bricks and clicks

Growth in Fresh Prepared / Retail Food Service Lies Within:

Shop. Eat. Drink. Explore.


QUESTIONS& ANSWERS

© 2019 Information Resources Inc. (IRI). Confidential and Proprietary. 45© 2019 Information Resources Inc. (IRI).

Confidential and Proprietary. 45

THANK YOU!Jonna [email protected] [email protected]

@FreshFoodTrends

mailto:[email protected]

mailto:[email protected]

state of deli meat & prepared foods - iri · 2019-09-23 · entertaining. pre-packaged ....

Documents