Trading up: can a shift from quantity to quality lift meat market malaise?
The latest survey from the market analyst found that in 2014, global retail volumes of processed red meat slumped by 1%, with consumption in China and the US each showing a 3% decline.
A fall in chilled processed meat consumption is to blame for the lacklustre performance. This massive category, which accounts for half of total processed meat and seafood sales, was worth €212bn (US$228bn) in 2014 and is expected to grow by just 3% in value terms in 2015 to €221bn US$23bn. Meagre 1.1% value growth is foreseen for 2015-16.
Concerns over health, the environment and animal welfare, along with changing demographics and tastes, are contributing to red meat’s waning popularity across its largest markets, according to senior food analyst Pinar Hosafci.
“Processed meat consumption is facing a challenge not least because of ethical and environmental concerns that lead people to pursue meat-restricted diets but also because of the ubiquity of meat scandals that affect a multitude of markets, from China to Denmark,”he told FoodNavigator.
Red meat is playing a decreasing role in the diet - the survey found that there are more consumers who restrict their red meat intake than there are vegetarians and pescatarians in Germany, the UK and France.
“In the UK, meat-free Mondays are gaining traction, whilst in Ghent in Belgium, vegetarian Thursdays are supported by the local government,”he said.
A flash in the pan
The World Health Organization’s statement last month may have added to the industry’s woes in the short term, but Hosafci doesn’t believe it will have a long range bearing on the fortunes of processed meat.
“The WHO’s report is not likely to have a big impact on processed meat sales in 2016 and beyond. Yes - consumers will further question their purchase of processed meat and are likely to make more informed choices but they won’t cease to consume meat altogether,” he speculated.
He also pointed out that reports like this are relatively short-lived, and whilst they might lead to short term turbulance in the market, long term dynamics would be determined by structural factors
Seeking salvation through value
But it is not all doom and gloom for processed meat producers. The volume declines are likely to be offset by an increase in value as consumers trade up to higher quality meat, in particular organic products and those that specify the place of origin, predicted Hosafci.
The future is also likely to see mainstream meat brands moving away from conventional red meats towards healthier and ‘less processed’ variants, such as organic meat or poultry, and the addition of meat substitutes to their portfolios.
Hosafci cited the example of Hormel Foods’ acquisition of Applegate Farms, which sells organic meats, and eschews the use of antibiotics, hormones and chemical preservatives.
Seafood on a wave
Whilst chilled processed meat is struggling, seafood is swimming - particularly the shelf stable variety, which is set to post double digit value growth in 2014-2015. Brazil, Russia and the US are expected to be the biggest contributors to shelf stable seafood’s growth, aided by the rising popularity of tuna and new product development from Grupo Calvo in Brazil and Bumble Bee’s owner Connors Bros in the US.
Globally, seafood sales are expected to show an uplift of over 4% in value terms from 2014-2015. Meat scares have played into the hands of seafood processors in China, where consumption is forecast to rise by 7% over 2014-2015. Similarly, in the US, volume sales of seafood have increased by 4% since 2013 as consumers seeking a healthier diet turn to fish. Western Europe has also continued its steady performance, and Italy - traditionally a strong red meat market - has seen a rise in seafood sales.
Although at the moment seafood seems relatively resilient to consumer concerns about health and animal welfare, Euromonitor warned that future supply and sales could potentially be impacted by the environment and ethical issues around overfishing.
