Consumer Demand for Premium Meats Can Increase Retail Profits
Even as consumers feel the pinch of inflation, they haven’t backed away from premium products, or at least not all of them.
One place where they are willing to splurge is at the meat case, and specifically on premium beef and pork, from lunch meat to tenderloins and ribeyes.1
A closer look at the research identifies a detail that may surprise you: Consumers from all income levels, including lower income households, are willing to pay more for premium products, particularly in the fresh category.2
Here are four things retailers should know about the premiumization of meats
- Premiumization contributes to price growth. When it comes to the meat case, premiumization isn’t just about fresh meat or high-priced cuts of beef and pork. Since the start of the COVID-19 pandemic, lunch meats have experienced an 11.6% increase in premiumization in total price/volume change.1
Frozen meats have experienced an 11.5% increase in premiumization in total price/volume change.1
Compare that to ice cream, for example, with an 8.4% increase in premiumization in total/price volume change, or bottled water, with a 6.8% change. 1
- The shift to premium brands crosses income categories. Shoppers from low-income households now make up 23% of consumers who are purchasing premium brands, a very similar percentage as shoppers from middle- and high-income households.1
Both low- and high-income households are trading up on food and beverages, as well as in categories including personal care and cleaning.1
- Premiumization and value can matter more to consumers than price. Across income levels and age groups, shoppers are trying to achieve a balance between affordability and premiumization.
How they reach that balance can vary by income level, age or both. But in all cases, it comes down to value. What does that mean? According to IRI, for today’s shoppers, “value is about price (and) competitiveness but also convenience, occasion and needs.”
For millennials, value is in experiences, and they will purchase premium products for the experiences they provide.1 As a subgroup, millennials who are from low-income households may place higher value on products that provide convenience or are specialty items.2
Even the most economically challenged shoppers are influenced by more than an item’s price. According to IRI, lower-income shoppers will purchase premium foods to reward themselves, to celebrate a special occasion, or because they believe that the quality and value of food they cook themselves provide greater value than food prepared outside the home.2
- Even as inflation began to rise, the demand for premiumization remained strong. The trend toward premiumization accelerated in 2020 as people spent more timing cooking at home. As their cooking skills improved and their confidence grew, shoppers sought to elevate their at-home dining experiences. Their interest in premium foods grew.
When IRI published its webinar, The Balance Between Premiumization and Affordability, in October 2021, this shift in behavior ranged from noticeable to remarkable for several top sellers in the meat department. Examples include:
- Ground beef – 0.2% shift to premiumization
- Bacon – 10.7% shift to premiumization
- Deli Service Lunch Meat – 3.7% shift to premiumization
- Deli Entrees – 12.5% shift to premiumization
The effect is even more pronounced in the meat case itself. In 2020, sales of prime beef increased 52% compared to 2019, plus an additional 28% in the first nine months of 2021.2
How Tyson Foods Can Provide Added Value for Retailers
Tyson Foods offers premium beef and pork programs that can help you meet the demands of shoppers, from the Never Ever beef and pork labeling of our Open Prairie® Natural* Meats brand to our Chairman’s Reserve® top tier and premium beef and pork products.
For more information about our premium offerings, visit https://www.TysonFreshMeats.com/Our-Brands.
1 The Premium Opportunity, IRI, November 2020
2 The Balance Between Premiumization and Affordability, October 2021