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Lunch Meat - US - December 2009

Since the start of the economic recession in 2007, sales of lunch meat have rebounded thanks in part to an increase in “brown bagging” and “eating in.” In this report Mintel discusses how consumer trends, the economy, and new product trends are influencing the lunch meat market. In addition to presenting sales data by segment, supplier and brand, the report considers a range of topics, including:

  • The size of the lunch meat market and growth forecast through 2014
  • How the recession has changed how consumers shop for lunch meat—and what to expect when the economy recovers
  • Why private label and small brands are driving growth at the expense of market leaders
  • The latest new product trends, including improved, re-sealable packaging technology, better-for-you offerings and bold and unique flavors
  • How “deli-style” packaged lunch meats such as Oscar Mayer Deli Fresh and Hillshire Farm Deli Select have helped boost consumer perceptions of packaged lunch meat
  • Why retailers are seeing a consumer shift from the deli counter to the packaged meat aisle
  • How the market leaders are using advertising to differentiate their brands from the rest of the category

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Advertising creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                      • Lunch meat sales reach $7.2 billion in FDMx in 2009
                        • Nearly all segments have seen volumes decline since 2005
                          • Private label and small brands grew faster than larger brands
                            • Supermarket service deli is most popular purchase location, but retailers are seeing a consumer shift to the packaged meat aisle
                              • Resealable packaging technology continues to improve
                                • Nearly nine in ten U.S. households eat lunch meat
                                  • Recession has changed how consumers shop for lunch meat
                                  • Insights and Opportunities

                                    • Room for private-label product selection to expand
                                      • Opportunity to boost “freshness” perceptions
                                        • Interest in all-natural lunch meat is widespread, but it’s not widely available
                                          • Leverage recession to boost sales and maintain recession-time gains
                                          • Inspire Insights

                                              • Trading Up, Trading Down, Trading Over
                                                • What it’s about: The recession is driving people to be more careful with their money
                                                  • Brown bag lunch goes mainstream
                                                    • Keep the momentum!
                                                      • Simplicity and convenience
                                                        • What it’s about: In the food and drink world, convenience means far more than ease and portability
                                                          • Back to Basics
                                                            • Innovate on Purity
                                                              • Selling Sentiment, Pushing Americana
                                                                • What it’s about: Many packaged foods have long been staples of the American diet—and they know it
                                                                  • Leverage Legacies
                                                                    • But Stay Current
                                                                    • Market Size and Forecast

                                                                      • Key points
                                                                        • Recession gives a boost to lagging lunch meat sales
                                                                          • Private label and small brands are driving recent growth
                                                                            • Sales and forecast of market
                                                                              • Figure 1: FDMx sales of lunch meat, at current prices, 2004-14
                                                                              • Figure 2: FDMx sales of lunch meat, at inflation-adjusted prices, 2004-14
                                                                            • Walmart sales
                                                                            • Competitive Context

                                                                              • Recession changes how consumers shop for lunch meat...
                                                                                • …and prompts a shift from the deli counter to the refrigerated section
                                                                                  • Competition from pre-made packaged sandwiches heats up
                                                                                    • Sandwich chains continue to expand
                                                                                      • Figure 3: Top sandwich/bakery-café chains, 2008
                                                                                      • Figure 4: U.S. sales of leading bread-based fast casual chains, 2006 and 2008
                                                                                      • Figure 5: U.S. sales of leading sandwich QSR chains, 2006 and 2008
                                                                                  • Segment Performance

                                                                                    • Key points
                                                                                      • Rising prices, recession-driven “brown bagging” and “eating in” trends have helped boost sales across all segments since 2007
                                                                                        • Sliced lunch meat growth came from higher prices
                                                                                          • Dinner sausage and franks see strong growth
                                                                                            • Refrigerated, non-sliced lunch meat declines sharply
                                                                                              • Sales of lunch meat by segment
                                                                                                • Figure 6: FDMx sales of lunch meat, by type, 2004-09
                                                                                                • Figure 7: FDMx sales of lunch meat, segmented by type, 2007 and 2009
                                                                                            • Segment Performance—Sliced Lunch Meat

                                                                                              • Key points
                                                                                                • Growth driven by product innovation and escalating retail prices
                                                                                                  • Figure 8: FDMx volume sales of refrigerated sliced lunch meat, 2005-09
                                                                                                • Sales and forecast of refrigerated sliced lunch meat
                                                                                                  • Figure 9: FDMx sales of refrigerated sliced lunch meat, 2004-14
                                                                                              • Segment Performance—Refrigerated Dinner Sausage

                                                                                                • Key points
                                                                                                  • “Eating in” trend coupled with product innovation drives growth in sausage sales
                                                                                                    • Sales and forecast of refrigerated dinner sausage
                                                                                                      • Figure 10: FDMx sales of dinner sausage, 2004-14
                                                                                                  • Segment Performance—Frankfurters

                                                                                                    • Key points
                                                                                                      • Recession-inspired thriftiness helps stem volume declines and grow frankfurter sales
                                                                                                        • Figure 11: FDMx volume sales of refrigerated frankfurters, 2005-09
                                                                                                      • Sales and forecast of refrigerated and frozen frankfurters
                                                                                                        • Figure 12: FDMx sales of frankfurters, 2004-14
                                                                                                    • Segment Performance—Non-sliced Lunch Meat

                                                                                                      • Key points
                                                                                                        • Steep volume declines offset by even steeper price increases
                                                                                                          • Figure 13: FDMx volume sales of refrigerated non-sliced lunch meat, 2005-09
                                                                                                        • Sales and forecast of refrigerated non-sliced lunch meat
                                                                                                          • Figure 14: FDMx sales of non-sliced lunch meat, 2004-14
                                                                                                      • Retail Channels

                                                                                                        • Key points
                                                                                                          • Supermarket service deli is most popular purchase location for lunch meat
                                                                                                            • Figure 15: Preferred purchase location for lunch meats, October 2009
                                                                                                          • FDMx sales of lunch meat by channel
                                                                                                            • Figure 16: FDMx sales of lunch meat, by channel, 2007 and 2009
                                                                                                            • Figure 17: FDMx sales of lunch meat, by channel, 2004-09
                                                                                                        • Retail Channels—Food Stores

                                                                                                          • Key points
                                                                                                            • Shift from deli counter to refrigerated aisle boosts supermarket sales of packaged lunch meat
                                                                                                              • Opportunity to grow private-label sales
                                                                                                                • Food stores’ sales of lunch meat
                                                                                                                  • Figure 18: U.S. food stores sales of lunch meat, at current prices, 2004-09
                                                                                                              • Market Drivers

                                                                                                                • Recession brings “brown bagging,” “eating in” back in style
                                                                                                                  • Figure 19: Usage of foodservice establishments compared to last year, October 2009
                                                                                                                • Healthy eating trend is driving sales of better-for-you lunch meats, but recession has dampened growth
                                                                                                                  • Figure 20: Percentage of population aged 20 and over who are overweight or obese or extremely obese, 1988-2006
                                                                                                              • Leading Companies

                                                                                                                • Key points
                                                                                                                  • Four companies comprise half of lunch meat sales
                                                                                                                    • Private-label growth outpaces the market
                                                                                                                      • Manufacturer sales of lunch meat
                                                                                                                        • Figure 21: FDMx sales of lunch meat in the U.S. by manufacturer, 2008 and 2009*
                                                                                                                    • Brand Share—Sliced Lunch Meat

                                                                                                                      • Key points
                                                                                                                        • “Deli-style” brands drive growth for market leaders Kraft and Sara Lee
                                                                                                                          • Smithfield and private-label brands pick up market share
                                                                                                                            • Manufacturer and brand sales of sliced lunch meat
                                                                                                                              • Figure 22: Selected FDMx manufacturer and brand sales of sliced lunch meat, 2008 and 2009*
                                                                                                                          • Brand Share—Dinner Sausage

                                                                                                                            • Key points
                                                                                                                              • Sara Lee and Johnsonville battle it out for market leader title
                                                                                                                                • Private label and small premium brands steal share from market leaders
                                                                                                                                  • Manufacturer and brand sales of dinner sausage
                                                                                                                                    • Figure 23: Selected FDMx manufacturer and brand sales of dinner sausage, 2008 and 2009*
                                                                                                                                • Brand Share—Frankfurters

                                                                                                                                  • Key points
                                                                                                                                    • Sara Lee and Bar-S gain market share
                                                                                                                                      • Private-label hot dog sales pick up amid recession
                                                                                                                                        • Manufacturer and brand sales of frankfurters
                                                                                                                                          • Figure 24: Selected FDMx manufacturer and brand sales of frankfurters, 2008 and 2009*
                                                                                                                                      • Brand Share—Non-sliced Lunch Meat

                                                                                                                                        • Key points
                                                                                                                                          • Private-label brands lead sales in highly fragmented segment
                                                                                                                                            • Manufacturer and brand sales of non-sliced lunch meat
                                                                                                                                              • Figure 25: Selected FDMx manufacturer and brand sales of non-sliced lunch meat, 2008 and 2009*
                                                                                                                                          • Brand Qualities

                                                                                                                                            • Deli counter lunch meats have an edge over packaged when it comes to “freshness” perceptions…
                                                                                                                                              • …but packaged lunch meat’s image is improving thanks to a selection of “deli-style” offerings
                                                                                                                                              • Innovation and Innovators

                                                                                                                                                • Key points
                                                                                                                                                  • Resealable packaging technology continues to improve
                                                                                                                                                    • Single-serve packaging
                                                                                                                                                      • Convenience packs for salads
                                                                                                                                                        • Variety packs give consumers options
                                                                                                                                                          • Family sizes offer value
                                                                                                                                                            • Better-for-you products aim to improve lunch meat’s image
                                                                                                                                                              • Organic and natural
                                                                                                                                                                • Reduced fat
                                                                                                                                                                  • Deli-style products aim to provide deli counter quality without the wait
                                                                                                                                                                    • Bold and unique flavors
                                                                                                                                                                    • Advertising and Promotion

                                                                                                                                                                      • Oscar Mayer spends more than $80 million on advertising in 2008
                                                                                                                                                                        • Figure 26: Oscar Mayer Deli Fresh Shaved Meats television ad, 2009
                                                                                                                                                                        • Figure 27: Oscar Mayer Deli Shaved Ham Print ad, 2009
                                                                                                                                                                      • Hillshire Farm scores with unconventional “Go meat!” campaign
                                                                                                                                                                        • Figure 28: Hillshire Farm Miller High Life Beer Brats television ad, 2009
                                                                                                                                                                        • Figure 29: Hillshire Farm Deli Select Meats television ad, 2009
                                                                                                                                                                        • Figure 30: Hillshire Farm Deli Select Ultra Thin television ad, 2009
                                                                                                                                                                      • Land O’Frost targets kids and moms with youth sports ads
                                                                                                                                                                        • Figure 31: Land O’Frost Premium Lunch Meat television ad, 2009
                                                                                                                                                                      • Buddig focuses squarely on health
                                                                                                                                                                        • Figure 32: Carl Buddig Deli Cuts television ad, 2009
                                                                                                                                                                    • Lunch Meat Usage and Usage Frequency

                                                                                                                                                                      • Key points
                                                                                                                                                                        • Household consumption of lunch meat
                                                                                                                                                                          • Figure 33: Household consumption of cold cuts, by presence of children and household income, April 2008-June 2009
                                                                                                                                                                        • Household usage frequency
                                                                                                                                                                          • Figure 34: Household usage frequency for cold cuts, 2002/03-2008/09
                                                                                                                                                                        • Personal consumption of lunch meat by gender and age
                                                                                                                                                                          • Figure 35: Lunch meat consumption, by gender and age, October 2009
                                                                                                                                                                        • Types of lunch meat consumed
                                                                                                                                                                          • Purchase frequency
                                                                                                                                                                            • Figure 37: Frequency of lunch meat purchase, by presence of children, October 2009
                                                                                                                                                                        • Purchase Drivers: Health, Packaging and More

                                                                                                                                                                          • Key points
                                                                                                                                                                            • All-natural, reduced fat, and reduced sodium lunch meat is in high demand
                                                                                                                                                                              • Figure 38: Lunch meat purchase drivers—health-related attributes, October 2009
                                                                                                                                                                            • But resealable packaging is consumers’ number one concern
                                                                                                                                                                              • Figure 39: Lunch meat purchase drivers—packaging and flavor attributes, October 2009
                                                                                                                                                                          • Value Perceptions and Impact of the Recession

                                                                                                                                                                            • Key points
                                                                                                                                                                              • Price of lunch meat is an obstacle for many
                                                                                                                                                                                • Figure 40: Perceptions of lunch meat value, by age, October 2009
                                                                                                                                                                              • Room for improvement in perceptions of packaged lunch meat
                                                                                                                                                                                • Figure 41: Lunch meat packaging and consumption preferences, by age, October 2009
                                                                                                                                                                              • Recession hurts brand loyalty as consumers look for sale brands and private label
                                                                                                                                                                                • Figure 42: Effect of the economy on lunch meat purchases, by gender and age, October 2009
                                                                                                                                                                            • Race and Hispanic Origin

                                                                                                                                                                              • Key points
                                                                                                                                                                                • Household consumption of lunch meat by race and Hispanic origin
                                                                                                                                                                                  • Figure 43: Household consumption of cold cuts, by race/Hispanic origin, April 2008-June 2009
                                                                                                                                                                                • Types of lunch meat consumed
                                                                                                                                                                                  • Figure 44: Household consumption of cold cuts, by type of meat, by race/Hispanic origin, April 2008-June 2009
                                                                                                                                                                                • Brand preferences
                                                                                                                                                                                  • Figure 45: Brand preferences for cold cuts, by race/Hispanic origin, April 2008-June 2009
                                                                                                                                                                              • Cluster Analysis

                                                                                                                                                                                  • Minimalists
                                                                                                                                                                                    • Inquisitives
                                                                                                                                                                                      • Deli Masters
                                                                                                                                                                                        • Cluster characteristics
                                                                                                                                                                                          • Figure 46: Lunch meat clusters, October 2009
                                                                                                                                                                                          • Figure 47: Lunch meat attitudes and usage habits, by lunch meat clusters, October 2009
                                                                                                                                                                                          • Figure 48: Lunch meat purchase frequency, by lunch meat clusters, October 2009
                                                                                                                                                                                          • Figure 49: Lunch meat purchase habits, by lunch meat clusters, October 2009
                                                                                                                                                                                          • Figure 50: Purchased lunch meat because of packaging claims and designs, by lunch meat clusters, October 2009
                                                                                                                                                                                          • Figure 51: Interested in purchasing lunch meat because of packaging claims and designs, by lunch meat clusters, October 2009
                                                                                                                                                                                          • Figure 52: Impact of the recession on meat purchase habits, by lunch meat clusters, October 2009
                                                                                                                                                                                        • Cluster demographics
                                                                                                                                                                                          • Figure 53: Lunch meat clusters, by gender, October 2009
                                                                                                                                                                                          • Figure 54: Lunch meat clusters, by age, October 2009
                                                                                                                                                                                          • Figure 55: Lunch meat clusters, by household income, October 2009
                                                                                                                                                                                          • Figure 56: Lunch meat clusters, by race, October 2009
                                                                                                                                                                                          • Figure 57: Lunch meat clusters, by Hispanic origin, October 2009
                                                                                                                                                                                        • Cluster methodology
                                                                                                                                                                                        • Custom Consumer Groups

                                                                                                                                                                                          • Moms are prime target for lunch meat
                                                                                                                                                                                              • Figure 58: Lunch meat consumption, by marital status and presence of children in household, October 2009
                                                                                                                                                                                            • Dads claim above-average purchase frequency
                                                                                                                                                                                                • Figure 59: Lunch meat consumption frequency, by marital status and presence of children in household, October 2009
                                                                                                                                                                                              • Purchase behavior
                                                                                                                                                                                                • Figure 60: Lunch meat consumption purchase habits, by moms, dads and presence of children in household, October 2009
                                                                                                                                                                                                • Figure 61: Lunch meat consumption purchase habits, by marital status and presence of children in household, October 2009
                                                                                                                                                                                              • Impact of the economy on purchase behavior
                                                                                                                                                                                                  • Figure 62: Lunch meat consumption purchase patterns and the recession, by moms, dads and presence of children in household, October 2009
                                                                                                                                                                                                  • Figure 63: Lunch meat consumption purchase patterns and the recession, by marital status and presence of children in household, October 2009
                                                                                                                                                                                              • IRI/Builders—Key Household Purchase Measures

                                                                                                                                                                                                  • Overview of lunch meats
                                                                                                                                                                                                    • Refrigerated sliced lunch meat
                                                                                                                                                                                                      • Consumer insights on key purchase measures—refrigerated sliced lunch meat
                                                                                                                                                                                                        • Brand map
                                                                                                                                                                                                          • Figure 64: Brand map, selected brands of refrigerated sliced lunch meat, buying rate, by household penetration, 2008*
                                                                                                                                                                                                        • Brand leader characteristics
                                                                                                                                                                                                          • Key purchase measures
                                                                                                                                                                                                            • Figure 65: Key purchase measures for the top brands of refrigerated sliced lunch meat, by household penetration, 2008*
                                                                                                                                                                                                          • Refrigerated non-sliced lunch meat
                                                                                                                                                                                                            • Consumer insights on key purchase measures—refrigerated non-sliced lunch meat
                                                                                                                                                                                                              • Brand map
                                                                                                                                                                                                                • Figure 66: Brand map, selected brands of refrigerated non-sliced lunch meat, buying rate, by household penetration, 2008*
                                                                                                                                                                                                              • Brand leader characteristics
                                                                                                                                                                                                                • Key purchase measures
                                                                                                                                                                                                                  • Figure 67: Key purchase measures for the top brands of refrigerated non-sliced lunch meat, by household penetration, 2008*
                                                                                                                                                                                                              • Appendix: Other Useful Consumer Tables

                                                                                                                                                                                                                  • Figure 68: Lunch meat consumption in multi-person households, by gender and age, October 2009
                                                                                                                                                                                                                  • Figure 69: Lunch meat packaging and consumption preferences, by age, October 2009
                                                                                                                                                                                                                  • Figure 70: Lunch meat packaging and consumption preferences, by household income, October 2009
                                                                                                                                                                                                                  • Figure 71: Perceptions of lunch meat value, by age, October 2009
                                                                                                                                                                                                                  • Figure 72: Perceptions of lunch meat value, by presence of children and size of household, October 2009
                                                                                                                                                                                                                  • Figure 73: Effect of the economy on lunch meat purchases, by household income, October 2009
                                                                                                                                                                                                                  • Figure 74: Effect of the economy on lunch meat purchases, by presence of children and household size, October 2009
                                                                                                                                                                                                                  • Figure 75: How respondents consume lunch meat, October 2009
                                                                                                                                                                                                                • Value perceptions by race and Hispanic origin
                                                                                                                                                                                                                  • Figure 76: Perceptions of lunch meat value, by race/Hispanic origin, October 2009
                                                                                                                                                                                                                • Purchase location by age
                                                                                                                                                                                                                  • Figure 77: Preferred purchase location for lunch meats, by age, October 2009
                                                                                                                                                                                                                  • Figure 78: Lunch meat consumption purchase habits, by moms, dads, and presence of children in household, October 2009
                                                                                                                                                                                                                  • Figure 79: Lunch meat consumption purchase habits, by marital status and presence of children in household, October 2009
                                                                                                                                                                                                              • Appendix: IRI/Builders Panel Data Definitions

                                                                                                                                                                                                                  • IRI Consumer Network Metrics
                                                                                                                                                                                                                  • Appendix: Trade Associations

                                                                                                                                                                                                                    Companies Covered

                                                                                                                                                                                                                    • American Association of Meat Processors (AAMP)
                                                                                                                                                                                                                    • American Heart Association, Inc.
                                                                                                                                                                                                                    • American Meat Institute (AMI)
                                                                                                                                                                                                                    • Bar-S Foods Co.
                                                                                                                                                                                                                    • Burger King Corporation
                                                                                                                                                                                                                    • California Pizza Kitchen Inc.
                                                                                                                                                                                                                    • ConAgra Foods, Inc
                                                                                                                                                                                                                    • Costco Wholesale Corporation
                                                                                                                                                                                                                    • Dunkin' Brands
                                                                                                                                                                                                                    • Eastern Perishable Products Association (EPPA)
                                                                                                                                                                                                                    • Food Marketing Institute
                                                                                                                                                                                                                    • GE Capital
                                                                                                                                                                                                                    • Greenfield Online
                                                                                                                                                                                                                    • Grocery Manufacturers Association (GMA)
                                                                                                                                                                                                                    • Grocery Manufacturers of America (GMA)
                                                                                                                                                                                                                    • Johnsonville Sausage, LLC
                                                                                                                                                                                                                    • Kraft Foods Inc. (U.S.A.)
                                                                                                                                                                                                                    • McDonald's Corporation
                                                                                                                                                                                                                    • National Frozen and Refrigerated Food Association
                                                                                                                                                                                                                    • National Hot Dog and Sausage Council
                                                                                                                                                                                                                    • Natural Products Association
                                                                                                                                                                                                                    • Panera Bread Company
                                                                                                                                                                                                                    • Pizza Hut Inc
                                                                                                                                                                                                                    • Safeway Inc
                                                                                                                                                                                                                    • Sara Lee Corporation
                                                                                                                                                                                                                    • Smithfield Foods Inc.
                                                                                                                                                                                                                    • Starbucks Corporation
                                                                                                                                                                                                                    • Subway
                                                                                                                                                                                                                    • The Kroger Co.
                                                                                                                                                                                                                    • U.S. Bureau of Labor Statistics
                                                                                                                                                                                                                    • U.S. Department of Agriculture
                                                                                                                                                                                                                    • Walmart Stores (USA)
                                                                                                                                                                                                                    • Wegmans Food Markets, Inc
                                                                                                                                                                                                                    • Weight Watchers International Inc.

                                                                                                                                                                                                                    Lunch Meat - US - December 2009

                                                                                                                                                                                                                    US $3,995.00 (Excl.Tax)