Category Update: Many Departments See Record Sales

In October, many grocery categories saw strong sales growth, including key departments such as meat, produce, and deli, according to data from 210 Analytics and Circana. Overall, the average price per unit across all food and beverage categories increased by 2.2% compared to October 2023, with fresh food seeing a slightly higher increase of 2.8%, while center-store prices rose 2%. However, inflation accelerated in October compared to the previous quarter when prices increased by 1.8% across all foods and beverages.

Key Trends and Insights:

1. In-Store Purchases Dominate:
   • The majority of grocery purchases continue to happen in-store, with 64% of consumers indicating they purchase groceries exclusively in-store. Only 12% of consumers reported purchasing most or all groceries online, while 24% purchase a small portion online. This reinforces the continued dominance of brick-and-mortar shopping for groceries.
2. Red Meat Drives Meat Department Gains:
   • Red meat played a key role in driving sales in the meat department. Key contributors to growth were lamb (+11.5%), beef (+7.5%), and pork (+6.1%), which gained substantially in both pounds and dollars. In processed meats, items like bacon, hot dogs, and dinner sausage also contributed to an 8% increase in department dollar sales in October.
3. Deli Sales Growth:
   • Deli-prepared food sales reached $5.3 billion over the five weeks in October, with solid growth in both dollar and unit sales. Categories like prepared meats, combo meals, and pizza saw significant gains. However, deli meat sales lagged due to the Boar’s Head recall related to potential Listeria contamination. Despite this, deli-prepared foods remain a strong growth area amid high restaurant prices.
4. Fruit Sales Surge:
   • Fruit sales saw a notable increase, with a 6.9% rise in dollars and 4.9% in pounds. Berries, grapes, and avocados were the biggest contributors. While fresh and frozen fruit and vegetable dollar sales increased, shelf-stable vegetable sales declined.
5. Frozen Foods See Steady Growth:
   • Frozen food departments saw relatively flat pricing in October, with a 3.4% deflation in seafood prices. However, categories such as frozen processed meats (e.g., sausages and chicken nuggets) experienced a 7.9% unit gain compared to the previous year. Overall, frozen food saw modest dollar (+1.5%) and unit (+1%) growth.
6. Bakery Sales Stabilize:
   • Bakery sales remained subdued, though certain subcategories like donuts, croissants, and cookies saw growth. Prices in both the bakery and deli departments have stabilized recently. However, egg price volatility due to avian flu outbreaks could start affecting bakery prices in the future.
7. Seafood Sales Increase:
   • Seafood saw slight price increases in October, with finfish and shellfish seeing small price hikes. However, shrimp saw a deflationary price trend, boosting both fresh and frozen shrimp sales. Salmon sales are rebounding, but crab and lobster sales continue to struggle.
8. Plant-Based Meat Sales Decline:
   • Plant-based meat alternatives faced challenges, with sales for refrigerated and frozen plant-based meats falling by 4.8% year-over-year, generating $74.1 million in sales. Unit sales declined by 9.6%, reflecting the ongoing pressure in the plant-based category. After years of double-digit declines, both dollars and volume are showing signs of leveling off.

Conclusion:

October saw significant gains in multiple departments, particularly in meat, produce, and deli, while some categories like frozen food and seafood also showed steady growth. Plant-based meat alternatives, however, continue to face declines. The continued consumer focus on quality meat, fresh produce, and deli-prepared meals is shaping key trends in grocery sales, with in-store shopping remaining dominant. Retailers are expected to benefit from these shifting consumer preferences, particularly in the context of rising prices and ongoing inflation pressures.