“When we break total food and beverage down by department in this new game of more frequent but less items per trip, one of the biggest winners is deli. Deli is seeing almost 5% more trips per year than we saw pre-pandemic ... When we're buying just what we need when we need it, deli is still incredibly relevant.”
Fresh food meeting the moment of smaller, more frequent grocery trips
The overall fresh-food market is being influenced by several key consumer trends, Parker said. Most eating occasions "are still sourced from home," and "consumers are combating food cost inflation... by buying less units per trip," she added.
While prices across categories remain elevated due to inflation, "most fresh-foods departments, most notably produce and meat, have not seen as much price inflation, since pre-pandemic, as we're seeing in the general food and frozen aisles," Parker said. However, "consumers still feel the prices are too high" in fresh foods because "it's the groceries that people think most often about," she added.
“We've seen about 39% of all sales in food and beverage, beer, wine, spirits, coming from the fresh-foods departments, [and] ... we've actually seen over the last five years a little bit of a shift in how fresh is contributed by each department. So, for example, since three years ago, bakery and deli have actually added share of their part of the pie at the somewhat expense of meat, seafood, and produce.”
Mixed performance across fresh
Dollar sales in fresh food are increasing due to rising prices and inflation, but volumes are declining.
Bakery is leading dollar growth with $33.2bn, increasing 8% in dollar sales, but declining 2.1% in volume sales for the 52 weeks ending Oct. 1, 2023. Deli follows with $35.4bn in sales or 4.4% in dollar growth with 1.3% in volume declines, and produce saw $59.8bn in sales or 1.8% in dollar growth and a 0.1% decline in volume sales for the same time period.
Deli entrees achieved $2bn in sales and a growth of 42.3% in units over the last three years, while perimeter donuts saw $436.5m in sales and a 36.1% increase in units, and deli sandwiches saw $1bn in sales and a 27.1% increase in units for the same period.
The meat segment saw $65.5bn in sales and a decline of 1% in dollar sales and a 1.8% decline in volume sales, and the seafood market achieved $4.9bn and a decline of 2.4% in dollar sales and a 1.6% drop in volume sales, for the 52 weeks ending Oct. 1, 2023.
Will 2024 be the year or the chicken?
Despite the declines in meat, Parker predicts more consumers will turn to chicken in the new year due to its versatility.
“2024 is going to be the year of the chicken. Consumers see the value in chicken; they see the versatility in chicken. They feel confident that they will be successful with raw chicken, and that's why they are consistently choosing chicken over other proteins in the meat department," Parker said.
However, the global poultry market's future is unclear. Its growth slowed in 2023 and it is expected to grow by 1.2%, down from its historical average of 2.5%, making a rebound in 2024 uncertain, according to recent Rabobank research.