Red meat October 2010

Issues in the market Two in five meat eaters have switched to alternatives like poultry to save money, while nearly half limit how often they eat red meat. This responsiveness to price has seen red meat come under pressure in recent times. Estimated value growth of 21% over the 2005-10 period saw the market reach £3.5 billion. However, volume growth over the same period stood at an estimated 5%, the market reaching 630,000 tonnes in 2010. Growth of 16% to £4.1 billion is forecast for the red meat market over 2010-15. However, this will continue to be driven by rising value, with volume growth forecast at a modest 4%, reflecting the mature market. Key themes What are the key factors in consumers’ choice of red meat? How has the red meat market performed in the recession? How have different demographic groups moderated their red meat consumption? © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Price inflation has put pressure on meat Cost pressures fuelled rapid retail price inflation in red meat in 2008 and 2009. While contributing to value growth, it also encouraged switching to cheaper sources of protein, dampening volume growth. Within the market this saw cheaper cuts (eg beef mince, pork belly) and pork, as more affordable than beef and lamb, win popularity. Media coverage continues to affect the market. The boost from cooking shows and the ‘Jamie effect’ on pork appear to have had greater impact than coverage linking red meat to health and climate scares. More than half the nation say they “really enjoy” cooking, particularly women, 25-34- year-olds and ABs, benefiting also red meat. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Growth of ABs and over-55s brings opportunities and challenges Half of meat eaters have cut back on red meat recently because it is expensive, while only 4% see price as unimportant. Given this key role of consumer incomes and price, the slow spending growth expected in 2011 bodes well for red meat. While consumers are expected to loosen their purse strings slightly, they are likely to still look for good value for money. Expected growth in the number of over-55s and ABs poses both opportunities and challenges for red meat over 2010-15. Both groups show relatively little interest in price, but both are inclined to limit their intake of red meat for health reasons. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Strengths & Weaknesses All but one in 20 consumers eat red meat, making it an established menu staple. Quality is the top choice factor for red meat, signalling a focus on value for money not just price. Three in four meat eaters enjoy eating red meat, supporting selling points other than price. More than two in three meat eaters see red meat as part of a balanced diet. Only 11% of meat eaters have cut back on red meat because of its impact on the environment. Around half of meat eaters have cut back on frequency of eating red meat due to seeing it as expensive. Price and promotions come second and third as choice factors, signalling ongoing pressure on the market. The dominance of own-label leaves the market reliant on retailers and industry bodies for marketing support. Red meat remains under competitive pressure from poultry, supported by its image as cheap and versatile. Around half of meat eaters prefer familiar recipes for red meat, likely to dampen usage frequency. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Branded activity and less familiar cuts spice up NPD Private label continues to dominate red meat NPD, the nature of the product tending to limit the potential for product differentiation and brands. In a rare example of branded activity, Jamie Oliver’s new range of pork cuts launched in autumn 2010. Various grocers have introduced less familiar cuts such as rolled lamb shoulder in recent times to provide cheaper alternatives in the category. Various seasonings are a long-standing feature of the ready-to-cook segment, with potential to remind consumers of the versatility of red meat, Some lightly seasoned cuts are now appearing, positioned together with the unseasoned ones, a potentially more accessible alternative to RTCs. The absence of additives and preservatives and environmentally friendly packaging are the top claims, in line with the broader food market. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Red meat forecast to reach £4.1 billion in 2015 UK retail value sales of red meat, and index of growth, 2005-15 Source: Mintel Estimated growth of 21% over the 2005-10 period saw the red meat market reach £3.5 billion, volume growth standing at a modest 5%. The long-term growth in red meat has been modest, as expected in a mature market. Demand was negatively affected by the pressure on consumer incomes in the recession and high inflation in 2008-09. Growth of 16% to £4.1 billion is forecast for the red meat market over 2010-15. However, this will continue to be largely driven by rising value, with 4% growth forecast in volume terms. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Beef dominates the red meat market Growth of 21% in sales of beef to £1.9 billion over 2005-10 was fuelled largely by rising prices. Volume sales grew by just 3% over the period, under pressure from price inflation since 2007. Pork sales rose by 26% over 2005-10 to reach £919 million, on the back of volume growth of 11%. The lower price points and slower price inflation compared to other red meat helped pork gain share. Lamb has suffered from its expensive image in the recession, exacerbated by rapid price inflation. Volume sales declined by 4% over 2005-10, while value sales of lamb stood at £659 million, up 11%. Recent years have seen offal regain some ground following a long-term decline in consumption since the 1970s. The segment was estimated to stand at £57 million in 2010, still holding a niche position in the market. Across the three main segments, mince has tended to win share from other cuts as the better value option in the recession. Meanwhile roasting joints of beef and lamb have been hit as higher-ticket items, and expensive in comparison to alternatives like chicken. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Nine in ten adults eat red meat Frequency of eating red meat at home, July 2010 Base: 1,000 Internet users aged 16+ Source: Toluna/Mintel While pork has gained popularity in the recession, it still lags behind beef. Demand for lamb is dampened by its relatively high price points. Offal has fallen off the menu for many households as eating habits have changed. Veal meanwhile continues to affected by its image as unethical, harking back some 20 years. Men are more likely to eat red meat than women, and to eat it more frequently. The tendency to eat meat rises with age, particularly for offal. Veal is the exception, being most popular among under-35s. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Supermarkets dominate red meat Frequency of purchasing red meat at various outlets in the last six months, July 2010 Base: 940 internet users aged 16+ who have eaten meat at home As a key meal component, red meat is convenient to purchase as part of the weekly shop. Unsurprisingly, the top four grocery chains are also the top choices for red meat purchases. Butchers’ shops remain popular. Improving their accessibility and value image could help strengthen their appeal. While a sizable minority shop at farm shops and farmers’ markets, most of these are infrequent users. The online channel faces challenges as a distribution channel for food, but it has potential to help butchers and farms connect directly with shoppers. * eg Aldi, Lidl, Netto ** incl. Somerfield *** eg Spar, Londis, Costcutter Source: Toluna/Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Quality is top choice factor in red meat Factors influencing choice of red meat, July 2010 Base: 918 internet users aged 16+ who have purchased red meat in the last six months Quality followed by price is the top choice factors across most age, income and socio-economic groups. For Es this relationship is reversed. This indicates value for money, not low prices as the focus for shoppers. The absence of visible fat ranks third, ahead of promotions among 16-34s and 35-44s, ABs and Ds. The opposite holds true for other groups. This suggests demand for leaner meats at a small premium among these groups. The youngest and oldest age groups stand out for having a long best before date and the British origin of meat as their fourth most important choice factor, respectively. Source: Toluna/Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Three in four enjoy red meat Attitudes to red meat bought to eat at home, July 2010 Base: 956 internet users aged 16+ who have eaten/have purchased red meat in the last six months Signaling the strong position of red meat as a menu staple and an indulgence, most adults who eat red meat enjoy it but also see it as part of a balanced diet. The role of recessionary pressure is highlighted by the large minority who limit how often they eat red meat, or have switched to e.g. poultry to save money. The recession has not been all bad news for the sector, nearly one in three meat-eaters now cooking more with red meat. Health rather than green reasons are the likely factor fuelling cutting back on meat, underlining value growth as key for future growth. Source: Toluna/Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Most meat-eaters claim to be confident cooks Attitudes to preparing red meat, July 2010 Base: 956 internet users aged 16+ who have eaten/ purchased red meat in the last six months Most meat eaters say they are confident cooks, though the high tendency to follow familiar recipes suggests some limits to this. The reliance on familiar recipes may lead to red meat being seen as less versatile and hamper higher usage. Under-35s, students and singles are the least likely to feel confident as cooks, and among the most likely to use ready-to- cook dishes. The interest in marinades and sauces could suggest potential for quick meal solutions in these areas, and bringing versatility into the category. Source: Toluna/Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Provenance is key for one in five meat eaters Target groups, July 2010 Base: 918 internet users aged 16+ who have purchased red meat in the last six months One in three meat-eaters come across as largely driven by price in their meat choices, likely to continue to show an interest in better-value alternatives like ‘forgotten’ cuts. Apathy towards food and meat is the defining feature of one in five meat-eating adults, convenience likely to be one of the few qualities of interest for them. Just over one in four meat-eaters stand out as driven by healthiness and particularly weight management in their food choices, likely to react to such selling points also in meat. An interest in the provenance of meat marks out around one in five meat eaters, likely to respond to marketing based around the quality and origins of meat. Source: Toluna/Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Kiti Soininen Your contact Senior Food Analyst mintel.com fax: +44 20 7606 5932 email: ksoininen@mintel.com mintel.com