Red Meat Demand in Today's Economy.

Chairman Donald Biggar stressed that we should all know our market and be able to recognise the changes in.

Mark Thomson, Strategic Insight Director with TNS gave a presentation on changes in British retail over the past year. The retail scene has become much more competitive especially amongst the main players – the multiples.

Factors motivating purchases in 2009
 Affordability – household spend
 Location – trying different stores
 Isles influences – movement from premium to value
 Occasions – time to prepare dinners in.

More focus on eating in (sharing and entertaining). Planning ahead, Trust and familiarity, shopping around has led to greater interest in loyalty schemes.

In 2009
Food inflation peaked in summer.
Average spend per household rose, then fell towards end of 2009.
Trading down – example Aldi's success. Growth of discounters has declined.
Promotions are still a very important dynamic. Growth in sales mainly driven by promotions. 34% of total sales in multiples in 2009, 31% in 2008.

There are signs that shoppers are beginning to switch back from value own brand labels to quality brands. Marked trend since May 2009 back to premium and especially during final 12 weeks of 2009.

Premium Private label has been strongest with Tesco Finest.

Treat is coming back onto the radar. Steaks 22.4% consumed as treat.

Winning brands – lunch boxes and food that is carried out. Driven by kids but also young men. Top brands are chosen through habit. Health benefits cause purchases.

Loyalty – sticking to familiar brands
– people less likely to experiment, will stick to core meals.

Organic – slight return but still slippping. e.g. Deans shortbread in M & S switch from organic to mainstream.

Shopping around – more transactions and more trips, smaller shopping baskets.

The average number of shops visited by consumers is growing.

There has been a real back flip. Discounters growth decrease, Waitrose increasing. Waitrose have gained from the big four. Morrisons gaining from other major retailers, their share of the market now at highest ever 15.2%. ASDA 20.2%, TESCO 31%, Sainsburys 7.8%, Discounters 7.2%

Proliferation of round pound price points has been a key trends in 2009 across leading retailers. Many more deals going on in store. Promotions have become more innovative and event focussed.

Premium – evidence of correction
Health – less of a priority, yet obesity is on rise. Focus on nutrition. Growing interest in Scotland.
Provenance – growing importance, consumers claim to try and buy local produce.

Recession or Recovery?
In 2010 there is possibility of deflation. Growth could be squeezed in 2010. This can be stopped by more volume sales and trading up.

Consumer trends 2010/11
Budget own label
More promotional value
Eating In
Trading up

Michael Freedman, Senior Consumer Analyst at IGD presented about what consumers want from a Red Meat Quality Scheme.

Shoppers have been feeling pinch
Unemployment < 2.5 million
Powerful psychological effect
Research confirms price is increasingly important

Consumer wishes for 2010:-
No price rises, local foods, promotions and more discounters.
Shoppers have felt the impact of relatively high meat prices.

Price is top drivers for choice – 58% 2009, 39% 2003
Next sell by date – 56% 2009, 44% 2003
Lean meat and not too fat.
Able to see meat through packaging.

38% of Scottish consumers are willing to pay more for fresh meat and Scots are more willing to pay for higher quality (4 in 10).

Indicators of premium
– origin, provenance, maturation.

Customisation attracts shoppers to butchers.

Country of origin is not enough – there is a need to spell out what it means.

There is continued focus on animal welfare
– chicken – Hugh Fearnley Whittingstall
– – Jamie Oliver
– Freedom Food sales up 13% in Sainsburys.

Animal welfare is rising up the consumer agenda and the importance of animal living conditions continue to grow. (48% of consumers.)

Scottish is key driver for purchasing Scotch beef
– Support Scottish farmers
– The meat is local
– Because always buy Scottish
– Scotland has a tradition for beef production

IGD research has shown increased demand for farm shops and farmers markets. Supermarkets feel effect worst. 800 farmer markets and 4000 farm shops now in UK
22% in London use farmers markets.
In Scotland decline from 2008 to 2009.

There is evidence that shoppers in Scotland want to make purchases from butcher shops but that is not always carrying out their wishes.

Changing times in foodservice towards meal deals. Total sales are decreasing but number of people using food service is growing.

Key findings
Recession has impacted
Price is top driver
Scots willing to pay more for red meat
Scottish origin declining importance
Animal welfare growing in importance

Implications
Communicate Scotch Beef has high standards of welfare and that there are independent checks to make sure the meat has been reared in the proper way.

Sally Dudleston, Consumer insight Director, IGD
A review of red meat retailing scene in Scotland. £285.6m – value of Scottish Red Meat Market
Key trends
More Scottish households buy meat higher frequency of purchase
Volume per trip is 800g
Average total purchase 20.8 kilos per year

Price and frequency of purchase need to be looked out for. Scots have a much higher propensity for beef. Scots undertrade in pork and lamb.

Shift away from beef and lamb towards pork and chicken. Price has caused beef and lamb sales to decline. Fish has continued to perform well despite strong price but there has not been the same price inflaton here and health benefits are understood.

Also a movement in cuts towards less expensive cuts [pork shoulder up leg down].

Promotions also contribute to growth. Less expensive proteins such as fresh pork and bacon have seen greatest increase in promoted sales.

Total fresh meat sales
Butchers down from 13.1% to 11.3% in Scotland 08-09

Morrisons in Scotland
Strong focus on fresh
Strong price /crunch message

Looking ahead in 2010 there will be
A return to volume growth.
Following high inflation, fresh beef inflation is flat or slight decline.
People will shop around less and be more interested in promotions. Product choice will also see trading up.

Remember main reasons why people eat meat
1. Like the taste of meat
2. Health option
3. Meal occasion (roasts)
4. Family favourite

Purchase influences
1. Price
2. Appearance
3. Promotions
4. Meal planning

Key take outs
2009 clear evidence of trading down because of meat inflation promotions key especially during pork and bacon sales.

THE POST RECESSION CONSUMER – SHOPPERS 2010
Ben Miller Head of Shopper Insight IGD

Shoppers have had a jolt to their shopping purchases. Just over a quarter have changed their decisions because of the recession. Seeking new sources of value and will continue to do that.

Swing from boom to bust will not necessarily swing all way back. Price is at the top of the agenda.

1. Shoppers are trading back cash for time.

Time rich, cash poor. This means shopping around and comparing options. More interested in promotions and planning more.

Net gain of consumers cooking from scratch. Value is much more than price. This is a function of perceived sacrifices and perceived benefits. Economising does not always mean “downtrading.”

2. Smart shoppers are more interested in promotions.

Shoppers like these because they get a better deal on what they would have bought anyway.

Shoppers are more likely to try something new if it is on promotion (used to be advertising on TV). BOGOF customers split on these compelling for many shoppers but 40% are not interested when buying fresh because of issues of food waste.

Shoppers dislike promotions:-
No1 – no availability

3. Channel attitudes are changing.

Shoppers say they will use discounters more. Shoppers say they will use farmers markets more. Discounters are passed their peak growth. Now only 4%. Two year trend still 20%. Discounter shoppers are positive about the quality they find there. Those who don't use them will have a negative view. Fresh meat may be an opportunity for discounters!

4. Is premium just for Christmas?

IGD figures confirm up trading at Christmas, Tesco talking about shoppers treating themselves. Consumer confidence is low but expectations are good. By 2012 shoppers expect to be buying more premium products. A change in mindset will make shoppers more cautious.

Shoppers are prepared to pay extra for:-
high quality ingredients, free range, local produce and Fair trade.

5. Increasing popularity in ethical shopping

Sticky decision especially for those not worse off. Shoppers will look at value but they are interested in provenance and locally produced foods, expect these to accelerate. 34% want more local. Organic has suffered as shoppers trade down

6. More locally produced food is key improvement that is being demanded.

Perceived Benefit of buying Local
1. produce better and fresher 57% down 1%
2. support local farmer 54% up 11%
3. supporting local retailers/jobs 34% up 9%
4. Food miles 30% down 2%

Examples –
Waitrose local food heroes
Muller – provenance stories
Walkers – 100 % British potatoes

Conclusion: It has never been as important to stay as close to our customers.