Cold cuts are hot, sales grow six percent

Articles
October 15, 2009

Cold cuts are hot, sales grow six percent

Judging by the way food retailers have expanded and upgraded their peg displays of refrigerated deli meats around the service deli counter, you'd think the cold cuts are a hot attraction. You'd be right for several reasons:

Judging by the way food retailers have expanded and upgraded their peg displays of refrigerated deli meats around the service deli counter, you'd think the cold cuts are a hot attraction. You'd be right for several reasons:

The prepackaged, UPC-coded meats offer a quicker self-service shopping experience and anchor a highly visible display area that makes sandwich and meal assembly simple and convenient. Usually, people have to pay a price premium for convenience in the food store (pre-cut salads and pre-cut fruit platters are close analogies), but eagle-eyed shoppers can often use coupons and snag deals on refrigerated deli meats that aren't consistently available at the same low price when sold random-weight from behind the service counter.

The price per pound for deli meat protein usually compares well with other perimeter protein choices. As people brown bag more lunches and streamline their food spend, they notice the relative value. The usual pickup in deli meat sales during the Back to School season was even greater in 2009 because the need for this quick solution coincided with the need to save. Deli meat sales in the four weeks ended September 5, 2009 reached $438.8 million (on 107.2 million equivalized pounds sold) in U.S. food, drug and mass merchandiser stores (including Walmart), according to Nielsen data. This exceeded the peak in the same four-week period a year ago of $427.0 million (on 104.6 million equivalized pounds sold), and two years ago of $411.8 million (on 107.7 million equivalized pounds sold).

Convenience, check. Savings, check. Variety, check. The different tastes available within this category help people escape food drudgery as well. The prepackaged meats include salami, bologna, ham, liverwurst, turkey, chicken roll, turkey roll, corned beef, pastrami, and more. There's little reason to wonder why more than three out of four (76.6%) American households purchased sliced, refrigerated lunchmeat in the 52 weeks ended June 27, 2009, noted Nielsen Homescan data.

Dollar sales of the total lunchmeat category grew by 6.0% to $5.34 billion in the 52 weeks ended September 5, 2009, said Nielsen. This topped the $5.04 billion posted in the prior year, which was 3.3% above the $4.88 billion in the 2007 period. The latest gain occurred on a nominal 0.1% expansion to 1.28 billion equivalized pounds, a volume that has stayed essentially flat for the past two years, according to the Nielsen data. 

In order to save even more, shoppers are turning increasingly to private label—its dollar sales grew by 7.1% and 12.9% in two successive years to nearly $800 million, or a near 15% category share. By contrast, branded sales rose by 2.7% and 4.9% in two successive years to exceed $4.5 billion, or an 85% market share.

While these displays act as an express lane for shoppers lacking the time or patience to wait for custom service, or a sample taste of a new product, it is a traffic magnet on its own. Often shown near frankfurters (a $2 billion-plus seasonal favorite), the pegged deli meats are a key element of a quick-meal display center. Think cheeses, cole slaw, potato salad, pickles, mustards, soufflés, hummus, spreads, and many kinds of buns and breads.