How Consumers Decide What Meat to Buy

According to a recent piece of market research by EBLEX 23% of people are cutting back on the amount of meat they buy. This is not good news as a drop in demand tends to mean over supply and falling farmgate prices.

Conscious of the need to stimulate demand the EBLEX research goes on to analyse how people make their meat buying decisions and what levers can be pulled to encourage them to buy more. They interviewed 1200 shoppers in stores owned by the 4 main supermarkets.

Getting the meat purchase right is important to shoppers. They spend an average of 74 seconds at the meat fixture, considerably more than they did 10 years ago in a similar piece of research, and more than anywhere else in store apart from the veg counter.

EBLEX highlights the importance of appearance in the buying decision, and it is certainly true that appearance trumps price in most instances. If a piece of meat does not look right it will not be bought. Whilst the research does not go on to tell us what it is about appearance that matters we can guess that too much fat, an over watery look, flabby appearance, and too light or too dark are all flaws which are just not tolerated.

However we cannot dismiss the importance of price.

People are very price conscious. They buy on the price of the pack, not pence per kilo and of those questioned in the research 80% knew what they had paid for the product just bought. 35% of those questioned had bought products on promotion.

Some meat is more price sensitive than others. Pork is price sensitive, as is beef mince. Chicken legs and thighs are particularly price sensitive, and at the other end of the scale steak is too. There is clearly a price point over which people will not go however good looking the product.

The research confirms that meat purchase is not species specific. It indicates that 35% of people will change to an alternative if the species they first thought of is not available in the way they want it, compared with 30% who will change to another cut within a species. Decisions about roasting joints are especially fluid with 48% being prepared to change to another species.  17% will leave without buying anything if they cannot find exactly what they want.

This piece of work from EBLEX demonstrates that the meat buying decision is complex. Unsurprisingly in a category now so expensive that packs are security tagged people take their time over purchase. If something does not look right it will be rejected. If it is not priced right it will be rejected. If one species does not provide what is wanted then shoppers will in many cases move to an alternative. This is an important finding as it suggests that merely putting the price up in store and funneling the incremental back to the farm gate will not work, unless all species go up in price together, which is an unlikely event.

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What is clear is that all parts of the food chain need to work closely together to deliver what the shopper wants. This represents a colossal communication challenge when according to DEFRA there are 86,000 beef farms, 73,000 sheep farms and 9,000 pig farms in the UK.

Red Meat Consumption Update - Beef and Pork Steady, Lamb Plummets

Shoppers bought 19% less lamb in the 12 months to mid July 2011 than they did in the previous year. (Source: Kantar Worldpanel)

By contrast, volume sales of beef are up 1%, pork and sausages up 2%, sliced cooked meats up 3%, and bacon up 5%. Overall, purchases of red meat have remained level with last year, indicating perhaps that lamb buyers have migrated to alternative red meat options.

This is perhaps not surprising given that the average price of a kilo of pork is £4.71p, and beef £6.12p, both around what they were last year. The price of a kilo of lamb though has increased by 14%, and now stands at £7.94p, the knock on effect of higher prices being paid to farmers for their live lambs.

Consumers are walking away, put off by having to pay around £5 for a couple of chops, or £13 for a small leg of lamb. Only 22% of people buy lamb every 4 weeks compared with 37% buying pork and 55% buying beef, and when they do buy they buy less – 1kg of lamb compared with 1.5kg for pork, and 1.4kg for beef.

The figures should make those advocating higher retail prices for beef and pork pause for thought. So far, despite the difficult economic climate, sales of these meats have held up well. The question is whether they are sufficiently special to persuade people to buy despite price hikes. Or would demand just fall as it has with lamb? And will a fall in demand lead to oversupply of pigs and cattle, and reduce the price paid to farmers anyway?

Many factors influence prices paid to farmers, and it is difficult to find a clear link between retail prices and those paid at the farm gate. The lamb experience shows that domestic eating of lamb can fall dramatically yet prices paid for live lambs stay buoyant due to external factors like a strong euro, less imports and shrinking breeding flocks. By contrast, when farm gate prices for beef fell sharply last year due mostly to high quantities of dairy beef cattle, retail prices hardly moved at all, and consumption stayed about the same.

What is clear though is that a push too far on price will probably result in big falls in the amount of meat eaten, and  that the fundamentals of supply and demand tend to hold true in the long term. So, if farmgate prices are to remain higher following an increase in retail price in the home market, additional outlets for British cattle and pigs need to be found urgently. Not an easy task.

Ways to Grow the Beef Mince Market - A Report for Beef Producers

Mince accounts for 52% of all beef sold, and it has come under the spotlight in a new report written by the Institute of Grocery Distribution with contributions from Dunhumby, who analyse Tesco data, and Taylor Nelson Sofres who monitor the total market. The report’s aim is to “help beef producers understand the challenges that the wider beef supply chain faces in maintaining and growing one of the most important and versatile meat products”. The report is endorsed by the NFU, EBLEX and the AHDB.

Some of the data in the report could be guessed, but some is really quite startling. Fairly predictable is the fact that mince beef sales, although down 1% in volume over the past year, have held up better than any other cut. Total beef sales are down around 3%. It’s also unsurprising that premium mince, sold under supermarkets expensive labels such as Tesco’s Finest and Sainsbury’s Taste the Difference, tends to be bought by the more affluent, whilst value mince is bought by the less well off. Smaller 250g packs are bought by pensioners and older families, and bigger packs by bigger families.

Other facts are less obvious. For example, nearly half of all mince is sold on some sort of price promotion, the most popular just now being “buy 2 packs for (say) £4”. This compares with about a third of sales on promotion a year ago. And mince is not just mince. In fact the market is divided up into 4 segments – premium, standard, value and healthy. These are categories defined by supermarkets themselves, and are designed to appeal to different types of consumers. Region wise, the Scots eat most premium mince, value sells best in the North East, and healthy mince appeals most in the south and east.

Most startlingly of all, value mince has grown very fast with sales doubling in the last year, but it still only accounts for a small proportion of mince sold. IGD shows that in Tesco, value mince in the biggest selling 500g pack size, is just 3.4% of sales of all its mince in the 250g to 500g sizes, compared with 4.5% for premium and 11% for healthy. So, contrary to most people’s expectations, consumer choices are not all about lowest possible price.

Looking forward, the report suggests that anyone seeking to grow the beef mince market should bear consumer trends in mind. Chief of these is health, with 57% of people thinking that they can make a difference to their health through the foods they eat. Interest in local foods continues, as does commitment to buying products with high animal welfare standards. And most encouraging of all, 89% of consumers feel that British farmers should be supported.

The last point made by the report is the need for carcase balance. And they are right to point this out. Clearly it makes little financial sense to grow the mince market yet in the process use up cuts which can be sold at a higher price. Although easier said than done, a marketing strategy is needed for the whole animal.

The Changing Shape of Meat Eating

The British Pig Executive (BPEX) has published data about meat consumption comparing the year ending 25th January 2009 with the previous 12 months, and the figures give an interesting insight into how consumers are coping with the twin challenges of rising prices and recessionary nervousness.

Faced with some whopping price rises on red meat*, and a conscience led move towards buying more welfare friendly chicken, I thought that consumers would just cut back on the amount of meat, fish and poultry they bought. In fact total consumption of these foods has remained the same as last year at just under 3 million tonnes.

There are though quite big changes in the types of protein bought.

Up are sales of burgers (+6%), sausages (+3%), frozen fish (+4%), pastry based meats (+2%) and fresh fish (+1%).

Down are sales of canned meats (-5%), lamb (-4%), beef (-3%), pork (-2%), and chilled ready meals (-5%).

Poultry is still by far the biggest meat bought, and sales are level with last year.

Within the red meat sector there has been a well documented trend towards buying cheaper cuts. Lamb mince has seen the biggest rise in sales followed by pork loin, stewing lamb, beef mince and stewing beef. The biggest falls have been in roasting cuts of lamb, beef and pork shoulder, and also in beef steaks. What seems to be happening is that people are buying red meat less often, and when they do buy, they buy less at any one time.

The trends make sense. Consumers are managing their budgets carefully. They have turned to meats such as bacon, sausages, and burgers which are not just cheaper but allow for stricter portion control, and so less waste. They are prepared to spend time at home now, cooking those cheaper cuts, rather than go out and pay restaurant prices. The trend towards frozen foods is being seen generally, not just in fish, again because of price. And the move away from ready meals reflects unwillingness to pay high prices, but also the rise in home cooking.

Perhaps the most surprising thing is that these shifts in consumer behaviour are large, and have happened very quickly. They can have a dramatic effect on profitability, for example in red meat where demand for expensive cuts has plummeted and best cuts are either being minced or sold off at vastly reduced prices. They forcibly illustrate the need to keep a very close eye on trends, and to be prepared to change tack to meet consumer needs.

* Notes on price rises

The data shows that in the last year prices per kilo have risen as follows: beef +11%, lamb +9%, pork +10%, bacon +11%, sausages +7% and sliced meats +8%. These rises are averages and reflect the trend to cheaper cuts. Like for like comparisons on each cut will show much higher increases. Price increases are accelerating, for example in the last 12 weeks, beef has gone up by 16%, and lamb by 11%, compared with the same period a year ago. Further changes in the patterns of consumption are therefore likely.

Unthinking Consumerism - R.I.P

It looks as if the days of "I want what I want when I want it" are over, even for the relatively affluent, and even when it comes to food which still only accounts for about 10% of UK consumer expenditure. Shoppers are planning more carefully, shopping more wisely, and weighing up the quality/price equation more thoughtfully.

Consider what we know.

Latest research from the Institute of Grocery Distribution (The Credit Crunch-Adapting to Change) shows that 16% more of us are planning meals, 13% more are cooking smaller portions, and 6% more are cooking with leftovers. Indeed the research found that 59% are actively economising.

We also know that shoppers are seeking bargains. The ALDI phenomenon is well documented, as is the growth in shoppers visiting Morrisons and ASDA. Tesco is now promoting itself as the UK's biggest discounter, which makes sense given that it is still 10 times the size of ALDI. Sainsbury claims a growth of 30% in their Basics range and a big uptake in their own label products which sell about 20% cheaper than the equivalent brand. Waitrose says that 30% more products are being bought on promotion. Certainly in the red meat market there is ample evidence of careful buying, with less being bought on each shopping trip, and much more thought being given to the relative price of the various meats. For example lamb, which has seen a huge drop in sales this year, has suddenly bounced back because it has become much closer in price to beef.

It does look though as if consumers have not turned their backs completely on premium tier foods. Sainsbury's Taste the Difference range is growing, albeit modestly, and is still 3 to 4 times the size of its Basics range. Waitrose says that it As Good as Eating Out products have grown by 40%, and that it is "still selling alot of organic".

Which leads to the often raised question of whether ethics have gone out of the window in favour of cheapness. Joanne Denney Finch of IGD, presenting their research findings said ethical purchasing is still important, and that that 79% of people are "still engaged in purchasing some type of ethical product", be it organic, Fair Trade or local produce. And it seems as if as many people as ever are visiting farmers markets. My guess would be that there is still a core of committed people who feel strongly about a particular issue, and continue to buy, but that fringe purchasers who were perhaps following a trend rather than a principle have dropped out completely.

What all this points to is that consumers are being much more thoughtful about how they buy food. Now it's "two stop shopping" for value instead of one stop for convenience. Its being much more canny about promotional offers. And its being much more marketing savvy. Consumers are twigging that the salmon in a store's best range is actually the same as in the basic product, but it's just uniformly presented, and so costs up to 50% more. The label on the premium mince might be classier, but it's still mince. The cooking apples, carrots and parsnips in the cheaper range might be all sorts of odd sizes, but they still taste the same as the more expensive version.

I can't see people reverting to unthinking consumerism any time soon. Yesterday's worry about petrol prices might have abated now that it's below a £ a litre, and the banks seem a bit less wobbly, but today the spectre of unemployment looms, and tomorrow it will be something else.

In this more discerning climate the winners will be those who truly understand what is important to consumers, and offer great quality at a price which consumers think is worth paying.

A Shift to Thrift - Organic Sales Well Down, Red Meat Not Far Behind

Whether its Gordon Brown telling us not to waste food, a general belt tightening in an effort to pay the bills, or more questioning of the value of what we buy, there is a definite change in consumer buying habits.

A well publicised example of the shift to thrift comes in the shape of Tesco's decision to reduce the price of many organic lines. Their press release quotes TNS saying that demand for organic produce across all retailers has dropped by 8.1% in the last three months. Tesco says that many people would like to buy organic but won't pay the premium. So it has cut the price of new potatoes and carrots by 20%, broccoli and asparagus by 25%,avocados by 13%, mixed peppers by 12%, leeks by 11% and courgettes by 5%.

Next, red meat. In the 12 weeks to June 15th, according to TNS figures published by the British Pig Executive, volume sales of beef, lamb and pork dropped by 4.7% in volume compared with last year. What seems to be happening is that fewer people are buying red meat on a regular basis, and those that do buy are buying smaller amounts. Worst hit is lamb, down 12%, followed by beef down 4% and pork down 1%. Lamb of course is the most expensive red meat, and pork the cheapest on a per kilo basis. Sausages are the only red meat product showing any growth, and then by only 1%. The shift to thrift is clear in the type of cuts bought, with a marked trend to minced and stewing beef and lamb, pork belly, and pork shoulder. On the other hand, sales of roasting joints are well down, and even convenient cuts like chops and steaks are selling less than last year.

The shift is happening in even the smartest places. Waitrose have reported a 55% increase in sales of free range chicken legs and thighs, compared with 10% for significantly dearer chicken breasts.

On dairy, the figures are less startling. DairyCo data for the year to July 2008 shows that liquid milk sales have started to fall back gradually, and are now at their lowest since September 2007. Its unlikely that people are using less milk, rather that they are being careful on date codes and throwing less away. All growth has gone from organic milk, possibly as consumers question the premium paid, and sales are now drifting slowly down.

On a brighter note, total cheese sales are up by 1%, but odd things are happening. The super-premium cheddar cheeses are forging ahead. At the other end of the scale, supermarkets' value cheddars are also growing. There is a trend to buying brands rather than own label cheeses, probably because the price difference between the two is now an average of 14p per kilo when a year ago it was 29p.

Some of the changes in what consumers buy are predictable, the drop in some organic sales for example, and the switch to brands when there is not much price difference with own label, and the move to buying cheaper cuts of meat.

But a nearly 5% decline in total red meat sales is alarming, and is the direct result of major price hikes in shops.

The next few months will be tricky for livestock. Consumer demand is falling, we are heading into a period of heavy supply, and seemingly the euro is weakening which could dampen export sales. As ever, supermarkets will be forcing the pace. The red meat market is important for them, and they will be evaluating their strategies carefully. Will they lower prices in their stores to boost sales, or keep prices up? Tesco's milk price reduction today probably shows the way. Prices will come down. But who will ultimately fund the fall? Hopefully the number crunchers at the NFU, DEFRA, EBLEX, BPEX and the livestock associations are keeping close tabs on the percentage of retail price going into farmgate prices. And will complain long and loudly if farmers are getting a worse deal.

Red Meat Grocery Sales - Beef and Pork Holding Up, Lamb Down

The new British Pig Executive (BPEX) website now carries monthly red meat sales through supermarkets. Here's a look at data for the 12 weeks ending 18th May 08 compared with last year.Data is compiled by TNS.

1. Price inflation is not as rampant as government figures make out, probably because the Office of National Statistics (ONS)does not capture promotional offers such as buy one get one free. Of which there have been many. TNS shows beef prices up 5%, lamb up 5%, and pork up 4%.

2. There are signs of a cutback by consumers. Consumers are buying the same amount of red meat as this time last year, but there is a trading down to cheaper meats and cuts. Total beef tonnage sales are the same as last year, pork sales have increased by 2%, but lamb sales are 3% less. Lamb could be suffering because it is more expensive. Lamb sells at £6.12 average price per kilo compared with beef at £5.46 and pork at £4.46. Beef and lamb mince and stewing steak have increased sales, whereas roasting joints of both species are selling less than last year. Frying and grilling beef have also dropped in sales, although lamb chops have held steady.

3. Sales of bacon and sausage are growing. Both have increased by 4% in tonnage, and average prices are up by 2% per kilo. Bacon selling prices average £5.63 per kilo, and sausages £3.08.It is easy to see why sausage sales should have grown, given how comparatively cheap they are. Bacon may be doing well because there is so little waste due to easy portion control, and willingness to eat the fat.

4. Sales of cooked meats are up by 2% despite costing a hefty £7.85 per kilo,which shows that if a product meets a real consumer need, in this case convenience, sales are likely to grow despite a high price.

5. There are differences by country. Scotland has turned away from beef and lamb in a big way, with sales of beef down 3% and lamb down 12%. By contrast Wales remains loyal to lamb, with volumes up 2%, beef is down 5%, and pork sales are static.

Note

The future for lamb sales looks bleak just now. Consumers are buying less from grocery stores, and sales through hotels and restaurants, which feature alot of lamb on their menus, will be struggling as consumers turn away from eating out.