Progressive Grocer

2017 Category Management Handbook

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Page 33 of 59

Progressive Grocer: How is meat performing in the supermarket, in terms of sales? What is contributing to this performance? Dedra Berg: With the influx of protein in the market and dropping protein prices, overall Fresh Meat dollars are down. Dollars have declined -3% in the latest 13 weeks, while volume is up +3% (Perishables Group Fresh Facts® powered by Nielsen 13 weeks ending 10/1/2016). Volume growth for Total Fresh Meat was driven by beef volume gains of +8%, as beef prices dropped -$0.58/lb. from drought driven highs. With dropping beef prices, many retailers are shifting their focus to feature beef in their weekly ads. In the latest 26 weeks retailers increased beef share of fresh meat ad space by 7 pts. vs. YA, while pork dropped 9 pts and chicken gained 2 pts. (ECRM 26 weeks ending 9/24/2016). Pork has also declined on price and is down $.15/lb. in the latest 13 weeks which makes Pork a great value for retailers to run in their ads. PG:Are there any negative impacts from retailers shifting their ad mix so dramatically from last year? DB: The missed opportunity we see with retailers shifting away from featuring fresh pork is that we know the fresh pork consumer—unlike the beef and chicken consumer— tends to be a heavier meat consumer. According to research conducted by the National Pork Board, the fresh pork consumer is 2x more likely than chicken buyers and 1.5x more likely than beef buyers to purchase across all three proteins. As a result, the total market basket for a fresh pork consumer is higher than that of a beef or chicken buyer. The implication is that by advertising fresh pork, retailers will attract a heavier meat consumer and a larger market basket ring to their store. We have seen that retailers who are focused on growing their fresh pork sales are seeing corresponding growth across total fresh meat. The pricing gap between the proteins is very important. We see optimal total fresh meat sales when beef is gapped $2.50/lb. higher than Pork. (Perishables Group Fresh Facts® powered by Nielsen 2015-2016 Price Gap Analysis). Recently the gap has been under $2/lb. and has resulted in declining total fresh meat dollars. PG: How has the consumer landscape and shopping experience evolved, as it relates to fresh meat? DB: Smithfield recently conducted an in-depth study with +1,600 consumers to better understand how the consumer landscape and shopping experience has evolved. We reconfirmed some things we already knew—like the growing purchase power of Millennials, Hispanics, as well as the growth in men doing more of the cooking and shopping for their household. What we were surprised to learn is that 50% of US adults are single—which is a historical first. This has implications for new product innovation, as well as consumer communication and recipe development. S P O N S O R E D C O N T E N T Speaking with... Dedra Berg Senior Director of Marketing, Fresh Pork for Smithfield Foods Some of the shopping trends we see are around the growing importance of food transparency and convenience, as well as a shift to e-commerce. Food transparency can include everything from a cleaner label and where food comes from to Organic and Antibiotic Free products. In regards to convenience, we continue to see the trend towards snacking and fresh prepared solutions, as the amount of time consumers have to prepare meals continues to shrink. PG:How is your company responding to those issues? DB: Smithfield continues to innovate and optimize around these issues and trends. One of our key areas of focus is our Smithfield Marinated Fresh Pork line. Our marinated fresh pork portfolio is on fire and the category share leader as it is easy to prepare and delivers real flavor, real fast— without the need for compromise. In addition, we recently reformulated the marinated fresh pork portfolio to be able to highlight that there are No Artificial Ingredients. PG:What can retailers do to boost sales in the meat case, in terms of merchandising or marketing? What support do you offer retailers? DB: One of the biggest opportunities is to understand the ever-evolving shopper and retailer landscape. In addition, it is critical for retailers to understand the importance of shopper marketing and the positive impact it has on sales in the Fresh Meat case. At Smithfield, we invest in knowing the consumer and fresh meat category so that we can be a strategic partner to our retailers. In addition, we have developed a robust full year shopper marketing support plan that is built around the consumer's path to purchase and leverages natural consumer inflection points throughout the year. We develop marketing materials and leverage media to engage and inspire consumers, drive them to store and convert at shelf. This includes but is not limited to traditional media executions such as television, radio, online advertising, public relations and social media. Smithfield is committed to investing in our retail partners and consumers to drive total category growth. As a strategic company we lean heavily on our Insights team to provide in depth analysis and reporting on performance. Smithfield continues to invest in the latest data tools and custom research to ensure we understand behavior and trends across the country in order to better provide to our customers. Our retailer partners can leverage us to help them grow not only fresh pork, but their overall meat business. We have teams dedicated to both fresh and packaged meats. Q A &

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