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Lunch Meat - US - May 2012

Sales in the $12.6 billion lunch meat category grew by only 1.8% in 2011 (only 0.2% when adjusted for inflation). The slowed growth is likely due to a slowdown in volume sales due to product price increases, a failure of new product innovation to resonate with consumers, and an improving economy that has consumers seeking other food options. Category saturation ensures a robust consumer base (lunch meat of some form is eaten in 94% of respondent households). However, usage has seen no growth among households over the past few years. In fact, 32% of respondents to Mintel’s custom consumer survey were buying less pre-packaged or deli counter meat at the start of 2012 than previously.

Future sales growth will require increasing usage frequency in these households, along with the development of higher price point items that will help raise the bottom line. The category is hurt by an impression that the products within it are overly processed. Room exists for manufacturers to position and effectively promote products as natural, premium offerings that consumers would seek out in place of prepared goods (47% of lunch meat eaters would eat more lunch meat if it was less processed looking and tasting).

Throughout this report, Mintel will address key issues facing the category, including:

  • How is lunch meat, which proved fairly recession-proof, faring amid signs of an improving economy?
  • What have lunch meat manufacturers done, in terms of the latest innovation, to generate interest among consumers?
  • How are lunch meat manufacturers addressing the health and quality concerns/demands of consumers and how effective have they been at addressing this with consumers?
  • What can manufacturers of sliced and non-sliced lunch meat do to compete against the deli counter, which accounts for the greater portion of lunch meat sales?
  • As consumers shop in a expanding universe of retail formats, what can traditional food retailers do to attract and retain lunch meat buyers?
  • Have private label manufacturers been able to capitalize on the challenging economic environment to get consumers to shift from name brands to store brands?
  • What role does household income, gender, race/Hispanic origin, and other demographic factors play in lunch meat sales performance?
  • What kind of marketing strategies and tools are manufacturers using to connect with their target audiences? How aggressively are marketers incorporating social media and other online initiatives as a way of staying relevant to a younger audience that has much different media patterns than previous generations?
  • What are the key market drivers driving and deterring lunch meat’s fortunes, and how can manufacturers and retailers manage these factors to maximize sales opportunities?

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Table of contents

  1. Scope and Themes

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

                      • Sizeable sector sees growth slow in 2011
                        • Market’s growth may hinge on healthy, premium, and convenient offerings
                          • Deli-counter segment sales leads category
                            • Supermarkets comprise highest sales in category
                              • Successful brands focused efforts on premium positioning
                                • Lunch meat product launches hit high in 2011
                                  • Higher-income earners more engaged in deli-counter offerings
                                    • Lunchtime is the most popular occasion for eating lunch meat
                                      • Some consumers driven by healthy, others by price
                                        • Asian and black consumers represent opportunities for growth
                                        • Insights and Opportunities

                                          • Subtle shift in category name could inspire new consumer behavior
                                            • Ethnic spin could drive usage increases
                                              • Take better-for-you (BFY) positioning to the next level
                                                • Ethical marketing
                                                • Inspire Insights

                                                    • Trend 1: The Real Thing
                                                      • Trend 2: The Power of One
                                                      • Market Size and Forecast

                                                        • Key points
                                                          • Lunch meat sales growth slows
                                                            • Sales and forecast of lunch meat
                                                              • Figure 1: Total U.S. retail sales of lunch meat, at current prices, 2006-16
                                                              • Figure 2: Total U.S. retail sales of lunch meat, at inflation-adjusted prices, 2006-16
                                                            • Fan-chart forecast
                                                              • Figure 3: Fan chart forecast of lunch meat, 2006-16
                                                            • Walmart sales
                                                            • Market Drivers

                                                              • Key points
                                                                • Consumers keep an eye on food costs, but may splurge a bit
                                                                  • Figure 4: Changes in eating, purchasing, and cooking behavior compared to a year ago, December 2011
                                                                • Food prices on the rise
                                                                  • Figure 5: Changes in food price indexes, 2009 through 2012
                                                                • Lunch meat’s somewhat negative health perception may deter usage further
                                                                  • Figure 6: Watching diet and reasons for doing so, by gender, October 2009-December 2010
                                                                • Decline in number of households with kids
                                                                  • Figure 7: Purchase and consumption frequency, by presence of children in household, February 2012
                                                                  • Figure 8: U.S. households, by presence of children younger than 18, 2000-11
                                                              • Competitive Context

                                                                • Key points
                                                                  • Grab-and-go food’s accessibility blossoming
                                                                    • Prepack hurt by higher quality perception at the deli counter
                                                                    • Segment Performance

                                                                      • Key points
                                                                        • Deli counter leads sales gains, non-sliced segment flounders
                                                                          • Figure 9: Total U.S. sales of lunch meat, by segment, 2009-11
                                                                      • Segment Performance—Deli-counter Lunch Meat

                                                                        • Key points
                                                                          • Deli-counter lunch meat segment sales grow 13% from 2006-11
                                                                            • Figure 10: Total U.S. sales and forecast of deli-counter lunch meat, at current prices, 2006-16
                                                                        • Segment Performance—Refrigerated Sliced Lunch Meat

                                                                          • Key points
                                                                            • Refrigerated sliced lunch meat gains when deli slips
                                                                              • Figure 11: Total U.S. sales of refrigerated sliced lunch meat, 2006-16
                                                                          • Segment Performance—Refrigerated Non-sliced Lunch Meat

                                                                            • Key points
                                                                              • Refrigerated non-sliced segment struggles
                                                                                • Figure 12: Total U.S. sales and forecast of refrigerated non-sliced lunch meat, at current prices, 2006-16
                                                                            • Retail Channels

                                                                              • Key points
                                                                                • Supermarkets comprised 66.3% of category sales in 2011
                                                                                  • Sales of lunch meat, by channel
                                                                                    • Figure 13: Total U.S. sales of lunch meat, by channel, 2009 and 2011
                                                                                  • Supermarket sales growth continues to gain strength
                                                                                    • Supermarket/food stores’ sales of lunch meat
                                                                                      • Figure 14: Supermarket/food stores’ sales of lunch meat, at current prices, 2006-11
                                                                                    • Supercenters and warehouse stores fail to engage lunch meat consumers
                                                                                      • Supercenters and warehouse club stores’ sales of lunch meat
                                                                                        • Figure 15: Supercenters and warehouse club stores’ sales of lunch meat, at current prices, 2006-11
                                                                                      • Lunch meat sees strongest sales growth in other retail channels
                                                                                        • Other retailers’ sales of lunch meat
                                                                                          • Figure 16: Other retailers’* sales of lunch meat, at current prices, 2006-11
                                                                                      • Retail Channels—Natural Supermarkets

                                                                                        • Key points
                                                                                          • Natural channel sees strong sales gains
                                                                                            • Figure 17: Natural supermarket sales of lunch meats and lunch meat substitutes at current prices, 2009-11*
                                                                                            • Figure 18: Natural supermarket sales of lunch meats and lunch meat substitutes, at inflation-adjusted prices, 2009-11*
                                                                                          • Natural lunch meat gains market share from vegetarian alternatives
                                                                                            • Figure 19: Natural supermarket sales of lunch meats and lunch meat substitutes, by segment, 2009 and 2011*
                                                                                          • Brand significance
                                                                                            • Nonorganic offerings gain market share from organics
                                                                                              • Figure 20: Natural supermarket sales of lunch meats and lunch meat substitutes, by organic, 2009 and 2011*
                                                                                          • Leading Companies

                                                                                            • Key points
                                                                                              • Kraft Foods responsible for more than a third of category sales
                                                                                                  • Figure 21: Manufacturer FDMx sales of lunch meat in the U.S., 2011 and 2012*
                                                                                              • Brand Share—Refrigerated Sliced Lunch Meat

                                                                                                • Key points
                                                                                                  • Kraft and Land O’Frost brands lead gains in refrigerated sliced lunch meat
                                                                                                    • Figure 22: Selected FDMx brand sales of refrigerated sliced lunch meat, 2011 and 2012*
                                                                                                • Brand Share—Refrigerated Non-sliced Lunch Meat

                                                                                                  • Key points
                                                                                                    • Refrigerated non-sliced fares better in FDMx than overall
                                                                                                      • Figure 23: Selected FDMx brand sales of refrigerated non-sliced lunch meat, 2011 and 2012*
                                                                                                  • Innovations and Innovators

                                                                                                    • Key points
                                                                                                      • Product launches increase in 2011
                                                                                                        • Figure 24: Lunch meat product launches, by launch type, 2008-12*
                                                                                                      • Product claims rise sharply in 2011
                                                                                                        • Figure 25: Lunch meat product launches, by top 10 claims, 2008-12*
                                                                                                      • Category leader Kraft leads product launches
                                                                                                        • Figure 26: Lunch meat product launches, by top 15 companies, 2008-12*
                                                                                                      • Private label launches down from a high in 2010
                                                                                                        • Figure 27: Lunch meat product launches, by private label share, 2008-12*
                                                                                                      • Product innovations
                                                                                                        • Premium
                                                                                                          • Health positioning
                                                                                                            • All natural
                                                                                                              • Private label
                                                                                                                • Convenience
                                                                                                                  • Animal welfare
                                                                                                                  • Marketing Strategies

                                                                                                                    • Overview
                                                                                                                      • Overview of brand landscape
                                                                                                                        • Brand analysis: Oscar Mayer
                                                                                                                          • Figure 28: Brand analysis of Oscar Mayer, 2011
                                                                                                                        • Online initiatives
                                                                                                                          • TV presence
                                                                                                                            • Figure 29: Oscar Mayer, “Clear Pack (30 second),” 2011
                                                                                                                            • Figure 30: Oscar Mayer, “No Drama,” 2012
                                                                                                                          • Print and other
                                                                                                                            • Brand analysis: Eckrich
                                                                                                                              • Figure 31: Brand analysis of Eckrich, 2011
                                                                                                                            • Online initiatives
                                                                                                                              • TV presence
                                                                                                                                • Figure 32: Eckrich, “Succulent Experience,” 2011
                                                                                                                              • Brand analysis: Hillshire Farm
                                                                                                                                • Figure 33: Brand analysis of Hillshire Farm, 2011
                                                                                                                              • Online initiatives
                                                                                                                                • TV presence
                                                                                                                                  • Figure 34: Hillshire Farm, “Quality Time,” 2011
                                                                                                                                • Brand analysis: Hormel
                                                                                                                                  • Figure 35: Brand analysis of Hormel, 2011
                                                                                                                                • Online initiatives
                                                                                                                                  • TV presence
                                                                                                                                    • Figure 36: Hormel, “All natural (package),” 2011
                                                                                                                                • Household Usage

                                                                                                                                  • Key points
                                                                                                                                    • Lunch meat category highly saturated
                                                                                                                                      • Figure 37: Household usage, February 2012
                                                                                                                                    • 55-64s most likely lunch meat consumers
                                                                                                                                      • Figure 38: Household usage, by age, February 2012
                                                                                                                                    • Household income drives selection, highest earners least engaged
                                                                                                                                      • Figure 39: Household usage, by household income, February 2012
                                                                                                                                    • Turkey and ham most popular lunch meats
                                                                                                                                      • Figure 40: Lunch meat usage, by meat type, February 2012
                                                                                                                                  • Usage Occasions and Purchase/Consumption Frequency

                                                                                                                                    • Key points
                                                                                                                                      • Lunch meat most often used for lunch
                                                                                                                                        • Figure 41: Usage occasions, February 2012
                                                                                                                                      • Young consumers most open to alternative use for lunch meat
                                                                                                                                        • Figure 42: Usage occasions, by age, February 2012
                                                                                                                                      • Lunch meat may meet protein needs of lower-income households
                                                                                                                                        • Figure 43: Usage occasions, by household income, February 2012
                                                                                                                                      • Households with children engage in alternative consumption
                                                                                                                                        • Figure 44: Usage occasions, by presence of children in household, February 2012
                                                                                                                                      • Lunch meat consumed less than three times per week
                                                                                                                                        • Figure 45: Purchase and consumption frequency, by gender, February 2012
                                                                                                                                      • Higher-income households more frequent consumers of lunch meat
                                                                                                                                        • Figure 46: Purchase and consumption frequency, by household income, February 2012
                                                                                                                                    • Lunchtime Favorites

                                                                                                                                      • Key points
                                                                                                                                        • Meat sandwiches common lunch item for 75% of lunch meat eaters
                                                                                                                                          • Figure 47: Lunchtime favorites, by gender, February 2012
                                                                                                                                        • Younger consumers less likely to be sandwich eaters
                                                                                                                                          • Figure 48: Lunchtime favorites, by age, February 2012
                                                                                                                                      • Sandwich (with Meat) Preparation and Purchase Behavior

                                                                                                                                        • Key points
                                                                                                                                          • Older respondents most likely to make sandwiches at home
                                                                                                                                            • Figure 49: Sandwich (with meat) preparation and purchase behavior, by age, February 2012
                                                                                                                                          • High-income households likely to have sandwiches prepared offsite
                                                                                                                                            • Figure 50: Sandwich (with meat) preparation and purchase behavior, by household income, February 2012
                                                                                                                                        • What Matters to Lunch Meat Consumers

                                                                                                                                          • Key points
                                                                                                                                            • Interest in natural, quality claims opens room for premium positioning
                                                                                                                                                • Figure 51: What matters to lunch meat consumers, by gender, February 2012
                                                                                                                                              • 55+ are health conscious, younger respondents ethically minded
                                                                                                                                                  • Figure 52: What matters to lunch meat consumers, by age, February 2012
                                                                                                                                                • Highest-income consumers drawn to premium, responsible products
                                                                                                                                                    • Figure 53: What matters to lunch meat consumers, by household income, February 2012
                                                                                                                                                  • Product freshness and price important in category participation
                                                                                                                                                      • Figure 54: Attitudes toward and behavior with lunch meat, by age, February 2012
                                                                                                                                                    • Higher-income earners good target for premium products
                                                                                                                                                        • Figure 55: Attitudes toward and behavior with lunch meat, by household income, February 2012
                                                                                                                                                      • Lunch meat users with children value price and health
                                                                                                                                                          • Figure 56: Attitudes toward and behavior with lunch meat, by presence of children in household, February 2012
                                                                                                                                                      • Impact of Race and Hispanic Origin

                                                                                                                                                        • Key points
                                                                                                                                                          • Asian households less likely than average to consume lunch meat
                                                                                                                                                            • Figure 57: Household usage, by race/Hispanic origin, February 2012
                                                                                                                                                          • Black consumers good target for lunch meat snacks
                                                                                                                                                            • Figure 58: Usage occasions, by race/Hispanic origin, February 2012
                                                                                                                                                          • Asians and Hispanics most frequent lunch meat buyers
                                                                                                                                                            • Figure 59: Purchase and consumption frequency, by race/hispanic origin, February 2012
                                                                                                                                                          • Asian shoppers could be good target for nonmeat items
                                                                                                                                                            • Figure 60: Lunchtime favorites, by race/Hispanic origin, February 2012
                                                                                                                                                          • Asian consumers most engaged in product characteristics
                                                                                                                                                            • Figure 61: What matters to lunch meat consumers, by race/Hispanic origin, February 2012
                                                                                                                                                        • Cluster Analysis

                                                                                                                                                            • Lunch meat Lovers
                                                                                                                                                              • Demographics
                                                                                                                                                                • Characteristics
                                                                                                                                                                  • Opportunity
                                                                                                                                                                    • Deli Counters
                                                                                                                                                                      • Demographics
                                                                                                                                                                        • Characteristics
                                                                                                                                                                          • Opportunity
                                                                                                                                                                            • Pre-Pack Non-conformists
                                                                                                                                                                              • Demographics
                                                                                                                                                                                • Characteristics
                                                                                                                                                                                  • Opportunity
                                                                                                                                                                                    • Equal Deli-tunities
                                                                                                                                                                                      • Demographics
                                                                                                                                                                                        • Characteristics
                                                                                                                                                                                          • Opportunity
                                                                                                                                                                                            • Cluster characteristic tables
                                                                                                                                                                                              • Figure 62: Target clusters, December 2011
                                                                                                                                                                                              • Figure 63: Household usage, by clusters, February 2012
                                                                                                                                                                                              • Figure 64: Usage occasions, by clusters, February 2012
                                                                                                                                                                                              • Figure 65: Lunchtime favorites, by clusters, February 2012
                                                                                                                                                                                              • Figure 66: Purchase and consumption frequency, by household income, February 2012
                                                                                                                                                                                              • Figure 67: What matters to lunch meat consumers, by clusters, February 2012
                                                                                                                                                                                              • Figure 68: Attitudes toward and behavior with lunch meat, by clusters, February 2012
                                                                                                                                                                                            • Cluster demographic tables
                                                                                                                                                                                              • Figure 69: Target clusters, by gender, December 2011
                                                                                                                                                                                              • Figure 70: Target clusters, by age, December 2011
                                                                                                                                                                                              • Figure 71: Target clusters, by household income, December 2011
                                                                                                                                                                                              • Figure 72: Target clusters, by race/Hispanic origin, December 2011
                                                                                                                                                                                              • Figure 73: Target clusters, by presence of children in household, December 2011
                                                                                                                                                                                            • Cluster methodology
                                                                                                                                                                                            • Custom Consumer Groups

                                                                                                                                                                                              • Key points
                                                                                                                                                                                                • Heavy, medium, and light users and their behavior/attitudes
                                                                                                                                                                                                    • Figure 74: Purchase and consumption frequency, by meat users, February 2012
                                                                                                                                                                                                  • Light users exhibit flexibility in lunch meat usage
                                                                                                                                                                                                    • Figure 75: Usage occasions, by meat users, February 2012
                                                                                                                                                                                                  • Lights find importance in product characteristics
                                                                                                                                                                                                    • Figure 76: What matters to lunch meat consumers, by meat users, February 2012
                                                                                                                                                                                                  • Room to grow participation among Heavys
                                                                                                                                                                                                      • Figure 77: Attitudes toward and behavior with lunch meat, by meat users, February 2012
                                                                                                                                                                                                  • SymphonyIRI/Builders—Key Household Purchase Measures

                                                                                                                                                                                                    • Lunch meat – U.S.
                                                                                                                                                                                                      • Overview of lunch meat
                                                                                                                                                                                                        • Refrigerated sliced lunch meat
                                                                                                                                                                                                          • Consumer insights on key purchase measures – refrigerated sliced lunch meat
                                                                                                                                                                                                            • Brand map
                                                                                                                                                                                                              • Figure 78: Brand map, selected brands of refrigerated sliced lunch meat buying rate, by household penetration, 2011*
                                                                                                                                                                                                            • Brand leader characteristics
                                                                                                                                                                                                              • Key purchase measures
                                                                                                                                                                                                                • Figure 79: Key purchase measures for the top brands of sliced lunch meat, by household penetration, 2011*
                                                                                                                                                                                                              • Refrigerated non-sliced lunch meat
                                                                                                                                                                                                                • Consumer insights on key purchase measures – refrigerated non-sliced lunch meat
                                                                                                                                                                                                                  • Brand map
                                                                                                                                                                                                                    • Figure 80: Brand map, selected brands of refrigerated non-sliced lunch meat buying rate, by household penetration, 2011*
                                                                                                                                                                                                                  • Brand leader characteristics
                                                                                                                                                                                                                    • Key purchase measures
                                                                                                                                                                                                                      • Figure 81: Key purchase measures for the top brands of refrigerated non-sliced lunch meat, by household penetration, 2011*
                                                                                                                                                                                                                  • Appendix: Other Useful Consumer Tables

                                                                                                                                                                                                                      • Figure 82: Cold cut (packaged or fresh cut/deli) usage, January 2007-November 2011
                                                                                                                                                                                                                      • Figure 83: Cold cut (packaged or fresh cut/deli) usage among teens aged 12-17, May 2006-June 2011
                                                                                                                                                                                                                      • Figure 84: Purchase and consumption frequency, by age, February 2012
                                                                                                                                                                                                                      • Figure 85: Sandwich (with meat) preparation and purchase behavior, by presence of children in household, February 2012
                                                                                                                                                                                                                      • Figure 86: Usage occasions, by gender and age, February 2012
                                                                                                                                                                                                                      • Figure 87: Sandwich (with meat) preparation and purchase behavior, by gender and age, February 2012
                                                                                                                                                                                                                      • Figure 88: Purchase and consumption frequency, by gender and age, February 2012
                                                                                                                                                                                                                      • Figure 89: What matters to lunch meat consumers, by gender and income, February 2012
                                                                                                                                                                                                                      • Figure 90: What matters to lunch meat consumers, by gender and age, February 2012
                                                                                                                                                                                                                      • Figure 91: Attitudes toward and behavior with lunch meat, by gender and income, February 2012
                                                                                                                                                                                                                      • Figure 92: Attitudes toward and behavior with lunch meat, by gender and age, February 2012
                                                                                                                                                                                                                  • Appendix: Trade Associations

                                                                                                                                                                                                                    Companies Covered

                                                                                                                                                                                                                    • ABP Corporation
                                                                                                                                                                                                                    • Aldi (USA)
                                                                                                                                                                                                                    • Amazon North America
                                                                                                                                                                                                                    • American Association of Meat Processors (AAMP)
                                                                                                                                                                                                                    • American Heart Association, Inc.
                                                                                                                                                                                                                    • American Meat Institute (AMI)
                                                                                                                                                                                                                    • Applegate Farms
                                                                                                                                                                                                                    • Blimpie International Inc.
                                                                                                                                                                                                                    • Butterball, LLC
                                                                                                                                                                                                                    • Campbell Soup Company
                                                                                                                                                                                                                    • Cargill Incorporated
                                                                                                                                                                                                                    • Centers for Disease Control and Prevention
                                                                                                                                                                                                                    • ConAgra Foods, Inc
                                                                                                                                                                                                                    • Facebook, Inc.
                                                                                                                                                                                                                    • Food Marketing Institute
                                                                                                                                                                                                                    • General Mills Inc
                                                                                                                                                                                                                    • Google, Inc.
                                                                                                                                                                                                                    • Grocery Manufacturers Association (GMA)
                                                                                                                                                                                                                    • Hormel
                                                                                                                                                                                                                    • International Dairy·Deli·Bakery Association
                                                                                                                                                                                                                    • Jennie-O Turkey Store, Inc.
                                                                                                                                                                                                                    • Kellogg Company
                                                                                                                                                                                                                    • Kraft Foods Inc. (U.S.A.)
                                                                                                                                                                                                                    • McDonald's U.S.A.
                                                                                                                                                                                                                    • National Meat Association (NMA)
                                                                                                                                                                                                                    • Natural Products Association
                                                                                                                                                                                                                    • Nestlé USA
                                                                                                                                                                                                                    • Niman Ranch, Inc.
                                                                                                                                                                                                                    • Panera Bread Company
                                                                                                                                                                                                                    • Private Label Manufacturers Association (PLMA)
                                                                                                                                                                                                                    • Publix Super Markets
                                                                                                                                                                                                                    • SAM's Club
                                                                                                                                                                                                                    • Sara Lee Corporation
                                                                                                                                                                                                                    • Smithfield Foods Inc.
                                                                                                                                                                                                                    • Subway
                                                                                                                                                                                                                    • Target Corporation
                                                                                                                                                                                                                    • The Kroger Co.
                                                                                                                                                                                                                    • The New York Times Company
                                                                                                                                                                                                                    • Twitter, Inc.
                                                                                                                                                                                                                    • U.S. Bureau of Labor Statistics
                                                                                                                                                                                                                    • U.S. Bureau of the Census
                                                                                                                                                                                                                    • U.S. Department of Agriculture
                                                                                                                                                                                                                    • US Department of Commerce
                                                                                                                                                                                                                    • USA Today
                                                                                                                                                                                                                    • Walgreen Co
                                                                                                                                                                                                                    • Walmart Stores (USA)
                                                                                                                                                                                                                    • Weight Watchers International Inc.
                                                                                                                                                                                                                    • Whole Foods Market Inc
                                                                                                                                                                                                                    • YouTube, Inc.

                                                                                                                                                                                                                    Lunch Meat - US - May 2012

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