A Snapshot of TODAY’S RETAIL MEAT CASE 2010 N AT ION A L ME AT C A SE S T UDY E X EC U T I V E SUMM A R Y BACKGROUND & METHODOLOGY KEY FINDINGS Sealed Air’s Cryovac Food Packaging, The Beef Checkoff Program and the National Pork Board teamed up in the first quarter of 2010 to conduct audits of the nation’s retail meat cases. Texas Tech University conducted the bulk of the data collection, and First Stage Marketing analyzed data. Each protein’s share of package count and pounds found in the meat case during the audits remained relatively stable in 2010 when compared to 2007. Other key findings, however, surfaced and pointed to the important role information and marketing claims now have at the meat case. Surveyors audited 124 retail supermarkets and nine club stores in 51 metro markets across 31 states on various days of the week at random times. This summary only addresses the more than 160,000 packages representing more than 288,000 pounds and 21,000 SKUs of meat products that were captured in supermarkets to further understand the growing transformation seen in the retail meat case during the last eight years. This research project, the National Meat Case Study (NMCS) 2010, was benchmarked against the same study conducted in 2002, 2004 and 2007 to provide insights into emerging retail trends. While reviewing the findings from this 2010 study, it is important to keep in mind the overall economic and market conditions affecting the grocery industry during the study period. In the first quarter of 2010, the U.S. was still feeling the effects of an economic recession. Among other things, the recession caused consumers to eat at home more and dine out less. The Consumer Confidence Index dropped from 100.3 in January 2007 to 56.5 in January 2010, and the unemployment rate rose from 4.6% in 2007 to 9.7% in the first quarter of 2010. Competition among formats also remained strong during 2010, as club stores, traditional supermarkets and niche stores competed for market share. As you review the executive summary, keep in mind it is only a summary. There are many more statistics available as well as entire modules specific to each protein. Contact one of the partners for additional information. 1.Store branding numbers changed the most of any audited categories in the study. The percent of packages with store branding in the meat case has tripled since 2004. 2.General consumer information on package grew. On-package nutrition labeling numbers and cooking information continued to increase. This year’s study also captured production claims, COOL labeling and the use of bilingual labels for the first time, giving further insight into the marketing activities taking place at the meat case. 3.Packaging also changed. The amount of case ready packaging increased, while average package weight remained steady at 2 pounds. 4.Products with a natural claim grew in 2010, up 10 percentage points from 2004. 5.The zero stock analysis shines a spotlight on potential lost sales by documenting top selling cuts that were out of stock. 48% 37% 12% 23% 36% Supplier Brand Store Brand No Brand Within fresh meat, the 3 core proteins (beef, pork and chicken including value added) 38% of SKUs, 29% 27% represented 94% of linear feet, 89% of all packages and 89% reinforcing the importance of these proteins for category growth and department profitability. 2004 2007 2010 Changes in linear feet were driven by a 2 percentage point increase of ground beef linear feet. PROTEIN’S SHARE OF FRESH MEAT CASE The ratio of full service and self-service linear feet Protein’s Share of LINEAR Fresh Meat - % of Linear Feet of Shelf Service Case % OF FEET Case OF SELF-SERVICE CASE stayed the same in 2010 with 93% self-service and 7% full-service. Seafood continued to lead the 2% <1% 1% 2% 3% 1% 3% 2% Veal way in the full-service case with 52% of linear feet, 7% 7% 8% 6% Lamb 26% 26% 26% 27% although it has steadily decreased from 67% in Cooking Information on Package - % of Package Turkey 2002. Beef (21%), pork (10%) and chicken (9%) Chicken 21% 22% 21% 20% had the next highest presence in the full-service Pork 39% case. Beef (including ground beef) commanded the 12% 12% 14% 37% Ground Beef 34% 32% 11% largest share of the self-service case (42%) followed Beef 42% 30% 28% 28% by chicken at 27%. (Whole Muscle) 2002 2004 2007 2010 2002 2004 2007 2010 Bee On Package Nutrition Labeling of Packages Exact Weight - %- % of Packages BRANDING 2010 2007 2004 44% 57% 61% C The biggest news from NMCS 2010 was in the area of gained against supplier brands. The supplier brand 34% store branding. The percentage of packages carrying decreased from 69% in 2007 to 56% in 2010 a store brand has tripled since 2004. Store brands while the store brand 2002 2004 2007 increased 2010 from 26% in 2007 increased from 12% in 2004 to 36% in 2010; this to 35% in 2010. are 16% even stronger 56%These trends 21% 71% 51% 22% 15% into account. 64% growth was at the expense of packages carrying when taking 2004 package counts 6% 31% 13% 34% 4% supplier brands, which decreased 13 percentage Store Branding Ground - Pork % of -Packages Beef Gains Ground Beef Chicken STORE BRANDING % OF PACKAGESTurkey points from 2004 to 2010, and no brand packages, Supplier Brand down 11 percentage points for the same timeframe. 50% 48% 37% Store Brand It appears retailers are taking advantage of the No Brand consumers’ no brand preference, as sited in the Power of Meat studies below to introduce 12% 23% 36% store brands in hopes of gaining loyalty and differentiating themselves from competitors. 5% 20% 75% Beef 8% Natu Protein’s Value-Added 38% Share of29% 27% - % of Package 2007 72% 13% 15% 2010 74% 13% 13% Source: Power of Meat, An In-Depth Look at Meat Through the Shoppers Eyes, 2007 and 2010. Store FRESH MEAT/POULTRY: No brand preference Prefer private brand Prefer national brand 2007 20% 18% 3% <1% 1% 2% 3% 1% 3% 2% 2010 12% 44%12% 42% 7% 7% 8% 6% 2004 15% 7% 2007 26% 26% 26% 27% 2007 31%2010 21% 2% CONSUMER BRAND PREFERENCES Supplier Store brand growth was seen across all proteins in 2004 2007 2010 2010. Beef store branding increased from 31% in 2% 2007 to 51% in 2010. Store branding of ground STORE BRANDING BY PROTEIN - % OFVeal PACKAGES 15% 11% beef increased from 21% in 2007 to 37% in 2010. 1% 4% Lamb Beef Ground Beef Pork Chicken Pork store branding increased from 19% in 2007 12% Turkey 27% 2004 27% 18% 56% 77% to 26% in 2010. Chicken store brands actually 24%Meat Case - % of LinearPork 16% Protein’s Share of Fresh Feet of Shelf Service Case 21% No Brand MEATCASE SHARE FINDINGS 50% 42% 2002 58% Chicken 69% 43% Ground Beef 56% Veal 11% 15% Beef Lamb(Whole Muscle) 19% Turkey 26% 2010 22% 51% 21% 37%20% 26% Chicken 35% 2004 58% 75% Pork 33% 8% 61% Ground Beef 5% 23% Beef 31% 9% (Whole Muscle) 12% 2007 49% 2010 37% 30% 2004 12% 28% 2007 14% 51% 28% 2010 Exact Weight - % of Packages 2 Pork Pac CONSUMER MESSAGES FINDINGS Protein’s Share of Value-Added - % of Package Consumer communication plays a key role in meat case merchandising. More information is being placed on packages and signage to help communicate the many benefits 2% of today’s meat products. As a result of this importance, many areas of consumer Veal 15% 11% communication are getting more emphasis. 1% 4% Lamb 12% 16% On-package production claims were collected in 2010. Top production claims included “minimally processed,” “hormone free,” “antibiotic free” and “vegetarian fed.” The total percentage of all fresh meat packages carrying the “minimally processed” claim was 27%. 2010 Production Claims - % of Packages Total TOTAL PRODUCTION CLAIMS - % OF PACKAGES Minimally Processed 34% On-pack nutrition labeling has continued to expand across proteins in the meat case. Beef 2002 increased 2004 from2007 2010to 29% in 2010. 24% in 2007 Ground beef also increased 4 percentage points from 2007 to 2010. Chicken, turkey, lamb and veal also increased the amount of packages with Store Branding Gains Ground - % of Packages nutrition labeling. 50% 48% 37% Supplier Brand Store Brand No Brand 27.2% Hormone Free 15.5% Antibiotic Free 4.7% Vegetarian Fed 3.9% Never Ever 1.4% Billingual Labeling - % of Packages BILINGUAL LABELING - % OF PACKAGES Cooking Information on Package Package Bilingual language usage- % wasofanother new item audited in 44% 44% 2007 The “vegetarian fed” claim was also found most often on chicken (8%), lamb (4%) and ground beef (3%). Nutrition labeling on package expanded yet again in 2010, 61%the last four studies significantly increasing over 57% from 34% in 2002 to 61% in 2010. 24% 42% The “antibiotic free” claim was found on 5% of all packages. It was most often found on chicken (8%), ground beef (6%) and lamb (5%). On Package Nutrition Labeling - % of Packages Turkey Pork Chicken Ground Beef Beef (Whole Muscle) 3% On-package “minimally processed” claims were found on 57% of chicken, followed by 45% of turkey. Next was lamb with 34%, veal with 26% and ground beef with 22%. Just over 15% of all fresh meat packages were labeled as “hormone free.” Chicken packages carried the “hormone free” claim significantly more often than the other proteins. It was found on 43% of all chicken packages. 2010. The average of all fresh meat packages with bilingual information was39% 8%. Ground beef has 37% the largest of bilingual packages, with 17% 34% percent 32% of packages including information in both English Ground was followed by beef at 2002 and Spanish. 2004 2007 beef 2010 11%, pork at 8% and lamb at 7%. 27% 17% 11% 8% 7% 5% 4% Beef Ground Beef Pork Chicken Lamb Veal Nutritional Labeling on Package - % of Packages By Species COOL Beef 2004 2007 2010 Labeling in 2002 Store - % of Stores Audited 5% 7% 3% Pork 20% 16% 21% Ground Beef Chicken Turkey 9% 7%57% 16% 24% 29% 3% 68% 2% 77% 81% On Both 32% 17%41% 18% 53% 53% 16% On Sign 46% 58% 74% 80% On Package 65% 78% 88% 90% Veal 6% 8% 10% 29% Lamb 10% 18% 18% 36% 34% 80%44% 80% 57% 77% 61% Total 75% 77% 76% Beef Ground Beef Pork Chicken Lamb Veal % of On Package Nutrition Labeling - % of Packages FINDINGS 61% 57% 44% 34% COOKING INFORMATION % OF Cooking InformationON onPACKAGE Package - % of PACKAGES Package Cooking information on packages increased in 2010, Billingual Labeling - % of Packages Cooking Package - % 32% of Package up 7 Information percentageonpoints from in 2007 to 39% 2002 in 2010. All major proteins increased the percent 39% of37% packages with cooking information. The highest 34% 32% was ground beef with increase among proteins an increase of 16 percentage points. The protein 2002 2004 2007 2010 with the highest percentage of packages containing cooking information was turkey at 76%. On Package Nutrition Labeling - % of Packages 2007 34% 2010 39% 32% 11% 8% 2007 2010 2002Gains 2004 Store Branding Ground -% of Packages 7% 5% 4% Supplier Brand 50%Beef 48%Labeling 37% OnGround Package Nutrition - %Lamb of Packages Beef Pork Chicken Store Veal Brand No Brand 61% 57% COOL LABELING IN-STORE 12% 23% 36% COOL in Store - %INFORMATION of Stores Audited % OF Labeling STORES44% WITH COOL 34% 3% 7% 7% 3% 2% 5% 38% 29% 27% On Both 21% 2004 16% 16% 17% 18% 2010On Sign 20% 2002 2007 2004 2007 2010 On Package Country of Origin Labeling (COOL)61% information was 57% another element added to the 2010 audit. In the 44% supermarkets audited, COOL information was 34% displayed 75-80% of the time on the package, 2002 2004 2007 The 2010 depending on the protein. proteins with the highest percentage of COOL displayed on package were lamb and veal, both at 80%. Category A (USA only) Gains was recorded forofover 70% of beef, Store Branding Ground - % Packages pork, chicken and veal. Category B (USA and Supplier Brand 50% 48% 37% other) was the code found most often on Storeground Brand beef (45%). Lamb was categorized as mainly No Brand 54% category A and 23% category D (other). PACKAGING 2004 37%17% Store Branding Gains Ground - % of Packages Supplier Brand 76% 77% 77% 80% 80% 75% 50% Case -48% 37%Feet of Shelf Protein’s Share of Fresh Meat % of Linear Service Ca Store Brand Ground Pork Chicken Lamb Veal Beef No Brand 2% <1%Beef 1% 2% 3% 1% 3% 2% % of Veal 7% 7% 8% 6% Supermarkets Lamb 26% 26% 8% 15% 26% 9% 12% 8% 12% 23% 27%11% 36% without COOL Turkey 12% 23% 36% Chicken 21% 22% 21% 20% In addition to information displayed on package like nutrition labeling, the 38% 29% 27% Pork 38% 29% 27% 12% 12% 14% audit also evaluated package weight, exact weight and case ready 2004representation. 2007 2010Ground Beef 2004 2007 2010 Average pounds per package has remained consistent over30%the years at 2 28% pounds.Beef 42% 28% (Whole Muscle) Case ready representation has continued to increase to 66% of all2007 packages in 2010. 2002 2004 2010 Average pounds per package has remained consistent Protein’s Share of Fresh Meat Case - % of Linear Feet of Shelf Service Case at 2 pounds while the number of exact weight 2% <1% 1%has grown. 2% 3% Chicken 1% 3% and2%pork packages packages Veal 7% 6% tended to be7%slightly 8% heavier, averaging 2.5 and 2.1 Lamb 26% 26% 26% 27% pounds respectively. The number of exact Turkey weight packages increased 2 percentage pointsChicken in the meat 21% 22% 21% 20% case in 2010 to 24%. Turkey had the most Pork exact 12% 12% 14% weight packages at 71% (up 7 percentage Groundpoints Beef from 2007 to 2010). Beef 42% 30% 28% 28% 2002 2004 2007 2010 (Whole Muscle) Exact Weight - % of Packages Case Ready representation continued to increase, Exact Weight - % of Packages jumping 17 percentage points during the last 8 2010 years, from 49% in 2002 to 66% in 2010. 2007 All proteins either maintained or increased their 2004 percent of case ready packages. Poultry products continued to have the highest percentage of case ready products, with turkey at 98% and chicken at 94%. This is followed by ground beef (71%), lamb 56% 21% 16% 71% (60%), pork veal (54%) 51%(58%), 22% 15% and beef 64% (31%). 4% Beef 31% Ground Beef 6% 13% Pork Chicken Protein Case Ready Growth by Protein, Top Five 2010 2007 Ground Beef 2004 By Species 2002 2004 2007 2010 Change vs. ‘02 56% 66% 67% 71% +15 Beef 15% 23% 27% 31% +16 Pork 37% 50% 56% 58% +21 Lamb 38% 47% 60% 60% +22 Veal 2% 28% 37% 56% 51% 21% 54%16% Protein’s Share of Value-Added - % of Package 51% 22% 15% 60%6% 64% Veal 13% 66% 15% 11% 4% Beef Ground Beef Pork Lamb Chicken Turkey Pork 24% Total w/ Poultry 4% 34% Turkey Exact Weight - % of Packages Protein’sEXACT Share WEIGHT of Fresh-Meat Case - % of Linear Feet of Shelf Ser % OF PACKAGES 2010 2% <1% 1% 2% 3% 1% 3% 2% 2007 Veal 7% 7% 8% 6% 2004 Lamb 26% 26% 26% 27% Turkey Chicken 21% 22% 21% 20% Pork 71% Ground Beef 56% 12% 21% 12% 16% 14% 51% 22% 15% 64% 6% 34% 31% 13% 4% Beef 42% 30% 28% 28% (Whole Muscle) Turkey Beef Ground Beef Pork Chicken 2002 2004 2007 2010 1% 12% 16% 27% 49% 31% +26 71% 64% 34%+17 Turkey Na 21% FINDINGS NATURAL VS. ORGANIC 42% 22% 21% 20% 12% 12% 14% 30% 28% 28% Chicken Pork Ground Beef Beef (Whole Muscle) 2002 2004 2007 The share of packages carrying2010 a natural or organic claim showed steady growth again in Exact Weight % of Packages 2010. Packages with a natural claim increased to 32%. Packages with the USDA organic seal remained very small at 0.9% but still showed an increase compared to prior years. 2010 2007 2004 Packages with a natural claim* increased to 32% of the packages, up 3 percentage points from 2007. Also, 46% included a natural claim and at least one production claim; 24% 56%included 21%two production 16% 71% 51% 22% 15% 64% claims. (See on6%production for 31% 13% claims34% 4%the section more information.) Nearly one-third of ground Beef Ground Beef Pork Chicken Turkey beef packages carried a natural claim.Turkey, lamb and veal also had large increases in the number of packages labeled as natural products. Products Labeled Natural - % of Packages 2004 2010 Beef 2% 4% 5% Ground Beef 7% 25% 31% Pork 9% 15% 18% Chicken 61% 67% 59% Turkey 17% 16% 61% Lamb 22% 27% 38% Veal 15% 6% 42% While only 0.9% of all packages had the organic seal, the percentage has continued to increase since 2002. Two percent of chicken is labeled organic. Protein’s Shareand of Value-Added - % beef of Package Ground beef (1.1%) whole muscle cuts (0.5%) showed the most growth since 2007. Natural and Organic Products - % of Packages NATURAL AND ORGANIC GROWTH - % OF PACKAGES 2010 2007 2004 32% 29% 22% 2% * OUT OF STOCK 2007 In this study, products classified as natural included: 1. Natural as defined as containing no artificial ingredient or added Veal color and only 15% 11% 1% minimally processed and 2. Naturally-Raised4% productsLamb as defined as raised and have never 12% entirely without growth promotants, antibioticsTurkey 27% been fed animal by-products. Pork 24% 16% 3% 42% 44% 0.2% Natural 0.7% 0.9% Organic Chicken Ground Beef which products Beef (Whole Muscle) The2007 zero stock analysis revealed were out of stock Pork Packages Decline during the audit and showed the potential for lost sales when top selling cuts were not in the meat case. 2010 In order to analyze zero stock items, a rollup of top package counts by protein was conducted. Data regarding the percentage of stores that did not have these items in stock during the store visit (zero stock) was then added. Because not all stores call the same cut by the same name, the product descriptions found on the price/unit labels were rolled Production up for a better represention. Claims - % of Packages Total Pork has the most to gain from overcoming a zero stock situation. Four of the top selling Minimally Processed 27.2% pork items were among the top 5 zero stock Hormone Free 15.5% items. Back ribs and non-flavored tenderloins Antibiotic Free 4.7% were missing from the case most often, 27% and Vegetarian Fed 3.9% 24% respectively. The analysis showed the Ribeye Never Ever Steaks, Top Sirloin1.4% Steaks and Cube steaks are most likely areas of lost profit for retailers in the beef category. Wings led zero stocks for chicken. Top Beef, Pork and Chicken Items Beef % of Packages Beef Stew 6.4% Strip Steak Boneless 5.9% Ribeye Steak Boneless 5.4% Sirloin/Top Sirloin Steak Bnls 4.6% Cubed Steak Beef Pork Ground Beef Pork Loin/Top Loin/CC Chops Bnls 4.0% Chicken % of Packages % Zero Stock 0% 2007 8% Supermarket 201011% Supermarket 200712% Club Stores 201011% Club Stores % Zero Stock 12.8% 4% Loin/Top Loin/CC Chops Bone-in 6.4% 15% Tenderloin (Non-Flavored) 4.4% 24% Spare Ribs (including St. Louis) 4.3% 19% 3.8% 27% Pork Pounds Decline Back Ribs Chicken % of Packages 2007 % Zero Stock Supermarket Boneless Breasts (including Skinless) 17.0% Drumsticks 9.6% Whole Chicken (including Roaster) Beef Whole Ground Beef Pork 8.2% Chicken 2010 6% Supermarket 2007 2% Club Stores 2010 Club Stores 4% Thighs 7.8% 7% Wings 5.8% 11% CONCLUSION The data from this series of meat case audits across the country is a valuable tool in understanding how the national retail meat case is evolving. In addition to the snapshots provided here of major trends, there are separate modules specific to each protein. Each protein has additional trending news. Here are a few findings from each protein: Beef In addition to store branding, another major development in 2010 for beef was value/family packs. Most beef categories increased the percentages of total packages that were family/value packs. The category that increased the most was offals, which increased from 2% in 2007 to 14% in 2010. Ground beef had the second highest increase from 3% in 2007 to 11% in 2010. Pork Among the data for pork, the most change was in the area of enhanced product. Enhanced product counts for pork significantly declined 6 percentage points from 45% in 2004 to 39% in 2010. Chicken Many retail areas have seen an increase in family and value size packs. Chicken saw a significant increase in the value/ family packs sold. It increased from only 6% in 2007 to 15% in 2010. Turkey For turkey, the major change was in natural claims. Natural claims increased 45 percentage points to 61% of turkey packages. Also, 71% of turkey packages are now exact weight, driven by ground turkey. Cooking information increased 9 percentage points to 76% of packages, leading all proteins. Lamb Nutrition labeling was a big story for lamb. It doubled to 36% of lamb packages. Also, ground lamb increased 4 percentage points to 13% of lamb packages. Veal Ground veal increased 11 percentage points to 23% of veal packages. Veal Scallopini, a higher priced cut, increased 10 percentage points to 21% of packages despite the economic conditions. Nutrition labeling also increased for veal, up 19 percentage points to 29% of packages. PROJECT FUNDING AND CONTACTS Additional information is available by contacting one of the organizations below. Funded in Part by The Beef Checkoff Sealed Air Corporation Cryovac Division National Cattlemen’s Beef Association National Pork Board Retail Marketing 100 Rogers Bridge Road, Building A Duncan, SC 29334 Email: cryovac.mkt@sealedair.com Web: cryovac.com 9110 East Nichols Avenue Centennial, CO 80112 Email: retailmarketing@beef.org Web: BeefRetail.org 1776 NW 114th Street Clive, IA 50325 Email: jsutton@pork.org Web: PorkRetail.org All rights reserved. No part of this research may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of authorized Sealed Air personnel, in cooperation with partners the Beef Checkoff Program, and the National Pork Board. P.O. Box 464, Duncan, S.C. 29334-0464. 5000-09/10