Five Secrets You Didn't Know About Meat

Hillshire Brands CEO Reveals Mysteries of Meat Innovation at Analyst Conference

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It has not been a good few months for meat.

Europe is dealing with a horsemeat scandal, and U.S. consumers last summer were bombarded with news that the heat wave and drought might drive up meat prices. But the reports of meat's demise have been greatly exaggerated. An overwhelming majority of Americans remain meat eaters. (Recent reports suggest meat prices are actually falling.)

And companies are still bullish on the category as they unleash a wave of innovations covering products such as hot dogs, lunch meat and breakfast sausage.

One such marketer is Hillshire Brands, the U.S. meat-focused company formed last year when Sara Lee Corp. split in two. Newly liberated from Sara Lee's international coffee and tea business, Hillshire is introducing a host of new products in the coming months. They include Aidells chicken meatballs flavored with habanero and green chile; Hillshire Farm Tuscan Style Herb Turkey Breast and Smoky Bourbon Seasoned Ham; premium Hillshire Black Label deli meats; Ball Park Lean Beef franks; and Jimmy Dean Meat Lover's breakfast sandwich, which includes two sausage patties, egg and cheese.

What is driving all this innovation? Hillshire Brands CEO Sean Connolly gave his take on some key meat trends to Wall Street analysts and reporters at this week's Consumer Analyst Group of New York meeting in Florida. Below is a snapshot. (Warning to vegans: This might be a good time to look away.)

1. We still crave meat, but not as the star

"The number of eating occasions containing meat per capita have been increasing. What's happening is consumers are eating meat differently," Mr. Connolly said. "They are not eating meat in bulk. Instead of sitting down and having just a steak, they are eating food with steak in it. So some consumers are moderating their meat consumption, but the key is they are hardwired to crave meat."

Of course, Mr. Connolly, being CEO of a meat company, has a bit of a bias. So Ad Age ran his assertion by food expert Harry Balzer of the NPD Group, who essentially agreed. "This country has continued to eat meat" at roughly the same pace for a quarter-century, with some 98% of us consuming meat at least once in a two-week period, he said. But the share of dinner meals featuring an animal protein at the "center of the plate" has dropped to 28% from 34%. Instead, consumers are putting meat in salads, pasta or sandwiches, he said. Hillshire wants to make meat the "hero ingredient," which might explain new products like Jimmy Dean's Breakfast Bowl, which includes eggs, potatoes, sausage, cheddar cheese and bacon.

2. We still love our meat brands

When it comes to smoked sausage, hot dogs and cocktail links, consumers want recognizable brands rather than generic offerings. Store brands, or so-called private-label products, account for less than 10% share in each of those categories, while mainstream lunch meat has only 14% private-label penetration, according to Hillshire. That compares with the 18% private-label average for the entire food and beverage industry.

3. But for premium meats, we want exclusive brands

There has been a lot of talk lately about the "barbell economy," in which the middle-class segment is shrinking, with more consumers looking for either cheap value brands or expensive premium offerings. Mr. Connolly dismissed the theory as "overstated," saying, "I think the bulk of the value out there is in the mainstream brands." Still, he conceded that some sophisticated consumers tend to look for "emerging brands as opposed to well-established brands." That is why the marketer in 2011 acquired Aidells Sausage, a San Francisco-based premium-meats business, rather than trying to extend one of its existing brands into the space. And now Hillshire is growing Aidells with offerings such as a smoked chicken sausage with apple with gouda, touted as being "all-natural" with "no antibiotics."

4. We want meat transparency

Consumers want a good look at their packaged lunch meat -- before they take it home. This is why Hillshire is rolling out new packaging featuring a large transparent window so that buyers can peek at their turkey or ham before tossing it in the cart. Consumers said, "Let us see the quality of the meat," Mr. Connolly said. "You're known for craftsmanship. You're known for quality. But you have an opaque package. We can't see it."

5. We want meat for breakfast, but fast

Wither the bowl of cereal? Not quite yet, perhaps, but Hillshire Brands says there is a resurgence in demand for meat-based breakfast sandwiches as consumers look for lower-carb protein in the morning. The marketer watched in recent years as quick-service restaurants set the tone with an array of morning meat offerings. Its response: an expanded selection of Jimmy Dean snack-size sandwiches -- including varieties such as chicken biscuit -- that can be heated in the microwave in 60 seconds or less.

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