Inflationary Pressure Impacting Consumer Behaviour for Meat
Peter Duggan, Sector Manager Pigmeat and Poultry
Image by Kyle Mackie on Unsplash
The latest Kantar shopper trends highlight how consumers have reacted post Covid-19 and how they are behaving in response to the ongoing cost of living crisis. The impact of the crisis has led to consumers changing their shopping behaviour from choice of retailer, frequency of retail visits, to switching to different proteins.
Pent up demand post Covid-19 during December 2022 hit record levels at €1.3 billion. Households managed rising prices by shopping more frequently and purchasing less per visit. Stores were at their busiest last Christmas, with 38 in-store visits recorded on average during December.
As the cost of living crisis deepened as we moved through 2022, consumers initially impacted by higher energy costs, were later affected by higher grocery costs. Irish grocery inflation for the latest reporting period, is now running 15% higher for January 2023 YoY. Irish shoppers traded out 60% of inflation in the 12-week period up to Christmas by reducing volume and switching to cheaper products. Last Christmas the number of in-store visits rose by 5%, with packs per trip falling by around 10%. Kantar research shows that consumers are also managing inflationary pressure through cutting back on nights out and takeaways, reducing discretionary spend, and 70% of all adults are choosing the cheapest range and brands when shopping. The cohort of consumers choosing cheaper brands are female shoppers (54%), of which one third are aged between 16 and 34 years of age.
The spend on the meat category for the latest 12 week period ending the 25th December 2022 is almost 8% higher at €349 million reflecting an increase in average prices by around 14%. However, on the back of these higher prices, the volume of these sales is back by 5% as consumers purchase more frequently but put less in the basket. Interestingly, chicken became increasingly popular in the lead up to Christmas, accounting for one quarter of value sales.
Some noticeable changes in retail trends include both Lidl and Dunnes increasing their share of meat sales in value and volume terms significantly during the 12-week period in the lead up to Christmas. Tesco continues to under index at 17% of overall meat sales against their grocery share of 22% for the Irish market. On the back of strengthening primary producer prices during 2022. The average retail poultry meat price rose by 17% to €6.49/kg, the highest increase recorded amongst all the proteins. However, the poultry meat category remains the 2nd cheapest protein after sausages. The lamb category remains the most expensive protein, with average prices up 8% to €11.62/kg. Private label sales still dominate the total meat category, with branded meat products edging up from 9% to 10% from 2019 to 2022. The key items driving the share of branded meat products include sausages and bacon, especially sausages where 41% of category sales are branded. Consumers trading down within the same category has also become more evident, for example more consumers are switching out of beef steaks to other beef items like mince, burgers, joints and stewing products. Given the ongoing pressure that consumers faced in response to higher grocery inflation last year, retailers responded by increasing the number of meat sku’s on promotion during the backend of the year, while products sold at full price declined. Spend on frozen meat on promotion also increased significantly with growth driven by multi-buy promotions. Whilst retail meat spend was up significantly during 2022, the only demographic that showed some decline in the value of meat purchased was the pre-family demographic. Looking at the breakdown by demographic and how this performed against meat consumption, consumers within the 45+ age (with family) bracket accounted for a quarter of retail meat sales. Whereas young families account for just 3% of total sales. Interestingly for lamb, consumers aged 45+ (with family) over index against overall meat sales, with this segment accounting for 32% of lamb sales. Highlighting the squeeze on disposable income for pre-families, they have reduced their spend across all meat sub categories bar poultry.
The key takeout’s for meat companies is that shoppers are trading out grocery inflation by purchasing less volume and trading down to cheaper products. The pre and early families are the most price sensitive demographic groups. Focusing on price reduction mechanics with these groups will help to stimulate trade with this cohort. Older demographics have shown that their still willing to spend on quality and provenance especially for festive or special occasions, optimising premium ranges and branded offerings with this cohort will help to drive more value and volume into the meat category.