But supermarkets need to improve in-store marketing, merchandising and product selection
In part two of a three-part series, Meat Marketing & Technology presents the results of interviews with retail grocery store executives, restaurateurs, consultants and brokers on their attitudes and opinions relating to the sale of fresh red meat in today's retail environment.
by Barbara J. Mosacchio
Veteran food-trend forecasters claim that to accurately predict which food products or categories could soon be hot sellers at retail, just look at what is currently hot in foodservice.
If this is true, red meat companies selling retail products have reason to be optimistic.
Strong evidence exists that more foodservice patrons are turning away from the minimal foodservice portions of the 1980s and demanding more hearty food with value.
Consider the growing popularity of restaurant chains such as Good Eats Cafe and Black-Eyed Pea in the Southwestern United States, which offer homestyle cooking-style entrees like pot roast, meat loaf, Prime rib and steaks.
Even McDonald's is testing a new homestyle cooking format called Hearth Express in Darien, Ohio. Geared toward families, this new concept features items like meat loaf, baked ham, rotisserie chicken, mashed potatoes and apple turnovers.
When people dine out, insiders say they are ordering meat-beef in particular.
"People will eat chicken at home, but beef tastes good [in restaurants] and people like it," says foodservice consultant Sharon Olson, president of Chicago-based The Olson Group. "You feel like you're getting more when you see a steak on your plate."
Consider the growing number of steak and chop houses opening up around the country. Chicago-based The Restaurant Development Group, which operates the Kinzie Chop House, Saloon and Surf & Turf, recently opened its third steak house in Chicago.
"This trend [increasing orders of meat at restaurants] is here to stay," says Ted Kasmir, vice president of The Restaurant Development Group. "People are tired of fancy, frilly food."
John Coletti, general manager of Gibson's restaurant of Chicago, agrees.
"People are returning to comfort foods," he notes. "[Ours] is a meat-and-potatoes joint. Steak has come around again. There is a 'celebrity quality' to red meat that is not associated with other [center-of-the-plate] offerings."
Flavor is still a factor when it comes to fulfilling customer satisfaction. "Sales of our New York strip loins have skyrocketed," Kasmir says. "We just introduced a 22-ounce, bone-in rib-eye. The loins are the biggest seller [because of flavor]."
This foodservice beef renaissance is not just a Midwest phenomenon. Regional chains such as Ruth's Chris Steak House and Morton's of Chicago are expanding throughout the United States.
Moving retail target
Consumers would also be buying more beef at retail, sources believe, if in-store marketing, merchandising and product selection would improve.
"Buy a strip steak at a local [grocery store] chain and put it up against one of ours," Kasmir says. "It's the difference between night and day. It's the difference between Prime and Choice."
Coletti adds: "The stores aren't giving the consumer an incentive to buy. If the customer is going to pay $27 for a steak from us, they'll be willing to pay $15 a pound [at retail] and cook it at home on the grill-but only if it's worth it."
The meat case still contains classic cuts of beef steaks, roasts and lean ground meat. But many are offering fewer selections of pork, lamb and veal.
However, other ideas have come full circle since the 1950s. For one, it appears the full-service meat case concept is regaining popularity-even among the no-frill chains.
"We offer our customers a full-service meat counter," says Jim Zimmer, meat market manager for Cub Foods, a warehouse grocery store. "We believe customers shouldn't be penalized for shopping at a [warehouse] store like ours."
Significant changes in other areas are impacting fresh meat sales in the '90s. Private label, for example, has been catching on at the fresh meat case in recent years, and more retailers are offering their own brands, such as Dominick's Traditional and Lean Cuts and Kohl's (A&P) Master Choice.
Sources say that branded meat products imply a guarantee to consumers that they are buying a safe, quality product. The trend is expected to positively affect the fresh meat category just as it has the poultry and deli meat segments.
Sources add they are unclear as to whether consumers are ready for case-ready meat because some consumers perceive it to be "less fresh" than meat prepared in-store.
However, consumers do believe that branding fresh meat could provide a boost to the industry. Appropriate marketing is a critical component for this to succeed.
"I'd be advertising my quality," says Jules Rose, former CEO for New York-based Sloan Supermarkets. "I'd have [Certified] Angus Beef, the aged beef, Prime beef, Choice beef.
"The fresh meat industry [previously] lacked good organizational marketing," Rose points out. "There wasn't a [meat] company for the consumer to identify with [regarding unbranded fresh meat products]."
Dennis Bagwell, corporate meat buyer for A&P, adds: "Consumers don't recognize [the brands] Monfort or IBP. These packers have to market their products the same way the poultry, deli and produce people have done.
"You have to let the consumer know who is standing behind the product," Bagwell adds.
Perhaps the major shift in the fresh meat area is the addition and expansion of value-added, ready-to-cook products such as stuffed pork chops; pre-marinated, pre-seasoned beef and pork; roasts; shish kebobs; meat loaf; stuffed peppers, and ethnic specialty items.
Some retailers add value to fresh meat at the store level, and they are partnering with suppliers, such as Brownberry Ovens, to obtain ingredients like stuffing. Other retailers are using ingredients from their own produce departments.
"We get the green pepper, onions and mushrooms and make [value-added meat] products the customer wants," says Dennis Harder, meat market manager for Dallas-based Tom Thumb.
One retailer is capitalizing on the growing popularity of prepared salads.
"One of the biggest selling [and most innovative] products is prepared salads [like Fresh Express and the Dole brand] in the produce section," says Craig McKnight, corporate director of meat operations for Randall's of Dallas.
"We recently developed a product that will be sold from the meat case," he adds. "It will be packaged similar to Oscar Mayer's Lunchable Funpacks. It consists of fresh ham, bacon, and turkey that sits on top of a salad. It offers everything the consumer wants: convenience, portability, freshness and quality."
Some retailers have made more room for chicken and turkey in their fresh meat cases because of the increasing demand for poultry products in recent years.
"Poultry sales continue to rise," says Tom Thumb's Harder. "I don't think the poultry industry did anything special; [processors] just took out the bone, took off the skin, and had a low-fat product."
What's puzzling is that many consumers are unaware that less-expensive beef alternatives can provide the same lean, low-fat benefits of certain poultry products, retailers point out.
"If I were stocking meat cases today, I'd be concentrating on lean ground beef," Rose notes. "Once people understand it [is 80 percent to 95 percent lean], sales will take off."
Heat-and-eat products are growing at retail and causing even more shifts in the fresh meat case. Crossing the spectrum of beef, pork, poultry and veal, such products include Provimi Baked Veal; On-Cor Redi-Serve meatballs, veal parmigiana; sliced beef and gravy; and Lloyd's fully-cooked ribs.
Many retailers, including Tom Thumb, Super-Value, A&P, Eagle Stores, Dominick's and Kroger, prepare their own heat-and-eat products daily.
Roast beef, Salisbury steak with mashed potatoes and green beans, and meat loaf with gravy are packed single-serve in microwaveable containers. They are advertised as "fresh" and "as good as homemade."
Pre-packaged deli meats have been growing tremendously because the products are innovative and respond to consumer needs, retailers say.
"[Lunch meats] have low-fat and lean products, as well as the old stand-bys," Cub Foods' Zimmer says. "The packaging is consumer friendly [resealable].
A&P's Bagwell adds: "Our sales [in pre-packed deli meats] are increasing. It suits the current consumer's lifestyle. These products are light, good and easy to prepare."
In-store delis: More choice
Some of the well-defined lines of a retailer's format blur even more when comparing the product mix between its in-store deli and refrigerated meat case. Both sections carry everything from ready-to-eat, ready-to-cook to heat-and-eat products.
The major shift in the deli area in the past decade has been toward becoming a foodservice provider.
"The deli has become a prepared foods section, a mini-gourmet shop," Rose says. "Cold cuts and sliced cheese are now pre-packed outside of the deli."
Further-processed meat sections of in-store delis continue to shrink in size while the prepared foods section keeps expanding.
Processed meats featured in in-store delis still offer consumers a choice-but less variety.
In order to make room in the deli for more specialized products like mesquite smoked meat, lean roast beef, imported prosciutto and meat entrees, traditional lunch-meat products (bologna, salami, olive loaf and veal loaf) have been moved into the pre-packaged meat sections.
Processed meat products sold in today's in-store deli are perceived by consumers to be premium products-and they are branded. Plantation, Boar's Head, Wilson and Klements' are several examples of such products.
Alternative retail formats
New alternative retail formats are taking root as a result of a growing consumer demand for healthier alternative products. These stores strive to offer the same food variety found in traditional supermarkets but place a special emphasis on healthy products. Fresh Fields and Whole Foods, which have about 12 stores nationwide, are two examples of such businesses.
"We don't sell anything with refined sugar, hydrogenated oils, tropical oils or cottonseed oils," says Kathy Ordan, director of marketing for Fresh Fields. "We don't sell meat from animals raised with hormones or antibiotics.
"Our customers are looking for higher-quality food," she adds. "We get everyone from college students to the elderly."
Danny Poleto, manager of meat and seafood for Whole Foods, adds: "Our customers are people who care about what they put into their bodies. They don't mind spending money to buy products that they feel are good for them."
But meat does play an important role in both stores.
"Meat fits perfectly with our store concept," Ordan stresses. "Red meat is not intrinsically bad for you. We sell a better grade of beef, poultry and deli meats. In our deli, we don't offer any products containing artificial colors, preservatives or nitrates."
Poleto points out: "We sell a lot of meat: filets, T-bone, porterhouse steaks and chops. Our customers want it. They love the flavor and eating experience."
Both chains have large and well-merchandised service meat cases. However, they offer very little pre-packaged fresh meat. Instead, they focus on classic cuts of beef, pork, and some lamb and veal. Value-added meat products are prepared in-store and include items such as marinated shish kebobs, stuffed pork chops, pre-marinated roasts and even cheddar burgers.
"We give customers great service and ideas on how to cook the meat," Poleto says. "We make lots of ready-to-cook products in-store. We make our own sausages, which are primarily poultry-based but we make pork- and beef-based sausages, too."
Both chains feature a meat case concept that is reminiscent of old-time butcher shops.
Whole Foods stresses proficient customer service, Poleto claims. "We want to give our customers the impression that they are getting [quality, fresh] meat," he adds.
Delis at both chains rival any European gourmet food shop. Although there are not extensive selections in the types of deli meat offered, there is a choice between nitrate-free ham, roast beef and turkey; variety in flavors; and a wide selection of specialty products like mousse, patŽ and prepared salads.
Neither chain believes it is an impending threat to traditional retailers, but both are making their mark and becoming well-known for giving consumers a choice in meat.
"Consumers want someone to assure them that it's safe to eat meat," Poleto notes. "We make sure our store is clean and sanitary. We have many brochures detailing the products we sell. We make sure our staff members can answer any questions our customers may have-especially about meat."
Barbara J. Mosacchio, president of Chicago-based Veritas Research and Consulting, conducted the research and analysis for this article. Veritas specializes in qualitative research, trend analysis and market plan development for retail food and foodservice industries.