May 4, 2023

Double-digit gains in United States supermarket store-brand sales during the first quarter included several fresh departments such as deli-prepared items (up 12.4%), bakery (rising almost 17%), and refrigerated, mostly dairy, lines (up 15.5%).

According to data analysts Circana (formerly IRI), 210 Analytics and Elanco, for the first time in many months inflation for total food and beverages moderated to single digits by March – but only just. The average price per unit across all foods and beverages (F&B) and other channels increased by 9.8% in the month. However this was still 21.4% above March 2021 and 27.4% above March 2020 levels.

Bureau of Labor Statistics data show that restaurant F&B prices increased even more slowly at 8.4% in March. Across supermarket fresh departments, the increases were much higher, although deli saw the least biggest increase during the quarter versus bakery and refrigerated goods.

“Within the total delicatessen department, deli-prepared foods were the biggest seller (and) the aisle also had the best year-on-year growth performance,” Jonna Parker, Circana’s team lead for fresh food told Supermarket News. “Deli-prepared foods only had mild unit pressure of -1%, whereas inflation boosted dollar sales well above year-ago levels.”

Deli is less price driven

According to Parker, deli is an area that is not driven by price but by assortment and awareness. She added: “Conversely, deli meat experienced the highest unit pressure of around -7% in both the March and 52-week time periods.”

Major metropolitan areas such as Detroit, Dallas, and Philadelphia, have experienced far greater F&B inflation and the US Government Accountability Office has reported that low-income households now spend an average of 30% of their total income on food. Not surprisingly, low-income households over index for the share of meals they prepare at home, at an estimated 80% of all meals, per the March Circana survey, versus 74% for those making $100,000 or more annually.

These latter households are therefore more likely to buy deli foods from the supermarket even though the Circana survey indicates that 94% of all primary shoppers are concerned about price increases generally, and that preparing meals at home remains one of the chief measures of saving money.

[Lead image courtesy of Thanos Pal/Unsplash]

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