The week ending July 12 was a non-holiday week, but did bring better prices in the meat department along with more consumers shopping for food. As COVID-19 cases are rising across many states, several rolled back the re-opening of restaurants and businesses. In some cases, the rollback prohibits in-restaurant dining altogether, in others, dine-in capacity was more restricted — much like late March and April. The reversal on restaurant openings along with rising consumer concern over COVID-19 is likely to shift dollars back from foodservice to food retail once more.

Taking all this into account, the elevated everyday demand resulted in a 21.4% increase in dollar sales versus year ago. Non-holiday weeks had been seeing some erosion in gains, but this represents a five percentage point increase from the latest non-holiday week, which was June 28. This also became the 17^th week of double-digit gains since the onset of the pandemic. While higher prices drove much of this gain, volume increased as well, at +7.7%. This was the highest volume gain during a non-holiday week since mid April. Unit purchases in the meat department increased by 16.2 million, or 8.1%, over the week of July 12 versus last year, while volume increased 7.7%. This points to more, but smaller, packages sold.

So far during the pandemic, starting March 15 through July 12, dollar sales are up 35.9% and volume sales have increased 22.5% versus the same period last year. This translates into an additional $7.4 billion in meat department sales during the pandemic, which includes an additional $3.3 billion for beef, $1 billion for chicken and $794 million for pork.

Dollar versus Volume Gains
The total meat dollar/volume gap narrowed to 13.7 points. Fresh meat had a slightly stronger week than processed meat in dollars, but processed had higher volume gains. The volume/dollar gap is a little over six points wider for fresh than processed.

The longer, four-week look ending July 12 also shows double-digit volume/dollar gaps for fresh beef and pork, as well as frankfurters. Despite just mild price inflation for turkey, exotic meat and several processed meats, inflation in the much larger proteins caused a double-digit volume/dollar gap for total meat. However, comparing the one week gap (-13.7 points) to the four-week gap (15.5 points), shows progress is being made. Exotic meat, which includes proteins like bison, had the highest percentage gain over the four week look in both dollars and volume, but off a much smaller base.

Assortment
Dipping well below 300 during the height of the supply chain woes, assortment leaped to an average of 321 items per store during Independence Day week. Assortment fell back down during the non-holiday week ending July 12, averaging 315 items per store. While assortment dipped from the holiday high in 2019 as well, assortment remains down 25 items versus the same week last year.

Christine McCracken, Executive Director Food & Agribusiness for Rabobank, is reporting continued mixed production results with strong pork and beef production, but down chicken production. “Pork and beef production continue to exceed year-ago, up 12.1% and 2.1%, respectively. A 10% year-over-year increase in hog slaughter drove the sizable increase in pork, with weights contributing the balance. Heavier carcass weights more than offset a slight (-0.8%) drop in fed cattle slaughter. Chicken production moved lower again this week, as slaughter levels continue to reflect the cuts taken this spring and higher weights offering a limited offset. Recent increases in weekly chick placements (+1% year-over-year) will result in higher production beginning in this fall and may weigh on prices in late third or early fourth quarter of this year.”

Price
While assortment and availability improved, consumers continued to call out higher meat prices and fewer meat features on the Retail Feedback Group’s Constant Customer Feedback (CCF) system. “I know it is not you, but meat prices are very high.”  Another shopper said, “Would like to see more specials, the way you used to have several meats on the front page of the ad. Seems like lately there have been very few specials and even then prices are not very attractive.”

IRI’s insights on the average retail price per volume show double-digit increases when comparing prices during the week of July 12 to the same week in 2019, and a mild increase versus the prior week. While beef prices were stable versus week ago, chicken’s price per volume showed the highest increase, at +5.1% versus the prior week. However, the four week versus one-week look shows that meat prices have come down somewhat, at +14.7% versus +12.8%.

McCracken also provided an updated on wholesale pricing. “Pork prices continue to rally, the cutout hitting a five-week high driven by strength in hams and bellies. Good processor demand for hams and bellies and renewed export interest from Mexico helped boost cutout values. Loins also saw some strength late in the week. Good retail and processor interest and relatively low inventories remain supportive, but big increases in slaughter in coming weeks (as packers continue to work through the backlog of market hogs) will continue to limit the upside for pork. Beef prices were relatively flat on the week, but continue to struggle to gain retail interest. Large supplies of competing proteins and limited demand from white table cloth restaurants will limit upside in most items in the near term. Even ground beef has struggled, with surplus 50% lean trim weighing on the market and contributing to the 9% year-on-year drop in values. Lower prices should help boost retail interest in coming weeks. Demand for chicken is steady, with lower prices on boneless breast meat attracting some retail interest. Wing demand remains outstanding and ahead of expectations, particularly given potential disruption in fall sports and foodservice outlets in some regions. Exports of chicken continue to struggle, leaving larger supplies of dark meat on domestic markets. Plentiful competing meat supplies have limited retailer interest in thighs and drums, but this could improve as consumers seek out value options.”

Meat Gains by Protein
The overall 21.4% meat department gain was fueled by double-digit gains for all proteins, with the exception of chicken that gained 8.8%. Lamb and beef had the highest percentage growth, at +31.1% and +30.1%. Beef easily had the highest absolute dollar gains (+$134 million), followed by pork (+$25 million) and chicken (+$20 million).

Grinds
The popularity of ground meat continues with double-digit increases in dollar sales for ground beef, turkey, chicken and pork. Ground beef had the highest dollar gains, at +24.5%, however, price inflation fueled much of the gain. At +7.6%, this was the first single-digit increase for turkey volume since the onset of the pandemic. At +9.1%, the same was true for ground pork.

• Ground beef increased 24.5% in dollars and saw its largest increase in volume since mid April, at +6.0%.
• Ground turkey, +12.0% in dollars and +7.6% in volume.
• Ground chicken, +20.4% in dollars and +19.4% in volume
• Ground pork, +16.1% in dollars and +9.1% in volume.

For the week ending July 12 versus year ago, these four ground proteins generated $256 million in sales, which represents an additional $48 million versus year ago. Ground beef represents 92% of these additional dollars.

The Pandemic Sales Performance by Area
Demonstrating just how big Independence Day sales are, total meat department sales dropped from $1.671 billion during the week of July 7 to $1.354 billion the week ending July 12. Yet, this is 21.4% higher than the same week year ago. All areas were in positive territory, with the exception of chicken. Frankfurters, that had experienced some sales pressure, bounced back big, at +21.7% vs. year ago.

Market Shifts
Beef and pork have strengthened their share of total dollars and pounds. During the week ending July 12, beef’s strong dollar gains caused its share to jump to 57.1% versus 53.3% the first week of March. Due to inflation, the increase in dollar share for beef was larger than the increase in volume share, however, at 39.3%, beef is the leader in pound sales as well. Pork also gained in dollar share to 13.5%. Chicken’s share was off in both dollars and volume.   

What’s Next?
This was the first of a stretch of eight non-holiday weeks until Labor Day, that falls on September 7. This means everyday demand alone will need to drive the gains over last year’s levels. Coronavirus cases are mounting around the country. Many large retailers have announced face mask mandates for customers at all their stores, including Walmart, Publix, Albertsons, CVS and Walgreens.

While everyday sales gains had been experiencing a one to two point erosion every week since the end of April, rising COVID-19 concerns along with the closing of restaurants and businesses appears to be driving renewed trips and sales for food retail. This means that meat sales will likely continue to track well ahead of the 2019 baseline for weeks to come. Depending on pricing levels, volume gains will likely continue to trail dollar growth. Additionally, consumers may continue to divert protein dollars to frozen meat and seafood as well as fresh seafood. Inflation in fresh and processed meats has started to moderate these past few weeks and this is expected to continue as supply is ample and foodservice demand is likely to plateau.

Source: 210 Analytics/IRI