GERMANY; Frankfurt. As the meat supply, labor and prices continued to dominate the headlines in consumer media coverage around the country, the week ending May 10 saw another enormous boost in both dollars and volume. Following two weeks that saw sales up around 50% over the same week last year, the week of May 10 came in at +40.6%.
Additionally, volume increased 27.8% versus year ago. Year-to-date through May 10, meat department dollar sales were up 24.3 %, boasting double-digit growth for nine weeks running. Year-to-date volume sales through May 10 were up 17.6% over the same period in 2019. Removing the pre-pandemic months shows meat sales between March 8 and May 5 up 45.2% in dollars and 34.5% in volume.
The tightness in supply prompted continued waves of consumers stocking up on meat and poultry, fresh and frozen. Many stores continued to have purchase limits in place for certain cuts or a limit for the total number of meat packages that could be purchased per customer. In their May 6 study, Datassential found that the occurrences of Covid-19 among meat plant workers may make 25% of consumers nervous to the point of purchasing less meat, but it does not stop the vast majority of Americans from stocking their grocery carts with meat. The firm found that 53% of Americans had already stocked up on meat or planned to stock up soon. According to Datassential, 16% of consumers have one-to-two days worth of meat/poultry on hand in their fridge or freezer; 27% a week’s worth; 26% have two-to-three weeks’ worth; and 25% have even more than that. Across all survey questions, Boomers are the least likely to panic purchase. Top on the grocery list to stock up are chicken, beef, bacon, sausage and pork chops.
In addition to stocking up, the week got a coronavirus-related spending boost from Mother’s Day. The National Retail Federation found that 78% of consumers say celebrating Mother’s Day is important to them this year, given the pandemic. In past years, Mother’s Day has been the most popular holiday for eating out- in fact, it tends to be the busiest restaurant day of the year. According to the National Restaurant Association, typically two in five consumers eat out for Mother’s Day across meal occasions, or more than 92 million Americans. With restaurants still limited to takeout or capacity restrictions for dining in, 2020 celebrations boosted food retail spending across departments.
The recent week sales gains were achieved through increases in buyers, trips and dollars spent per trip according to IRI National Consumer Panel data for Total US All Outlets. Over the four weeks ending May 3, sales increased 36.4% benefitting from a 18.3% increase in buyers versus year ago, a 13.5% increase in meat trips and a 17.9% increase in dollars spent per trip. In point of sale data, the gap between volume and dollar sales remained wide —signaling pressure on pricing due to tightness in the supply chain.
But supply is likely to continue to impact the dollar and volume performance in weeks to come. “Beef and pork plants are back online, but remain at least 15% short on labor,” said McCracken. “Workers vulnerable to the virus or with at-risk family members may be unwilling to return to their former positions. We expect absenteeism to fall, but anticipate labor constraints to limit processors’ ability to debone and trim. Growing supplies of commodity protein are already getting the Heisman from many retail buyers and will begin weighing on wholesale prices in the coming weeks. Beef production was up 14% from recent lows, but is still trailing 2019 production by 23%. Pork production is just 10% behind year-ago levels, although a lack of labor continues to limit value added processing. Processors began redirecting a portion of their export volumes to the domestic markets this week. This will limit near term pricing gains in pork and improve available supplies of beef and chicken.”
Many consumers commented on the sparse inventory levels during the week of May 10 on the Retail Feedback Group Constant Customer Feedback system. IRI’s measure reflecting the average number of items sold per store remained significantly down for meat, at 302.5. This reflects the lowest levels of variety seen since the onset of the pandemic in mid-March and is 44 fewer items on average selling than the same week last year.
The supply chain woes have affected wholesale and retail prices. Shoppers called out higher meat prices and fewer meat features on CCF. IRI’s average retail price per volume sold insights also show significant upward pressure on retail prices for the week ending May 10 versus the same week in 2019 for beef, particularly ground beef, and lamb. The upward pressure on the price per volume for turkey eased somewhat compared to the four-week view.
Turkey had a particularly strong week driven by both ground turkey and whole turkeys. The latter is driven by extended promotions by several retailers and particularly a very unique one by Walmart, representing 33% of all whole bird turkey sales over the past two weeks. Walmart is offering a special, no expiration gift card that can be used specifically towards a whole bird turkey or ham. The card has a “pay it forward” purpose to honor and thank those for all they are doing during these troubled times and to provide for those who are financially challenged. The card extending beyond the Easter holiday is likely to drive elevated sales for whole bird turkey and smoked hams for a while to come. Smoked ham sales for last week was up 83%, driven by the gift card.
Total meat department sales exceeded $1.6 bn. for the week, with continued gains for the big three (beef, chicken, pork) that have seen double and triple-digit increases ever since the week of March 15. Processed meats, sausages, frankfurters and bacon continued to do extremely well also.