Supermarket Foodservice - BeefResearch...foodservice, is dominated by Whole Foods in terms of sales, but most Tier 1 supermarkets share Whole Foods’ philosophies on food, atmosphere,

© 2015 Technomic Inc. SEPTEMBER 29, 2016 | technomic.com

Supermarket Foodservice: Creating Successful

Go-to-Market Strategies

PREPARED FOR:

SEPTEMBER 20151

© 2015 Technomic Inc.

Presentation Agenda

2

Study Overview

Key Conclusions

Core 4 Framework

Consumer Highlights

POV – Beef

Market Assessment and Forecast


INTRODUCTION

Draft Report


Objectives

4

Determine the current size and composition of the supermarket foodservice market by tier and category/product type (in dollars)

Forecast the next three years with projected growth rates by tier and category

Assess current supermarket business practices

Analyze trends related to food, culinary knowledge, formats and merchandising

Identify current consumer preferences, behaviors and needs

Deliver product category tier targeting – the Perimeter Opportunity Visualizer (POV)


Scope

5

‘Prepared (or partially prepared) foods that are found in sections of the store where consumers can pick up ready‐to‐eat or ready‐to‐heat items from service counters or self‐service/grab‐and‐go areas. These are products that do not require extensive

preparation beyond reheating (if applicable)’.

Hot and cold self‐service bars (including prepared entrees, salads, soup)

Specialty service case (traditional deli meats and cheeses are not included)

Dedicated stations or venues within the prepared foods area (these will vary by store ‐ e.g., pizza, sandwich, stir fry, carvery)

Grab‐and‐go (e.g., “deli wall”, “pre‐packs”)

Sushi

Cafés or restaurants within the store


Foodservice Specialists blur the line between supermarkets and restaurants. Gourmet menu items, limited table service, a warm atmosphere, and restaurant‐type amenities likely exist.

Scope (cont.)

6

TierCore 4

Segments Description

Foodservice Specialists1

Destination Supermarkets have a comprehensive perimeter that offers extensive choice across cuisine types. The perimeter often contains made‐to‐order stations, café‐type seating, and well‐trained service.

Destination Supermarkets2


Prepared Foods Departments have generally shifted focus away from meats and cheeses and to ready‐to‐eat or ready‐to‐heat meals. In most cases, shoppers have the ability to customize orders and there may be some basic in‐store seating.

Scope (cont.)

7

Tier Description

Prepared Foods Departments3

Extended Delis, while still emphasizing sliced meats and cheeses, typically offer customers several hot meal alternatives as well as a ready‐to‐eat cooler selection. They may even offer items such as sushi.

Extended Delis4

Core 4 Segments


Methodology

8

Program Initiation

Secondary Review

Consumer Survey

In-Depth Trade Interviews

Field Analysis

Reporting and Presentation

2

3

1

4

5

6


KEY CONCLUSIONS

Draft Report


Supermarket foodservice is one of the fastest growing segments in the away‐from‐home food industry and its underlying fundamentals make this a highly important opportunity for leading manufacturers.

Key Conclusions

10

11

22 Tiers of supermarkets exist (based on fresh prepared foods programs) and manufacturers must recognize the need to tailor sales, marketing, and product development activities to each of these different tiers.


Key Conclusions

11

Tailoring strategies requires a clearly defined supermarket foodservice vision; any lack of corporate vision will likely result in solutions that fail to completely meet the needs of the different supermarket banners.

33

44 The majority of volume is presently in Tier 3 (largely because of store count), but recognize that many Tier 3 banners have aggressive plans to elevate their prepared foods departments to Tier 2 levels; supermarket strategic plans and positioning are quickly evolving.


Key Conclusions

12

Tier 1, the most advanced level of supermarket foodservice, is dominated by Whole Foods in terms of sales, but most Tier 1 supermarkets share Whole Foods’ philosophies on food, atmosphere, and experience.

55

66 Food and beverages being offered within supermarket foodservice are far more sophisticated than one to two years ago.


Key Conclusions

13

One of the primary reasons for the strong historical and projected growth of supermarket foodservice is that core consumer needs are being met – not least among them being the desire for restaurant quality at less‐than‐restaurant pricing.

77

88 A secondary – but important – factor in consumer interest in supermarket foodservice is the fact that the dining experience has been upgraded dramatically.


Key Conclusions

14

Supermarket perimeters are being showcased via impressive re‐models, featured equipment, and made‐to‐order service. While Tier 1 locations have been the front runners in this regard, such strategies are increasingly being deployed at Tier 2 locations as well.

99

1010 An influx of professional foodservice management and production advances have lead to major quality improvements and preparation efficiencies.


Key Conclusions

15

Variety is highly important to consumers but manufacturers can help supermarkets understand the importance of optimized assortment.

1111

1212

1313

A large part of this opportunity is in ‘fresh’ foods and this means use of ‘real’ fresh and/or ‘extended’ fresh. This will be a challenge for supermarkets.

Manufacturers can best capitalize on the substantial supermarket foodservice upside by assisting retailers in finding ways to capture the center store shopper.


THE CORE 4 FRAMEWORK

Draft Report


The Core 4 Framework

17

Tiers defined and categorized according to:– Metrics– Food and programs– Physical characteristics– Marketing and communication

For today’s purposes, we will examine Tier 1– Each of the other tiers is profiled

similarly in the Technomic reportTier 1Tier 1


Example Metrics

18

Tier 1Tier 1

FPF to Total Store Size Ratio

20-30%

15-20FTE

Tier 2Tier 2

10-20%

10-15FTE

Tier 3Tier 3

5-15%

7-10FTE

Tier 4Tier 4

< 5%

2-4FTE

Service StaffHeadcount

FPF to Total Store Size Ratio

Service StaffHeadcount


Food and Programs

19

Tier 1 – Brand Penetration

Limited, highly curated (mostly single serve beverage, some pre‐pack/grab‐and‐go)


Physical Characteristics

20

Tier 1 – In‐store Location Strategy

Highly experiential, sensory design but within an integrated perimeter strategy



21

Chef‐case (cold)Chef‐case (hot)

MTO SandwichesMTO Pizza

MTO SpecialtyMTO Ethnic

SushiCoffee Bar

Specialty Treat/DessertOther Specialty Beverage

By the Pound – Salad (simple)By the Pound – Salad (compound)

By the Pound – Hot BarBy the Cup – Soup Bar

Fountain Beverage Dispenser

Grab‐and‐Go Case – ColdGrab‐and‐Go Case – Hot

Grab‐and‐Go – Single‐Serve Beverages

Grab‐and‐Go Case Fresh CutGrab‐and‐Go Case Meal Starters

Produce

Condiments

Express Checkout

Produce

Color Key

Tier 1 – Space Utilization



22

Tier 1 – Seating

Highly designed interior, placement is separate from rest of store


Marketing/Communication

23

Tier 1 – Core Positioning

Curated culinary experience is weighted equally with functional elements



24

Tier 1 – Messaging

Food with a 'narrative', clear communication of attributes (e.g. in‐house, organic, local)



25

Tier 1 – Merchandising Display

Liberal use of customized finishing and displays, heavy focus on visual presentation


CONSUMER DATA AND INSIGHTS

26Draft Report


Purchase Behavior

27

17%

42%

23%

8%

9%

Purchase Behaviorin a Typical Month

2‐3 times4‐6 times

10+ times7‐9 times

1 time

Nearly 35% of the demographic who purchase prepared foods from the supermarket 2‐3 times per month did so without planning the purchase in advance

Light Users: 17%

Medium Users: 65%

Heavy Users: 17%


Purchase Behavior

28

MEALS

“Which of the following day part(s) do you most frequently purchase ready-to-eat or ready-to-heat items from your supermarket? (select up to 3)”

SNACKS

Traditional meal times reign supreme as opportunities to purchase ready‐to‐eat or ready‐to‐heat meals at supermarkets

AM snack: 7%

PM snack: 16%

Late night: 6%

Breakfast: 18%

Lunch: 53%

Dinner: 70%


Purchase Frequency

29

Compared to last year, consumers are purchasing

prepared foods at supermarkets…

Convenience is a key reason consumers are purchasing prepared foods at supermarkets more frequently; price is a driver for consumers purchasing less frequently

WHY?

Less Frequently

13%

About the Same

51%

More Frequently

36%

65%

42%

41%

39%

37%

33%

25%

24%

22%

22%

15%

15%

3%

Convenience

I am on the go more often

Affordability

Quality of the food/beverages

Freshness

Better value than restaurant

Variety of the food/beverages

Good service

Healthier selections

Fast service

Appealing atmosphere

Made‐to‐order service

Other


Top Decision Drivers

30

“When considering supermarket prepared foods, how important are these factors when deciding?”

Where to purchase(Top 2 Box Scores)

What item to purchase(Top 2 Box Scores)

88%

87%

80%

72%

64%

Taste

Freshness

Appearance

Portion size

Variety

88%

82%

80%

74%

71%

Overall value

Price

Cleanliness

Difficulty ofpackaging

Staff


Value Added Proteins

31

Q20 What ready to eat or ready to heat protein options would you like to see more of? Select all that apply.Q21 Why are the main reasons why you usually purchase ready‐to‐eat or ready‐to‐heat protein items at the supermarket? (select up to 3)

Main reasons consumers purchase ready-to-eat and ready-to-heatprotein items at supermarkets

Consumers are seeking more ready‐to‐eat and ready‐to‐heat chicken and beef options at supermarkets

Proteins consumers would like to see more of

76%

46%

33%

30%

19%

18%

17%

14%

3%

1%

Convenience ‐ quick and easy option

Taste and flavor

Something I can't or don't want to take thetime to do at home

Variety, something different

Quality and value of the products

Healthy and nutritious

Flexibility so everyone in the household getswhat they want

Flexibility to customize

Something to impress my family/guests

Other

38%

45%50%

63%


17%

52%

11%4%

Price Comparison

32

Q48 Do you believe the price you paid for this meal was . . . (select up to 2)

“Considering price, this meal was…”

…less expensive than…

…more expensive than…

…at home …at a restaurant


Most Recent Purchase Snapshot

33

“When was your most recent prepared meal occasion?”

“Where did you purchase this most recent prepared meal?”

64%

47%

44%

33%

33%

25%

25%

24%

20%

18%

18%

16%

15%

12%

10%

7%

4%

1%

2%

Overall convenience

Fast & easy

Taste

Cost

Value

High quality

Too tired to cook

Already at the store

Don't want to cook

Customize my meal

Less expensive

Easier to eat at home

Variety

Doing other activities while eating

Appeals to children

Picking up food for others

Discount/coupon

Picking up items social event

Other

“This purchase was…”

“Who was the meal purchased for?”

“Where did you eat the meal?”

“Was the food you purchased eaten immediately?”

“What are the top reasons why you purchased a prepared meal from the supermarket?”

“My primary supermarket” 76%“Supermarket I shop at 22%frequently but not primary”

“Did you pick up a meal/snack for later in the day?”

“Within the last month” 94%“Within the last week” 68%

“Planned” 68%“Unplanned” 32%

“Myself” 40%“Adult family” 32%

“At home” 88%“At the store” 4%

“Eaten shortly after purchase” 77%“Eaten immediately in-store” 12%

“No” 86%“Yes” 14%


PERIMETER OPPORTUNITY VISUALIZER (POV)

34Draft Report


Category Overview – Beef

35

Gross margin requirements and fluctuating prices limit the potential for beef, and increase shrink riskTier 1 operators are willing to investSupplier / branded products have greatest potential in Tier 3 and 4 Leveraging the quality classification system (choice, prime, etc.) is an opportunity.The smoker may be the beef industry’s answer to the rotisserie

Highlights


Tier 1 – POV – Beef

36

Opportunity Zones

2

1

S

P

Meatballs are the most common menu item Tier 1 operators’ attempt to add value to their meatball offerings

The second most popular beef offering is roast beef – most often offered as a sandwich option

E

P Primary Application

Emerging/Innovation

S Secondary Uses

2 3

1

13



37

2

1

S

P

2 3

1

13

Opportunity Zones

E


Emerging/Innovation

S Secondary Uses



38

3

E

Higher value beef applications are seen as emerging in specialty MTO stations and upscale sandwich and meal offerings – specifically BBQ and Smoked MeatsSuch meats are sometimes cross‐utilized; supermarkets consider these new programs a success

2 3

1

13

Opportunity Zones

E


Emerging/Innovation

S Secondary Uses



39

3

E

2 3

1

13

Opportunity Zones

E


Emerging/Innovation

S Secondary Uses



40

2

1

S

P

Similar to Tier 1, meatballs are most common; Tier 2 operators attempt to position their meatball offerings as ‘better than average’

‘House‐made’ meatloaf is popular – most often as a family size, ready‐to‐eat meal optionRoast beef also common

2 31

1 2

Opportunity Zones

E


Emerging/Innovation

S Secondary Uses



41

3

E

Value added (fully cooked) meats with an ethnic twist in family‐size packaging is an emerging conceptFor example, 14 oz. – 32 oz. pack sizes of barbacoa or fajita meat

Small/regional ethnic manufacturers are active Strong opportunity for growth

2 31

1 2

Opportunity Zones

E


Emerging/Innovation

S Secondary Uses



42

3

E

2 31

1 2

Opportunity Zones

E


Emerging/Innovation

S Secondary Uses



43

1

P

Again, meatballs are most frequently a component

Sandwich offerings are important at this tierMany examples of branded deli meat programs (e.g. Dietz & Watson, Boar’s Head)

2

P

2 3

1

1

Opportunity Zones

E


Emerging/Innovation

S Secondary Uses



44

3 ‘Traditional’ and value‐oriented beef dishes as ready meals in grab‐and‐go are common (Salisbury Steak, Meatloaf, and Pasta with meat sauce)Packed in commissaries with the store brandedNational brands have significant presence (Hormel)

S

2 3

1

1

Opportunity Zones

E


Emerging/Innovation

S Secondary Uses



45

3

S

2 3

1

1

Opportunity Zones

E


Emerging/Innovation

S Secondary Uses



46

1

1

P

Meatballs are also the most common menu application in Tier 4; offerings are not very distinguishable

Limited beef sandwich options 2

S

Opportunity Zones

E


Emerging/Innovation

S Secondary Uses

2


MARKET ASSESSMENT AND FORECAST

47Draft Report

© 2015 Technomic Inc. 48

Total Size of Supermarket Foodservice

$12,488

$27,478

2006 2014

Supermarket Foodservice Retail SalesSupermarket Foodservice Retail Sales


Supermarket Foodservice Sales By Product Category

28%18%

16%14%

4%3%

2%2%2%2%2%2%2%

Value‐Added MeatsSandwiches/wraps

Prepared MealsPrepared Salads

PizzaHot Beverages

AppetizersSweet Goods

PastaSide Dishes

Sauces/Dips/SpreadsSoups

Cold Beverages

2014 Supermarket Foodservice Retail Sales(Total = $27,478M)


Supermarket Foodservice Sales by Tier

Tier 2014 ($M) % of TotalTier 1 $3,261 12%Tier 2 5,933 22%Tier 3 15,686 57%Tier 4 2,599 9%TOTAL $27,478 100%


Total Forecasted Size of Supermarket Foodservice

$27,478

$35,093

2014 2017

8.5%8.5%

Supermarket Foodservice Retail SalesSupermarket Foodservice Retail Sales


Supermarket Foodservice Forecasted Growth By Tier

Tier 2014 ($M) 2017 ($M) Change ($M)

CAGR ‘14 – ’17

Tier 1 $3,261 $4,258 $997 9.3%Tier 2 5,933 7,737 1,804 9.3%Tier 3 15,686 19,868 4,182 8.2%Tier 4 2,599 3,229 630 7.5%Total $27,478 $35,093 $7,615 8.5%


Questions?

53Draft Report312‐876‐0004 | [email protected] | technomic.com

Adrienne NadeauSenior [email protected]

Wade [email protected]

Sandeep [email protected]

Deli Prepared FoodsIRI Retail Sales Data Summary

52 weeks ending 6/14/15, Alison Krebs

Table of Contents – Deli Prepared Foods

1. Overall department trends2. Protein item sales

• Beef items• Chicken items• Beef vs. chicken items

3. Deeper view of beef item sales• Entrees• Sandwiches• Soups, appetizers and salads

4. Growing items in deli prep5. Key takeaways and opportunities

Overall Department Trends

57

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

1,600,000,000

1,800,000,000

2,000,000,000

2,200,000,000

YAGO Volume

$5,000,000,000

$6,000,000,000

$7,000,000,000

$8,000,000,000

$9,000,000,000

$10,000,000,000

$11,000,000,000

YAGO Dollars

52 Weeks ending 6/14/2015 – IRI/FreshLook Marketing, Multi-Outlet

Deli Prepared Trends Are Strong Across All Key Measures

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

$13,000

YAGO $/MM ACV

8.8%

6.0%

6.9%

Sales Rates ($/MMACV) were also up vs. YAGO

Deli Prepared saw solid increases in the Total US vs. the previous year, both in volume and in dollars

Entrees, Salads, Sandwiches and Appetizers Drive Department Sales

0 100 200 300 400 500 600 700 800

HOLIDAY MEALS

SPREADS

RING ON

SOUPS

TRAYS

DESSERTS

BREAKFAST

DIPS/SAUCES

COMBO MEALS

PIZZA

SIDES

APPETIZERS

SANDWICHES

SALADS

ENTREES

Million Units

Deli Prepared Sales (Volume) by Category

For the 52 weeks, entrée sales approached $3.8 Billion


Salads and Sandwiches Show Greatest Seasonality, Entrée Sales Chop Through Holiday Season

0

2

4

6

8

10

12

14

16

Million Units

Weekly Sales for Top Department Categories

APPETIZERS ENTREES SALADS SANDWICHES

Entrees have become the stable foundation of the deli prepared foods department


Protein Item Sales

Roast Beef Sandwich Sales Dominate Top Beef Items List

0 5 10 15 20 25 30

CHILI

STEW

OTHER SOUP

BBQ/SLOPPY JOES

BURGER/CH‐BURGER

MEATBALLS

PHILLY STEAK

MEATLOAF

OTHER ENTRÉE

ROAST BEEF SAND

Million Units

Top Deli Prepared Beef Items (Volume) 1‐YearGrowth

5.2%

3.4%

30.1%

‐20.0%

5.8%

1.5%

‐2.5%

‐16.5%

371.6%

‐3.0%


Roast beef sandwiches make up 56% of top 10 beef item volume

Three Categories Are Represented in Beef’s Top 10 Item List

Total US ‐ MULO

Category Segment SubSegmentVolume, Prior Yr Volume

Volume, Prior Yr %

ChgDollars, Prior

Yr Dollars

Dollars, Prior Yr %

Chg

$/MM ACV,

Prior Yr$/MM ACV

$/MM ACV,

Prior Yr % Chg

SANDWICHES COLD ROAST BEEF 23,399,427 24,608,609 5.2% $113,676,919 $120,351,428 5.9% $216 $235 9.0%

ENTREES BEEF OTHER 4,362,372 4,511,558 3.4% $34,339,016 $37,796,059 10.1% $126 $130 3.2%

ENTREES BEEF MEATLOAF 3,054,906 3,974,416 30.1% $18,501,512 $24,825,907 34.2% $76 $100 30.2%

SANDWICHES HOT PHILLY STEAK 4,273,369 3,417,035 -20.0% $30,024,921 $24,469,754 -18.5% $298 $214 -28.2%

ENTREES BEEF MEATBALLS 2,507,096 2,651,884 5.8% $13,481,094 $14,616,592 8.4% $74 $82 10.5%

SANDWICHES HOT HAMBURGER/CHEESEBURGER 1,627,173 1,651,289 1.5% $6,991,355 $7,250,757 3.7% $114 $72 -36.8%

ENTREES BEEF BBQ/SLOPPY JOES 984,831 960,674 -2.5% $7,110,230 $7,109,719 0.0% $403 $516 28.2%

SOUPS BEEF OTHER 698,345 583,166 -16.5% $3,686,967 $3,226,909 -12.5% $54 $923 1613.7%

SOUPS BEEF STEW 116,198 547,997 371.6% $733,054 $3,562,996 386.0% $13 $58 342.8%

SOUPS BEEF CHILI 564,750 547,886 -3.0% $2,252,422 $2,236,093 -0.7% $40 $235 485.1%


Top Deli Prep Beef items, ranked by Volume

Top beef items feature ground, sliced or slow cooked beef, but no appetizers make the list

Deli Prepared Chicken Offers Convenience and Variety

0 50 100 150 200 250

GRILLED

POPCORN

HOT CH SAND

COLD CH SAND

CH SALAD

OTHER

TENDERS

WING/DINGS

FRIED

ROTISSERIE

Million Units

Top Deli Prepared Chicken Items 1‐YearGrowth

10.5%

1.1%

4.1%

1.7%

5.1%

‐1.7%

17.3%

30.1%

12.1%

7.5%


Chicken item sales are much more evenly spread (vs. beef) as rotisserie chickens account for only 28% of top 10 chicken item

sales

Chicken Rules the Roost and Continues Strong Growth

Total US ‐ MULO


Volume, Prior Yr %

Chg Dollars, Prior Yr Dollars

Dollars, Prior Yr %

Chg

$/MM ACV,

Prior Yr$/MM ACV

$/MM ACV, Prior Yr % Chg

ENTREES CHICKEN ROTISSERIE 184,174,650 203,580,225 10.5% $1,006,791,237 $1,091,411,878 8.4% $1,369 $1,442 5.3%

ENTREES CHICKEN FRIED 170,986,105 172,911,548 1.1% $753,230,049 $797,565,414 5.9% $1,034 $1,075 4.0%

APPETIZERS CHICKEN WING/DINGS 130,029,958 135,329,349 4.1% $584,784,159 $633,835,658 8.4% $813 $861 6.0%

APPETIZERS CHICKEN TENDERS 67,774,775 68,959,876 1.7% $398,519,985 $446,224,053 12.0% $602 $658 9.3%

ENTREES CHICKEN OTHER 54,930,430 57,708,700 5.1% $288,181,022 $303,115,756 5.2% $436 $448 2.8%

SALADS PROTEIN CHICKEN 34,074,762 33,489,309 -1.7% $218,530,091 $220,991,294 1.1% $322 $315 -2.3%

SANDWICHES COLD CHICKEN 21,581,552 25,317,133 17.3% $91,977,683 $110,946,434 20.6% $172 $202 17.3%

SANDWICHES HOT CHICKEN 11,337,773 14,746,644 30.1% $65,462,271 $90,290,935 37.9% $290 $381 31.4%

APPETIZERS CHICKEN POPCORN 7,508,468 8,417,343 12.1% $30,195,642 $33,240,456 10.1% $82 $89 8.3%

ENTREES CHICKEN GRILLED 7,475,939 8,038,828 7.5% $33,971,126 $37,775,463 11.2% $164 $189 15.0%


Top Deli Prep Chicken items, ranked by Volume

#1 Beef Item (by volume) would be here

Rotisserie chicken is #1 deli prepared item with over 10% of department sales

By Volume, Chicken Appetizer and Entrée Sales Dwarf Beef Sales

0.1 13.5 1.7

29.8

215.8

455.9

0.2

40.1

‐

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

500.0

APPETIZERS ENTREES SOUPS SANDWICH

Millions

Annual Volume Sales by Protein

BEEF CHICKEN

By volume, deli prepared beef sales total 6% of chicken sales52 Weeks ending 6/14/2015 – IRI/FreshLook Marketing, Multi-Outlet

By Dollars, Chicken Appetizer and Entrée Sales Dwarf Beef Sales

$0.0$0.1

$0.0$0.2

$1.1

$2.3

$0.0

$0.2

$‐

$0.50

$1.00

$1.50

$2.00

$2.50

APPETIZERS ENTREES SOUPS SANDWICH

Billion

Dollars

Annual Dollar Sales by Protein

BEEF CHICKEN

By dollars, deli prepared beef sales total 7% of chicken sales52 Weeks ending 6/14/2015 – IRI/FreshLook Marketing, Multi-Outlet

Beef Appetizers Barely Register When Compared to Chicken Appetizer Sales

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

APPETIZERS ENTREES

Percen

t of C

hicken

Sales

Deli Prepared Beef Sales as Percent of Chicken Sales

Volume Dollars

Appetizer pricing may be a smaller barrier for beef as the beef vs. chicken price premium is half that of entrees


Entrees

Sales Are Spread Across Many Items As “Other” Is Top Beef Entrée Segment

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

$0

$5

$10

$15

$20

$25

$30

$35

$40

Million Units

Million Do

llars

Deli Prepared Beef Entree Sales

Volume Dollars


Sales of economical offerings (Meatloaf, Meatballs) are greater vs. higher‐value Tri‐Tip or Prime Rib

“Other” Beef Entrée Sales Peak for New Years, Meatloaf Rallied into Spring

0

20

40

60

80

100

120

140

Thou

sand

s

Weekly Deli Prepared Beef Entree Sales (Volume)

OTHER MEATLOAF MEATBALLS BBQ/SLOPPY JOES


BBQ/Sloppy Joes and Meatballs show little seasonality

Prime Rib Jumps at Holidays, Pot Roast and Pot Pie Drop in Summer, Tri‐Tip Weakened in Spring

0

2

4

6

8

10

12

Thou

sand

s


POT ROAST MACARONI AND BEEF POT PIE TRI TIP PRIME RIB

Substitution to higher‐end option


Consumers choose higher‐end products for special occasions

Fast‐Growing Stroganoff Was Strong in Fall, Ribs Peaked Late‐Summer

0

2

4

6

8

10

12

Thou

sand

s


RIBS STROGONOFF ROTISSERIE


Limited rotisserie success is isolated

Sandwiches

Poultry Takes Top Slots in Sandwiches

0

10

20

30

40

50

60

70

$‐

$50

$100

$150

$200

$250

$300

$350

Million Units

Million Do

llars

Top 10 Deli Prepared Sandwiches by Type

Volume Dollars


#1 Beef item for the entire department, the Roast Beef Sandwich, is a fraction of turkey and chicken sandwiches

Roast Beef Dominates Other Beef Sandwich Offerings

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Deli Prepared Beef Sandwich Sales

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Philly Steak is highest price/unit beef sandwich offering

Beef Sandwich Seasonality is Limited; Roast Beef Sales Slow in Winter

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WeeklyBeef Sandwich Sales (Volume)

BOLOGNA HAMBURGER/CHEESEBURGER HOT DOG MEATBALL PHILLY STEAK ROAST BEEF

Highest price/unit, Philly Steak, is trending down52 Weeks ending 6/14/2015 – IRI/FreshLook Marketing, Multi-Outlet

Soups, Appetizers and Salads

High Dollar Per Volume Stew Was Fastest Growing Beef Item

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OTHER STEW CHILI BARLEY

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Deli Prepared Beef Soup Sales

Volume Dollars


Consumers are showing some willingness to pay for more premium beef offerings

Beef Stew Sales Spike In Early‐Fall and Late‐Winter

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Weekly Deli Prepared Beef Soup Sales (Volume)

BARLEY CHILI OTHER STEW

Consumers purchase other beef soup and chili throughout year, although some seasonality exists


Chicken Items Dominate Appetizer Sales

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BEEFOTHER SHRIMP

PORK POT STICKERSCHICK POT STICKERS

ONION RINGSOTHER PROTEIN

CHICKEN NUGGETSOTHER CHICKEN

OTHER VEGETABLECRAB S‐FOOD CAKES

DEVILED EGGPICKLES

OTHER APPETIZERSJALAPENO POPPERS

MOZZ CHEESE STICKSTORTILLA CHIPS

POPCORN CHICKENEGG ROLLS

OLIVESCHICKEN TENDERS

CHICK WING/DINGS

Million Units

Top 20 Deli Prepared Appetizer Sales (Volume)


Total beef appetizer sales fail to reach 20th item sales

Beef Appetizer Sales Peak Over Holidays and for Super Bowl

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Weekly Beef Appetizer Sales (Volume)

Beef appetizer sales are meager, except for isolated exceptions52 Weeks ending 6/14/2015 – IRI/FreshLook Marketing, Multi-Outlet

Protein Salad Sales Are 0.4% of Total Salad Volume

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COLE SLAW FRUIT LEAF MACARONI PASTA POTATO PROTEIN RICE/GRAIN VEGETABLE

Million Units

Salad Sales (Volume)


Beef salad opportunities have been limited, to date

“Other” protein salad sales (which includes beef) grew at 12% compared to 2% for all protein salads and 1% for salads overall

Growing Items in Deli Prepared Foods


Volume, Prior Yr %

ChgDollars, Prior Yr Dollars

Dollars, Prior Yr %

Chg

$/MM ACV,

Prior Yr$/MM ACV


APPETIZERS POT STICKERS VEGETABLE 236 75,891 32072.3% $548 $377,012 68651.3% $3 $40 1432.1%

BREAKFAST OTHER NA VARIETY 444 10,042 2159.7% $2,528 $64,186 2439.2% $3 $4 17.2%

SPREADS PATE NA VARIETY 216 2,068 858.9% $2,635 $19,456 638.4% $13 $6 -50.1%

APPETIZERS POT STICKERS CHICKEN 126381 947,423 649.7% $88,530 $1,386,074 1465.7% $15 $51 233.2%

SOUPS BEEF STEW 116,198 547,997 371.6% $733,054 $3,562,996 386.0% $13 $58 342.8%

ENTREES MEXICAN FAJITAS 18022 84,094 366.6% $128,327 $764,861 496.0% $62 $21 -65.7%

SIDES RICE WILD 38,397 160,182 317.2% $157,586 $696,782 342.2% $22 $71 226.3%

SIDES RICE PILAF 53541 209,543 291.4% $197,138 $768,793 290.0% $15 $13 -14.2%

ENTREES BEEF STROGONOFF 32,542 120,667 270.8% $208,230 $786,065 277.5% $28 $15 -43.8%

ENTREES SEAFOOD SWORDFISH 140 436 210.6% $2,225 $7,372 231.3% $11 $23 116.6%

Six Categories Are Represented in Fastest Growing Items List

Total US ‐ MULO


Consumers are showing interest in a wide variety of offerings

Top 10 Deli Prep items, ranked by Volume % Change

Chicken Pot Stickers Replaced and Surpassed Pork Pot Stickers

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Weekly Pot Sticker Sales (Volume)

CHICKEN OTHER PORK VEGETABLE

Total Pot Sticker segment grew 29% with little seasonality52 Weeks ending 6/14/2015 – IRI/FreshLook Marketing, Multi-Outlet

While “Other” Breakfast Items Grew, Total Category Struggled

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Weekly Breakfast Item Sales (Volume)

EGGS ENTREE OTHER PANCAKES/WAFFLES SANDWICH SIDE

Breakfast category declined 5%; sandwich sales failed to rebound from new year declines


Top Growing Chicken Items Are Spread Across Categories

Total US ‐ MULO


Volume, Prior Yr %

Chg Dollars, Prior Yr Dollars

Dollars, Prior Yr %

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APPETIZERS POT STICKERS CHICKEN 126,381 947,423 649.7% $88,530 $1,386,074 1465.7% $15 $51 233.2%

SOUPS CHICKEN CHILI 2,494 7,210 189.0% $22,155 $60,653 173.8% $21 $19 -10.5%

ENTREES CHICKEN MARSALA 163,921 349,507 113.2% $629,307 $1,405,959 123.4% $41 $66 63.2%

SOUPS CHICKEN OTHER 28,073 44,409 58.2% $155,936 $312,217 100.2% $36 $24 -34.0%

SANDWICHES HOT CHICKEN 11,337,773 14,746,644 30.1% $65,462,271 $90,290,935 37.9% $290 $381 31.4%

ENTREES CHICKEN CORDON BLEU 287,890 359,322 24.8% $1,611,001 $1,999,439 24.1% $46 $44 -4.3%

APPETIZERS CHICKEN NUGGETS 1,172,844 1,419,234 21.0% $6,312,127 $7,912,962 25.4% $146 $105 -28.6%

SANDWICHES COLD CHICKEN 21,581,552 25,317,133 17.3% $91,977,683 $110,946,434 20.6% $172 $202 17.3%

APPETIZERS CHICKEN POPCORN 7,508,468 8,417,343 12.1% $30,195,642 $33,240,456 10.1% $82 $89 8.3%

ENTREES CHICKEN ROTISSERIE 184,174,650 203,580,225 10.5% $1,006,791,237 $1,091,411,878 8.4% $1,369 $1,442 5.3%


Rotisserie chicken still shows strong growth, and chicken’s overall growth continues to outpace alternatives

Top 10 Deli Prep Chicken items, ranked by Volume % Change

Beef Entrees Dominate List of Fast Growing Beef Items


Total US ‐ MULO


Volume, Prior Yr %

ChgDollars, Prior

Yr Dollars

Dollars, Prior Yr %

Chg

$/MM ACV,

Prior Yr$/MM ACV

$/MM ACV,

Prior Yr % Chg

SOUPS BEEF STEW 116,198 547,997 371.6% $733,054 $3,562,996 386.0% $13 $58 342.8%

ENTREES BEEF STROGONOFF 32,542 120,667 270.8% $208,230 $786,065 277.5% $28 $15 -43.8%

ENTREES BEEF POT PIE 164,241 217,837 32.6% $1,000,322 $1,352,174 35.2% $24 $71 198.2%

ENTREES BEEF MEATLOAF 3,054,906 3,974,416 30.1% $18,501,512 $24,825,907 34.2% $76 $100 30.2%

APPETIZERS BEEF NA VARIETY 113,078 129,145 14.2% $651,569 $766,246 17.6% $98 $113 15.3%

ENTREES BEEF POT ROAST 386,061 413,106 7.0% $2,613,012 $2,771,699 6.1% $36 $75 109.2%

ENTREES BEEF MEATBALLS 2,507,096 2,651,884 5.8% $13,481,094 $14,616,592 8.4% $74 $82 10.5%

SANDWICHES COLD ROAST BEEF 23,399,427 24,608,609 5.2% $113,676,919 $120,351,428 5.9% $216 $235 9.0%

ENTREES BEEF OTHER 4,362,372 4,511,558 3.4% $34,339,016 $37,796,059 10.1% $126 $130 3.2%

ENTREES BEEF MACARONI AND BEEF 217,409 221,237 1.8% $1,141,456 $1,191,354 4.4% $45 $46 2.3%

Top 10 growth rate dwindles much faster for beef items than for chicken items

Top 10 Deli Prep Beef items, ranked by Volume % Change

+10.5% for 10th fastest growing chicken item

Ethnic Offering Growth Outpaces Department Growth

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ASIAN MEXICAN ITALIAN

Ethnic Cuisine Growth Rates (Volume)

Consumers show interest in moving beyond traditional deli prepared department offerings


Robust Stroganoff and Other Comfort Foods Are Driving Beef Entrée Growth


Beef entrée sales averaged 11% sales growth (volume), although highest‐priced products showed volume declines

*No year-prior data for barley soup sales

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ROTISSERIE

TRI TIP

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RIBS

BBQ/SLOPPY JOES

MAC AND BEEF

OTHER

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Beef Entrees Percent Change from Prior Year

Volume Dollars

Price/Unit

$ 6.51

$ 6.21

$ 6.25

$ 7.02

$ 6.71

$ 5.51

$ 8.38

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$ 12.73

$ 11.85

$ 6.29

While Beef Stew Shines, Other Items Have Lost Ground

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Non‐Entree Beef Items: Percent Change from Prior Year

Dollars Volume


Non‐entrée beef items averaged 28% sales decline (volume), with highest priced products showing greater declines

Price/Unit

$ 6.50

$ 5.93

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$ 2.62

$ 4.08

$ 6.14

$ 5.53

$ 7.16

$ 7.06

$ 3.48

Key Takeaways and Opportunities

Key Takeaways for Beef

• Entrée is the largest category in deli prepared foods• Compared to chicken, beef is losing the growth battle as well as the volume battle

• Traditional and comfort foods drive beef item sales*• Beef item sales reflect an interest in economical as well as premium offerings

• Some beef items may be experiencing price resistance• Beef appetizers are especially under represented• Consumers appear open to a variety of offerings

*Some ethnic foods (such as Mexican) are categorized by item type vs. protein (e.g. fajita or burrito), so comparative protein sales cannot be gauged.

Opportunities for Beef

• Beef’s strong entrée reputation could be leveraged to align with the department’s strongest category

• Ethnic item growth may fit well with beef• Additional economical offerings, especially as ingredients may resonate with consumers

• With a lower ingredient share cost, beef appetizers may face less price resistance

For Additional Information, Contact:Alison L. Krebs

Director, Market [email protected]

NCBA, A Contractor to the Beef Checkoff

Documents

Supermarket Foodservice - BeefResearch...foodservice, is dominated by Whole Foods in terms of sales, but most Tier 1 supermarkets share Whole Foods’ philosophies on food, atmosphere,