Egg prices drag down dairy again, prepared meats remain strong in deli, Circana reports

By Ryan Daily

- Last updated on GMT

Image Credit: Getty Images - 	iprogressman
Image Credit: Getty Images - iprogressman

Related tags Dairy deli meat Cheese Cottage cheese

After a challenging year, dairy and deli markets are starting 2024 with unit growth, as egg prices rise once again as a result of avian flu, Jonna Parker, principal of fresh foods team lead at Circana, shared during an International Dairy Deli Bakery Association (IDBBA) webinar.

Similar to other food and beverage categories, the dairy, deli, and bakery categories are seeing higher dollar growth led by price increases and declines in units in 2023.

Dairy sales came in at $71.6bn, growing 0.6% in dollars and declining 0.5% in units, and deli sales were at $46.3bn, growing 3.2% in dollars and declining 0.5% in units, for the 52 weeks, ending Jan. 28, 2024. Bakery grew the most in dollars (5.7%) out of the three to reach $43.6bn but saw the steepest decline in units at 1.7% for the same period.

Despite dollar and unit declines for the year, dairy and deli saw unit sales increase in January. Dairy unit sales came in at $5.7bn for the month, growing 2.7% in unit sales and declining 4.3% in dollar sales, and deli saw $3.5bn in sales, growing 1.6% in units and 1.3% in dollars. While declining slightly in units (0.3%), the bakery market outpaced total food and beverage in dollar sales, growing 1.6% compared to 1.4% for the broader market.

Dairy: Egg price challenges persist, cottage cheese still popular

Though the dairy category is rebounding units, egg prices are increasing – due to tighter supply from avian flu – which is dragging down dollar sales for the category.

Eggs sales for Jan. were $751m, declining 32.2% (the highest for the category) in dollar sales, though units managed to grow 4.8% for the month. Desserts, cheese snack kits, and dairy alternative cheese also saw slumping dollar sales for the month, declining 1.7%, 8.1%, and 11.2%, respectively.

However, eggs’ functionality and increasing usage throughout the day might provide some relief from the pricing dynamics, Parker noted.

“If you've ever looked at the fresh-meat department or the fresh-seafood department right now, they're really struggling to regain shopper engagement after periods of high prices and high price perception. Eggs are falling to the same victim. Now, eggs benefit [in] many other ways because it is so essential right now to the diet. For example, in our consumption data, we found that both in-home and out-of-home eggs have become incredibly more popular in eating occasions in the breakfast time and have even started to move into other day parts.”

While many dairy products – including natural, cream, and processed cheeses; yogurt, cream/creamers, butter/margarine, sour cream – are seeing low-percentage dollar and unit growth, cottage cheese sales in Jan. grew 14.2% growth in dollars and 10.7% in units, boosted by viral social media videos. Whipped toppings also cracked double-digit growth, with units growing 11.3% and dollars increasing 10% in the same month.

“Cottage cheese’s interesting growth is partly tied directly to social media virality, but that viral video ... was actually about cottage cheese's health attributes and its taste attributes, especially when you whip it,” she added. “One little relevant tweak to a product can make it more important to consumers — that is a key story in dairy.”

Grab-and-go deli meats remain “buoyant,” prepared meats see double-digit unit and dollar growth

While the deli segment is seeing both dollar and unit growth, deli meats' dollar and pound sales are largely slumping, Parker said. 

"The big story on deli meat is there are three places to buy it within a deli. We don't see all trending the same way from a dollars and pounds standpoint," Parker said. "Grab-and-go remains something that's been buoyant. ... There's been an expansion of that at the detriment of service cases." 

Deli-service lunchmeat sales declined 3.8% in dollars and 2.7% in pounds to come in at $351.7m, and deli pre-sliced lunchmeat saw 0.3% in dollar and pound declines with $60.5m in sales for the four weeks, ending Jan. 28, 2024. Deli grab-and-go lunchmeat witnessed $196.4m in sales, with flat pound sales and a decline of 2% in dollars, for the same period.

While deli meats are largely down in dollars and units, prepared meats are seeing strong dollar and unit growth, increasing 10.1% and 11%, respectively, as sales came in at $400.4m for the first month of the year. Consumers are using prepared meats like already-cooked chicken as meal ingredients or substitutes for home-cooked or restaurant meals, tapping into shoppers' needs for convenience, Parker explained.

“It's really chicken that has emerged as the primary protein,” Parker said. “If prepared meats continue on this trajectory, we have to talk about how do we actually open up to more proteins and more recipe-ready options. Those are incremental trips and items that you would have lost if you didn't capitalize on this trend.”

Elsewhere in the deli counter, soups and chili and desserts are experiencing the highest unit growth at 15.3%and 8%, respectively, while breakfast, combo meals, sandwiches, and salads saw declines in units by 10.2%, 7.2%, 1%, and 0.8%, respectively.

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