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IBISWorld - 2019 Meat Markets in The US Industry Report
IBISWorld - 2019 Meat Markets in The US Industry Report
Industry Definition The Meat Markets industry comprises primarily retail fish and seafood are
butcher shops and delicatessens that covered in the Fish and Seafood Markets
primarily retail fresh, frozen and cured industry (IBISWorld report 44522).
meats and poultry products to Butcher shops and deli counters owned
households, other retailers and food by and operated in larger supermarkets
service companies. Establishments that are excluded from this industry.
Industry at a Glance
Meat Markets in 2019
Pounds (lb)
% change
0 210
205
-8
200
-16 195
Year 11 13 15 17 19 21 23 25 Year 11 13 15 17 19 21 23 25
Revenue Employment
SOURCE: WWW.IBISWORLD.COM
p. 25
Products and services segmentation (2019)
4.2%
Key External Drivers Frozen and packaged meats
Per capita meat 14.0%
consumption
Price of poultry meat
Pork
26.3%
Beef
Price of red meat
Per capita disposable
income 16.6%
Per capita seafood Other meats
consumption
19.9%
Other products
p. 5 19.0%
Poultry
SOURCE: WWW.IBISWORLD.COM
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 31
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 5
Industry Performance
Executive Summary | Key External Drivers | Current Performance
Industry Outlook | Life Cycle Stage
Executive Summary The Meat Markets industry retails a range, while also benefiting from cost
variety of fresh, frozen and cured meat savings associated with economies of
primarily to households, as well as other scale. This decline in revenue for the
downstream markets. In recent years, industry is primarily caused by a steep
competition from traditional and decline in the price of red meat at an
nontraditional retailers alike has annualized rate of 6.2% over the five
negatively impacted meat markets and years to 2019. Additionally, the price of
butcher shops. Moreover, the traditional poultry meat has declined during the
relationship dynamic between food same period. Players typically charge a
retailers, wholesalers and manufacturers premium for value added products to
has been shifting, making the food retail compete with big-box retailers, however
market more competitive overall. While declining input costs have helped
increasing health concerns and declining competition further reduce prices to
increase price competition. Industry
operators benefit from decreased input
O perators
encountered growing cost in that profitability increases. While
competition from supermarkets, grocery the price of red meat declines, industry
profitability is estimated to increase from
stores and big-box retailers 1.7% in 2014 to 2.4% in 2019.
Competition is expected to continue
input costs have hindered industry negatively impacting industry operators
performance, increased demand for meat over the five years to 2024. The price of
products, supported by rising per capita red meat is expected to continue
disposable income levels, has slowed the declining during the outlook period, in
decline in revenue. Over the five years to line with the declining price of poultry.
2019, industry revenue is expected to Per capita meat consumption is expected
decrease at an annualized rate of 0.8% to to grow only marginally, despite an
$6.8 billion, despite an expected 0.5% increase in disposable income over the
rise in 2019 alone. same period, indicating a shift in
Operators encountered growing consumer preferences away from meat.
competition from supermarkets, grocery Overall, industry revenue is expected to
stores and big-box retailers over the five continue declining. Industry revenue is
years to 2019. Each of these retail forecast to decrease an annualized 0.4%
channels provides an extensive product to $6.7 billion over the five years to 2024.
Key External Drivers Per capita meat consumption whereas a decrease in consumption
Per capita meat consumption will reduce sales. Per capita meat
represents the total carcass weight of consumption is expected to stagnate
red and white meat that the average in 2019.
American consumes in one year.
Health trends, consumer perceptions Price of poultry meat
and prices help determine per capita The price of poultry products, such as
meat consumption. Generally, per chicken, turkey and small game birds, is a
capita meat consumption most closely key driver of industry performance, with
reflects industry performance. An its significance growing in recent years.
increase in demand for overall meat When poultry prices are high, meat
products will increase industry sales, markets pass on the increased purchasing
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 6
Industry Performance
Key External Drivers costs to consumers in the form of higher Per capita disposable income
continued product prices. Even though the price of Meat markets and butcher shops typically
poultry meat is expected to increase in charge higher prices for their products
2019, it is projected to decrease during compared with competitive retail
the five-year period to 2019, representing channels. Higher disposable income
a potential threat to the industry. levels enable consumers to purchase
greater volumes or more-expensive cuts
Price of red meat of meat. Per capita disposable income is
Beef and pork products comprise the expected to rise in 2019.
largest share of industry revenue.
Therefore, prices of red meat strongly Per capita seafood consumption
drive operator’s revenue stream. In the Per capita seafood consumption represents
same way as poultry prices, higher prices the weight of seafood consumed by the
of red meat generally translate to average American in a single year. Seafood
increased industry revenue. Industry is increasingly viewed as an alternative
players will pass the cost to consumers, healthier source of protein than many meat
who typically purchase meat at a stable products. As the popularity of this
level regardless of prices. The price of red substitute grows, fewer consumers are
meat is expected to increase 2019, expected to purchase meat. Per capita
representing a potential opportunity for seafood consumption is expected to
the industry. decrease in 2019.
225 280
220
260
215
Pounds (lb)
Index
210 240
205
220
200
195 200
Year 11 13 15 17 19 21 23 25 Year 11 13 15 17 19 21 23 25
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 7
Industry Performance
% change
specially treated through different 0.00
processes, such as aging, drying, curing
and smoking. -1.25
Over the five years to 2019, industry
performance has been hurt by decreasing -2.50
input costs that reduce industry revenue Year 11 13 15 17 19 21 23 25
while improving the competitive edge of
low-cost retailers such as supermarkets. SOURCE: WWW.IBISWORLD.COM
Consumer demand Improving economic conditions over the storefronts emerging in large cities such as
past five years have led to higher disposable Chicago, New York City and Seattle.
income for the average American. Per capita Furthermore, with the growing popularity of
disposable income is expected to increase at ethnic food, more consumers are seeking
an annualized rate of 2.4% over the five uncommon cuts of meat, including oxtail,
years to 2019. This increase encourages lamb ribs and top blade steak, which are
consumers to purchase both larger often difficult to find in supercenters and
quantities and higher-quality goods across wholesale clubs.
all industries. Operators in the Meat Market The decline in industry revenue has been
industry are no exception. Consumers tend slowed by the relative stability of demand
to frequent butchers and delicatessens for for the industry’s products. Spurred by the
value-added products and knowledgeable increase in average income, per capita meat
service. When income is high, consumers consumption is expected to grow at an
will pay a premium for meat products from annualized rate of 1.4% over the five years
sources they trust, offering high-end goods to 2019. Per capita meat consumption most
and specialized knowledge. This has led to a closely mirrors industry performance, and
trend of gourmet butcher shops, with its growth in recent years is a key reason
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 8
Industry Performance
Consumer demand revenue has gradually increased. Demand comparatively unhealthy beef and pork
continued for meat consumption remains generally products, somewhat stifling growth. For
stable, as red meat and chicken are instance, per capita seafood consumption is
considered staples of the average American projected to increase at an annualized rate
diet. However, as health has become a of 1.5% during the period, which is faster
greater concern for consumers, many have than all other industry-relevant products
sought protein alternatives to the besides pork.
Competitive retail The industry has encountered increased meat markets and have increasingly forced
channels and prices competition from supermarkets and grocery operators to exit the industry. Consequently,
stores over the past five years. Additionally, industry enterprises are anticipated to
nontraditional retail industries, such as decrease at an annualized rate of 1.0% to
warehouse clubs and supercenters, are 8,166 enterprises over the five years to 2019.
fighting for consumer dollars. By leveraging economies of scale,
Furthermore, the evolution of big-box these external competitors have placed
retailers such as Costco Wholesale downward pressure on the market retail
Corporation and Walmart Inc., which are in prices of meat and poultry. This,
the Warehouse Clubs and Supercenters combined with a trend of lowering input
industry (IBISWorld report 45291), has also prices over the past five years, has
provided a new avenue for consumers to limited potential revenue growth for
purchase meat and poultry. Due to the scale operators. Industry revenue tends to
of their operations, big-box retailers can benefit from higher input prices because
offer lower prices and appeal to families operators can easily pass the high costs
seeking the convenience and bulk quantities to its customers via higher end good
centralized food retailers provide. prices. Unfortunately for industry
Additionally, specialty butcher shops have operators, the prices of red meat and
also experienced growing competition from poultry have both declined, falling at
new retailers, such as Whole Foods Market annualized rates of 6.2% and 1.2%
Inc., that offer a range of all-natural and respectively, over the five years to 2019,
organic products. These businesses have somewhat offsetting the positive trends
siphoned revenue away from traditional in meat consumption and income levels.
Industry Performance
Profitability measured as earnings before interest and industry operators, they have been forced
continued taxes, is estimated to account for 2.5% of to offer higher payments for skilled
revenue in 2019, representing a slight workers. Wages are expected to increase
increase from 1.7% in 2014. at an annualized rate of 2.4% to total $1.0
Additionally, rising wage costs further billion over the five years to 2019. Overall,
limited margin growth. As specialized wages’ share of industry revenue has
labor has become more advantageous to increased to an estimated 15.4% in 2019.
Industry Performance
Downstream demand over the five years to 2024, and poultry plan and pass on costs to consumers.
competition and prices are expected to fall an annualized Profit, measured as earnings before
prices continued 1.9% during the same period. The relative interest and taxes, is expected to increase
stability of red meat prices should enable slightly from 2.4% in 2019 to 2.5% of
industry players to more successfully revenue in 2024.
Opportunities and To increase revenue over the next five and Caribbean populations, while chicken
threats years, industry participants will likely hearts, gizzards and other offal are popular
rely on new marketing strategies to among Hispanic and Latino consumers.
compete with the convenience and According to the United States
product range offered at large Department of Agriculture, demand for
supermarkets and grocery store chains. organic products is increasing rapidly.
While the products sold at butcher shops This includes demand for organic meat,
are typical of a higher quality than which will benefit industry players
products sold at larger retail stores, they offering high quality meat. While demand
are also more expensive. Therefore, for premium meat products may help
retailers will need to target consumers industry operators, it also represents the
with higher incomes and an interest in growing significance of health to
quality food. The quality of meat consumer preference. Since consumers
products will be an increasingly now prefer healthy foods, customers are
important marketing tool moving expected to continue turning to
forward. Industry establishments may also alternative protein sources such as
benefit from providing consumers with seafood and tofu. Specialty grocery
niche products that are used in popular stores, such as Whole Foods, will
ethnic cuisines. Mutton and lamb are continue to capture market share from
popular among growing Arabic, African the much smaller meat market operators.
Industry Performance
Life Cycle Stage Industry value added is largely
in line with GDP growth
Enterprise and establishment numbers are
declining indicative of industry consolidation
Industry products have reached a
level of market saturation
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 12
Industry Performance
Industry Life Cycle The Meat Markets industry is in the competition will continue to incentivize
mature stage of its life cycle. IBISWorld meat markets to close or merge
estimates that the industry’s contribution operations to maintain profitability in the
Thisindustry to the overall economy, as measured by future. Overall the number of enterprises
is M
ature industry value added (IVA) is expected to is projected to decrease at an annualized
increase at an annualized rate of 1.4% rate of 0.9% over the 10 years to 2024.
over the 10 years to 2024. Comparatively, Although there is some innovation in
US GDP is forecast to grow at an meat products, most often in the form of
annualized rate of 2.1% during the same prepared or pre-marinated meats, these
period. IVA growth is below GDP growth goods have not expanded the industry’s
indicative of an industry in the mature market reach. Furthermore, industry
phase of its life cycle. This is further goods have reached a point of saturation,
supported since the industry is and the product range is largely the same
characterized by stable product offerings across establishments. Some growth has
and slowly declining number of come from the introduction of new niche
companies during the same period. market goods and advances in cutting
In recent years, the number of industry and storage techniques, but even this is
operators has declined as operators have unlikely to spur the industry into a new
attempted to consolidate as a means of growth cycle. Product stability and
competing with larger grocery retailers market saturation of staple goods
and other external competition. Greater indicate a mature industry.
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 13
16.6%
Other meats
19.9%
Other products
19.0%
Total $6.8bn Poultry
SOURCE: WWW.IBISWORLD.COM
In addition to the major products sold in been stable and remained the second-
establishments in the Meat Markets most consumed meat per capita in the
industry, many operators also provide US, while pork has experienced an uptick
value-added services. Value-added in consumption thanks in part to an
activities may include smoking, glazing, increase in supply. Industry operators
custom cutting and stuffing. By and large, such as butchers have traditionally
people visit meat markets for specific cuts specialized in the preparation of red
and specialty items that are unavailable meats, using this expertise by offering a
via other retail channels. variety of cuts to appeal to consumers
across a range of income levels and taste
Beef and pork preferences. In turn, consumers have
Beef and pork make up the largest consistently viewed industry operators
industry product segment, representing as trustworthy sources of quality red-
an estimated 26.3% and 14.0% of meat products as well as advice.
industry revenue respectively. Despite Together, beef and pork are expected to
recent health concerns associated with account for 40.3% of total industry
red-meat products, demand for beef has revenue in 2019.
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 14
Demand While this tends to boost revenue, it may health-conscious, seeking products that
Determinants at times cause consumers to purchase provide health benefits or mitigate risks.
smaller quantities of goods from meat This shift in consumer taste has hindered
continued
markets, purchase less-expensive industry demand as recent studies have
products or turn to competitive retail linked the consumption of red meat to a
channels for lower prices. However, meat higher risk of developing Alzheimer’s,
consumption generally remains stable diabetes, heart disease and a host of other
despite fluctuations of price. health complications. Consequently,
substitute sources of protein such as
Disposable income and seafood and tofu have experienced
downstream demand accelerating demand while demand for red
Households and individual consumers are meat and poultry has remained relatively
far and away the largest market for stable. Furthermore, fears of potential
industry operators. Income is a driving outbreaks of mad cow disease or bird flu
force for meat and poultry consumption can also steer consumers away from
influencing the quantity and quality of industry products. Fortunately, meat and
meats purchased. As disposable income poultry’s place as a staple of the average
rises, customers have stronger purchasing American diet has mitigated some of these
power giving them the ability to purchase concerns. Additionally, consumers tend to
a larger amount of meat, as well as more perceive products purchased from meat
value-added and premium meat products. markets to be healthier and fresher than
This increased income also helps shift those purchased from large grocery stores
consumers to industry operators as and retailers.
opposed to external competitors. Higher
disposable income also encourages Seasonality
consumers to eat out more, increasing Demand for meat and poultry tends to
demand from food service operators for increase in the spring and summer seasons
meat-market products. and decreases in the winter. The warm
weather during these times of the year
Health concerns provide the ideal environment for backyard
Nutrition and health also play a large role barbeques in the US, including several
in driving industry demand. In recent “grilling holidays” such as Memorial Day,
years, customers have grown increasingly the Fourth of July and Labor Day.
Major Markets Households and individual consumers more consumers in total fall into the
Most meat markets are local butchers lower brackets and purchase a higher
and storefronts that primarily serve the percentage of industry products overall.
needs of individual consumers and Consumers’ share of industry revenue
households. Consequently, consumers has declined slightly in recent years, as
represent the largest market segment for industry sales to retailers and food
the Meat Markets industry by far, services have grown in significance.
accounting for a combined 84.3% of
industry revenue. Consumers in higher Retailers and wholesalers
income brackets tend to purchase Other meat retailers (4.0%) and
higher-quality meat products as well as wholesalers (4.7%) combine to account
prepared, value-added products that for an anticipated 8.7% of industry
butcher shops specialize in. However, revenue in 2019. These companies may
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 16
22.1%
Households and individual consumers
earning more than $100,000 62.2%
Households and individual
consumers earning less than $100,000
purchase bulk quantities of meat and other contract feeding entities also
poultry from industry operators for future purchase meat and poultry from industry
resale. Generally, despite having already operators. Meat markets have
passed through wholesale distribution particularly benefited from the
channels, retailers and wholesalers may emergence of farm-to-table, organic and
nevertheless purchase these goods after all-natural restaurants, particularly in
industry operators have made value adding urban areas. Demand has consistently
modifications. Operators in this market been increasing since 2014, as consumers
segmentation include specialty stores such have been dining out more frequently,
as all-natural grocery stores and ethnic thanks to rising disposable income.
food stores. Demand from specialty food Restaurants will become an increasingly
stores has increased in recent years important market for this industry as
considering consumer trends that have more consumers demand locally sourced
boosted this retail channel’s popularity. meat when dining out. This segment
Furthermore, the growing immigrant represents an estimated 5.2% of industry
population has boosted demand from revenue in 2019.
ethnic food stores, while health concerns
have benefited all-natural and organic Other
grocery stores, increasing this segment’s Industry operators also sell goods to
share of industry revenue in recent years. farmers, government entities and businesses
that use industry products as inputs. This
Restaurants and food services market segment however is nearly negligible
Chain restaurants, single-location and is anticipated to only account for 1.8%
restaurants, hotels, food services and of industry revenue in 2019.
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 17
International Trade Operators in this industry do not engage in At the manufacturing level,
international trade due to the service-based meat and poultry exports typically
and localized nature of meat markets. outweigh imports by a sizeable
However, operator’s upstream suppliers margin. For further discussion of red
including the Beef Cattle Production and white meat trade, refer to the
industry (IBISWorld report 11211) engage in Meat, Beef and Poultry Processing
significant international trade. industry (31161).
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 18
West
AK
0.1 New
England
ME
Great Mid- 0.4
Lakes Atlantic 1 2
NY 3
WA MT ND 13.4
5 4
1.8 0.5 MN
Rocky
0.5 3.2
WI
OR Mountains SD
0.7
Plains 2.4 MI
4.1
PA
6.4
6
7
1.1 ID IA OH 9 8
0.5 WY 4.0
0.3
NE
0.9
IL IN WV VA
3.5 1.9 0.9
West NV
1.0 0.2
KY
UT MO
0.6 NC
0.4
0.5 CO KS 1.7 2.0
1.4 1.0 TN
SC
Southeast
1.0
CA 0.9
10.9
OK AR GA
0.9 0.7 AL 2.5
AZ MS 0.8
1.6 NM
0.5 Southwest 0.6
TX LA
1.7 FL
8.1 4.3
HI Less than 3%
0.3 Additional States (as marked on map) 3% to less than 10%
1 VT 2 NH 3 MA 4 RI 10% to less than 20%
0.2 0.4 1.9 0.6 20% or more
5 CT 6 NJ 7 DE 8 MD 9 DC
0.9 4.4 0.3 1.3 0.2
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 19
%
adhere to this process with most 10
establishments concentrated in the
Mid-Atlantic, Southeast, and Great
Lakes regions. 0
The Meat Markets industry is the most
West
Great Lakes
Mid-Atlantic
New England
Plains
Rocky Mountains
Southeast
Southwest
concentrated in the Mid-Atlantic region,
which accounts for 25.9% of
establishments but only 15.2% of the
population. New York holds the most Establishments
industry establishments, accounting for Population
13.4% of establishments. A large and SOURCE: WWW.IBISWORLD.COM
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks
Basis of Competition | Barriers to Entry | Industry Globalization
Market Share The Meat Markets industry exhibits a the strength of small companies is
Concentration low level of market share concentration. common for industries with low market
Most of the industry is highly share concentration. In recent years,
fragmented with most operators being franchising has gained popularity
Level
small, independent and privately-owned among industry players, with many
Concentration in enterprises with only one storefront. owner-operated stores opening
this industry is L ow Nonemployers, operators who employ franchises to expand their geographic
four or less people, are estimated to reach and increase economies of scale
account for nearly 40.0% of to lower overall operating costs. In the
establishments in recent years. The two future, the franchising trend should
largest industry players are anticipated help raise overall industry
to account for 10.6% of the available concentration but should most likely
market. This level of fragmentation and remain at low levels overall.
Key Success Factors Being part of a franchising chain Furthermore, the perishable nature of
Franchising cuts initial costs for operators industry products requires relatively
and streamlines business development. quick sales.
IBISWorld identifies
250 Key Success Attractive product presentation Marketing of differentiated products
Factors for a Attractive promotions and displays catch Product differentiation may include
business. The most the attention of customers leading to offering ethnic varieties and smoking,
increased sales and boosting revenue. stuffing and custom-cutting meats. Such
important for this
value-added activities and products help
industry are: Experienced work force owners stay competitive and gain
Consumers are more likely to frequent a customer loyalty.
store with a reputation for having
experienced and knowledgeable staff. Having a good reputation
A majority of meat markets are
Controlling stock independent, one-store operations that
Retailers must maintain adequate stock rely on a history of good service and
levels and ensure top-selling meat word-of-mouth marketing to attain and
products are available on demand. retain customers.
Cost Structure The costs of a Meat Markets industry higher wage, utility, rent and other
Benchmarks operator can vary depending on the size, costs, which are offset by their larger
location, types of products sold and sales volumes.
number of employees specific to the
business. For instance, specialty meat Wages
markets that only sell organic meat Wages are consistently the second-largest
products and other exotic cuts incur cost for operators in the Meat Markets
higher purchase costs when compared industry due to the labor-intensive
with an average butcher shop. nature of operations. In 2019, IBISWorld
Additionally, wage costs are less expects wages to account for 15.4% of
significant for nonemployer operations. industry revenue in 2019, an increase
Larger operations will usually incur from 13.1% in 2014. Labor tasks include
WWW.IBISWORLD.COM Meat Markets in the US December 2019 21
Competitive Landscape
Cost Structure butchering meat, preparing a variety of flow through the supply chain to raise or
Benchmarks meat products, taking and filling lower prices during the year. The decline
customer orders, organizing displays and in purchases as a percent of revenue can
continued
operating registers. The rise in wage costs be attributed to the decrease in prices of
can be attributed to the high employment red meat and poultry during the period.
dependency within this industry, given In 2019, purchases are expected to
the amount of manual labor required to account for 68.3% of revenue in the Meat
execute certain cuts of meat and engage Markets industry.
in consumer-facing activities. Operators
have also placed a premium on hiring Profit
more knowledgeable and skilled Industry profit, calculated as earnings
employees to more appropriately assist before interest and taxes, is expected to
customers and prepare products. As a account for an estimated 2.4% of an
result, wages have risen. average operator’s revenue in 2019,
representing a slight increase from 1.7%
Purchases in 2014. During the period input prices,
Purchases consistently account for most such as the price of red meat, have
of the average operators’ revenue. This decreased during the period, helping to
cost category consists of frozen, raw and reduce costs and increase margins. The
cured meat and poultry purchased from stability of meat demand has resulted
farmers and wholesalers for resale to in stable volumes of products being
consumers. Weather-related effects and sold at lower prices thus hurting
animal disease outbreaks can potentially industry profit.
Average Costs of
all Industries in Industry Costs
sector (2019) (2019)
100
3.4 2.4 n Profit
8.9 15.4
n Wages
n Purchases
80 n Depreciation
n Marketing
n Rent & Utilities
n Other
Percentage of revenue
60
73.0
68.3
40
20
0.9 1.6 1.5 1.3
4.1 4.6
8.1 6.5
0
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Meat Markets in the US December 2019 22
Competitive Landscape
Basis of Competition The Meat Markets industry is subject to sourced and butchered with care. In recent
internal and external competition. years, the growth of the all-natural and
Level & Trend Operators compete with other meat organic food trends has spurred demand for
retailers within the industry. Externally, organic and locally sourced meat markets.
ompetition
C in this meat markets compete with larger Furthermore, providing a multitude of
industry is H
ighand supermarkets and grocery stores and value-added, ready-to-cook products
the trend is S teady other retail channels with meat counters. enables store owners to target customers
Competition is likely to remain high as who value convenience, which is a growing
the allure of one-stop shopping attracts concern of the consumer segments. Location
customers to supermarkets and grocery is a key factor in attracting the time-poor
stores and away from more-traditional consumer. Finally, while the quality and
and smaller meat markets. variety of products is important, having a
good reputation and excellent customer
Internal competition service is particularly important for one-
Meat markets compete with one another store operators. Consumers turn to
based on price, the range of products knowledgeable store owners and butchers
stocked, the range of services provided, for advice on how to best treat meat.
quality of goods, product knowledge and
location. Consumers purchase meat and External competition
poultry from industry operators due to the The entrance of nontraditional retailers
freshness of goods and the variety of meat such as Walmart Inc., Costco Wholesale
products offered. Customers are willing to Corporation and Target Corporation into
pay a premium for goods that are soundly the food sector has hurt industry sales in
WWW.IBISWORLD.COM Meat Markets in the US December 2019 23
Competitive Landscape
Basis of Competition recent years. The larger scale of these poultry and seafood products.
continued players’ operations enables them to Furthermore, grocery stores offer a larger
purchase in bulk from wholesalers at much variety of grocery products appealing to
lower prices than small meat markets and customers looking to purchase all their
pass on the cost savings to customers in the goods from a single store. Online retailers,
form of lower prices. Meat markets also such as Fresh Direct and Amazon Fresh,
encounter competition from supermarkets have also become a threat to meat markets,
and grocery stores. Large supermarkets as consumers can easily purchase food
stock a variety of frozen and fresh meat, from home.
Competitive Landscape
Industry The Meat Markets industry exhibits a enterprises that service a limited
Globalization very low level of globalization. Due to the geographic area within the United States.
local nature of operations, international Even industry leader Omaha Steaks
Level & Trend trade does not exist in this industry. All International Inc. limits its online sales
establishments are US based, only and shipping to customers in the United
lobalization
G in this operating domestically. Most industry States, Canada, Puerto Rico and the US
industry is L owand operators are small, owner-operated Virgin Islands.
the trend is S teady
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 25
Major Companies
Omaha Steaks International Inc. | Other Companies
Major Players
(Market Share)
91.8%
Other
Player Performance Originally founded in 1917 as Table Meat sources of protein. Additionally, other
Supply Co., Omaha Steaks International factors that have sustained growth
Inc. (Omaha Steaks) emerged in 1966 to include incentive programs for repeat
Omaha Steaks sell premium meats and gourmet food customers, various sales promotions and
International Inc. products to a broader market. Since its joint affiliations with other food retailers.
Market Share: 8.2% inception as a food service provider, The company implements various
Omaha Steaks has grown to operate two marketing strategies to lure consumers,
manufacturing plants, a distribution center including catalogs and direct mail,
and a freezer warehouse. The company business-to-business gifts and its
sells 400 premium products through more company website.
than 80 brick-and-mortar retail stores in
the United States and globally through Financial performance
online, mail order and telemarketing Financial information on Omaha Steaks is
channels. Omaha Steaks is a privately held limited because it is a privately-owned
family business and employs more than company. However, IBISWorld forecasts
2,000 full-time workers. that the company’s revenue will reach
Historically, demand for meat $555.8 million in 2019, capturing 8.2% of
products has fueled the company’s industry revenue. Furthermore, over the
expansion and growth. However, the five years to 2019, Omaha Steaks’ revenue
company recently rebranded its seafood is expected to increase at an annualized
product line to World Port Seafood to rate of 3.1% as a result of increased sales
appeal to consumers seeking alternatives of traditional product lines and new goods
*Estimates
SOURCE: IBISWORLD
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 26
Major Companies
Player Performance offered. The company typically earns control of every stage of the production
continued healthy profit margins, as it owns supply and distribution processes is expected to
chain links from meat processing to help the company maintain an estimated
distribution and sales. Omaha Steaks’ profit margin of 2.4% in 2019.
Other Company The Honey Baked Ham Company (Honey $125,000 in liquid assets. For a multi-
Performance Baked Ham) was established in Detroit in franchise operation, the same
1957. The company sells dry, cured, requirements apply, multiplied by the
hickory-smoked, spiral-sliced and number of franchised stores. Currently,
Honey Baked Ham honey- and spice-glazed hams and turkey the company operates over 201 stores
Company breasts, as well as side dishes, such as and sells its products online. Over the five
Market Share: 2.4% soups, salads and desserts, through its years to 2019, IBISWorld estimates
franchises. To purchase a single Honey Honey Baked Ham’s revenue to decrease
Baked Ham franchise, the potential at an annualized rate of 2.3% to $162.9
franchisee must have a net worth of at million in 2019, capturing 2.4% of
least $300,000 with a minimum of industry revenue.
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 27
Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility
Regulation & Policy | Industry Assistance
Operating Conditions
Capital Intensity Due to the perishability of meat, computer scanning technology that has
continued industry capital costs are still important simplified labor tasks and minimized
to performance. Climate-control systems human errors made when processing
are particularly integral to everyday purchases. The enhanced efficiencies
tasks, requiring operators to invest have produced lowering costs. Over the
capital in cooling and refrigerating next five years, increased investment in
equipment. Over the past 20 years, meat point-of-sale systems and home
markets have undergone considerable equipment is expected to increase this
change with the implementation of industry’s capital expenditures.
Technology and The Meat Markets industry relies on Technological advances have promoted
Systems commercial meat and food processing online retail in recent years. Omaha
equipment, such as smokehouse Steaks International Inc., and Honey
Level controllers, sausage stuffers and Baked Ham Company (the two largest
autoclaves, to produce meat products. players in the industry) operate
The level
of Other industry technology includes sophisticated websites for online
technology change computerized point-of-sale (POS) systems purchases of meat products.
is M
edium that control and record merchandising, Furthermore, the onset of mobile
distribution, sales and stock markdowns. application technology has prompted
POS systems include computerized Omaha Steaks to develop an app
registers and credit card systems. In available in the google play store and
addition, the introduction of electronic Apple app store. The app contains
data interchange (EDI) has improved recipes, cooking timers, photos and
distribution, particularly for those more. Likewise, large competitors are
operations that engage in e-commerce. A active on social media platforms
popular form of EDI includes barcode including Twitter, Facebook and
scanning. Barcode scanning offers the Foursquare. Social media enables meat
advantages of higher labor productivity, markets to promote special products,
speedy data transfers, greater control over offer discounts and learn about their
the distribution process, and reduced consumers’ preferences to adjust their
errors in the supply chain. product lines accordingly.
Revenue Volatility The Meat Markets industry experienced red meat prices and competition from
low revenue volatility over the five years other retail channels. Heightened
to 2019. Since meat and meat products competition from meat counters at
Level
are staples of the average American diet, supermarkets and natural food stores can
The level of demand remains stable despite some pressure meat markets to charge lower
volatility is L ow price fluctuations. Generally, prices and, consequently, hamper
consumption patterns are largely revenue growth. Furthermore, industry
unaltered by price changes, unless a steep performance can be tied to the popularity
increase occurs. However, when prices do of substitute products, such as seafood,
rise, consumers may purchase smaller which has risen in popularity due to its
volumes of industry products, or eat meat associated health benefits.
less frequently. Overall, the industry’s Finally, outbreaks of mad cow disease
output depends on economic conditions, or bird flu can steer consumers away
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 29
Operating Conditions
Revenue Volatility from meat markets. For example, former prompt recalls. For example, in October
continued industry player Hallmark/Westland Meat 2014, Sam Kane Beef Processors, located
Packing Company recalled 143.0 million in Texas, recalled over 60,000 pounds of
pounds of beef prior to the period beef due to reports that consumers found
significantly affecting industry revenue shards of metal within the meat. These
and contributing to the company’s relatively isolated cases have the
eventual exit from the industry. Other capability of decreasing demand across
issues regarding meat quality can also the entirety of the industry.
Regulation and Policy Meat markets have a moderate level of industry (IBISWorld report 11211), are
regulation. Regulations relevant to the Meat more susceptible to more extensive
Markets industry largely stem from regulations and licensing requirements.
Level & Trend individual states, as each has specific rules
he level of
T imposed on operators. State laws primarily Nutrition labeling
Regulation is ensure consumers are not disadvantaged The US Food Safety and Inspection
Mediumand the with unfair meat pricing. Federal laws make Service’s rules regarding nutrition
sure operators comply with the labeling for meat products went into
trend is S
teady
implementation of fair practices in effect on January 1, 2012. Under these
employment and product handling. For regulations, nutrition information must
example, food retailers must adhere to the be applied to most individual packages of
Federal Food, Drug and Cosmetic Act USDA-defined “major cuts” or on signage
regarding the receipt, storage and sale of near relevant product displays. Failure to
meat products. More recently, product do so could incur negative publicity
labeling has become a topic of importance as surrounding allegations of mislabeling as
consumer preferences have shifted. Meat well as punishment and fines. Meat is
markets must also adhere to sanitation also given grades for differing criteria.
requirements for cold and dry products. Beef carcasses are graded on quality and
While the industry experiences a yield, accounting for tenderness, flavor
moderate level of regulation, its upstream and available useable lean meat on the
suppliers including Beef Cattle Production carcass. Meanwhile, poultry is graded
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 30
Operating Conditions
Regulation and Policy from A to C with grade A being the only higher purchasing costs. Also, meat
continued acceptable rating for retail level. markets may encounter pressure from
However, the suppliers from which meat consumers who become familiar with
markets source their products incur higher nutrition labeling at other retail outlets.
production costs in complying with the The growing frequency of such labels may
regulations. Higher upstream costs could encourage similar labeling from otherwise
be passed onto meat markets in the form of exempt stores to remain competitive.
Industry Assistance Although the Meat Markets industry does feeder grain. However, lower input costs
not receive direct assistance, regulations on for cattle and swine ranchers enable them
upstream supply channels may indirectly to charge lower prices to their
Level & Trend benefit meat markets. Since retail operators downstream markets, which ultimately
he level of
T purchase goods from importers and benefits industry profitability and
Industry Assistance wholesalers after tariffs have been applied, operator competitiveness.
is L owand the fluctuations in the tariff rate alter not only
where goods are sourced from but Country of origin labeling
trend is S teady
purchase price as well. Furthermore, a As part of the 2008 Farm Bill, mandatory
decline in the tariff rate will reduce Country of Origin Labeling (COOL) for
purchase costs, which can be passed onto red meat products went into effect in
consumers in the form of lower retail 2009. As the name of the bill implies the
prices. This enables the retailer to charge law aims to provide consumers with the
competitive prices against both internal national origin of food products. In May
and external competitors. 2015 the World Treaty Organization
Additionally, while the Meat Markets (WTO) upheld complaints from Canada
industry does not receive direct and Mexico that COOL provides an unfair
government subsidies, the industry’s advantage for US products and goes
upstream markets receive substantial against WTO regulations. The rule also
direct and indirect subsidies from the US prohibited combining muscle cut meats
government. According to the Cato from different countries. Most recently,
Institute, most of the subsidies that cattle in February 2016, the US repealed COOL
ranchers receive are indirect as they are requirements for muscle cuts and
in the form of artificially subsidized grounded beef and pork.
WWW.IBISWORLD.COM Meat Markets in the US December 2019 31
Key Statistics
Industry Data Industry Establish- Per capita meat
Revenue Value Added ments Enterprises Employment Wages Domestic consumption
($m) ($m) () () () Exports Imports ($m) Demand (lb)
2011 6,761.3 1,323.9 9,130 8,644 43,623 -- -- 979.1 N/A 253.7
2012 6,851.7 1,156.6 8,925 8,577 37,479 -- -- 834.6 N/A 251.2
2013 6,975.5 1,269.9 9,516 9,063 41,252 -- -- 921.1 N/A 252.8
2014 7,081.6 1,133.6 9,042 8,600 41,784 -- -- 928.2 N/A 250.1
2015 7,035.8 1,359.4 8,920 8,494 42,761 -- -- 986.5 N/A 261.5
2016 7,025.2 1,454.4 8,798 8,388 46,321 -- -- 1,068.0 N/A 265.8
2017 6,906.0 1,331.7 8,702 8,301 45,833 -- -- 1,055.4 N/A 269.9
2018 6,765.9 1,306.6 8,583 8,192 45,223 -- -- 1,039.9 N/A 267.5
2019 6,802.1 1,312.2 8,559 8,166 45,414 -- -- 1,044.5 N/A 267.7
2020 6,755.8 1,306.8 8,508 8,116 45,434 -- -- 1,043.5 N/A 268.2
2021 6,733.7 1,303.8 8,417 8,025 45,378 -- -- 1,041.8 N/A 268.7
2022 6,726.1 1,306.5 8,361 7,970 45,399 -- -- 1,041.9 N/A 268.7
2023 6,708.2 1,308.5 8,306 7,916 45,349 -- -- 1,040.4 N/A 268.8
2024 6,680.8 1,303.3 8,252 7,862 45,151 -- -- 1,036.0 N/A 268.9
2025 6,645.0 1,297.0 8,197 7,809 44,927 -- -- 1,030.7 N/A 268.9
Sector Rank 54/63 55/63 54/63 48/63 54/63 N/A N/A 55/63 N/A N/A
Economy Rank 575/694 608/694 335/694 311/694 463/694 N/A N/A 562/694 N/A N/A
Figures are in inflation-adjusted 2019 dollars. Rank refers to 2019 data. SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Meat Markets in the US December 2019 32
Liquidity Ratios
Current Ratio 1.1 1.6 2.0 2.6 3.4 n/a n/a
Quick Ratio 0.5 0.8 1.2 0.8 1.3 n/a n/a
Sales / Receivables (Trade Receivables
Turnover) n/c 551.6 186.0 112.9 n/c n/a n/a
Days’ Receivables 0.4 0.7 2.0 3.2 0.4 n/a n/a
Cost of Sales / Inventory (Inventory Turnover) 24.1 29.7 16.8 17.2 31.7 n/a n/a
Days’ Inventory 15.1 12.3 21.7 21.2 11.5 n/a n/a
Cost of Sales / Payables (Payables Turnover) 41.3 40.2 39.7 39.7 95.0 n/a n/a
Days’ Payables 8.8 9.1 9.2 9.2 3.8 n/a n/a
Sales / Working Capital 86.3 35.3 23.3 20.2 24.0 n/a n/a
Coverage Ratios
Earnings Before Interest & Taxes (EBIT) /
Interest 2.7 6.5 7.4 11.3 5.3 n/a n/a
Net Profit + Dep., Depletion, Amort. / Current
Maturities LT Debt n/a n/a n/a n/a n/a n/a n/a
Leverage Ratios
Fixed Assets / Net Worth 2.0 1.4 1.0 0.6 0.5 n/a n/a
Debt / Net Worth 3.9 2.4 2.1 1.4 1.2 n/a n/a
Tangible Net Worth 2.2 15.9 23.3 30.2 26.5 n/a n/a
Operating Ratios
Profit before Taxes / Net Worth, % 15.4 35.8 48.1 24.2 33.0 n/a n/a
Profit before Taxes / Total Assets, % 6.9 12.0 10.7 9.7 9.7 n/a n/a
Sales / Net Fixed Assets 18.3 19.1 15.8 19.6 24.8 n/a n/a
Sales / Total Assets (Asset Turnover) 4.9 5.2 4.6 4.5 5.6 n/a n/a
Assets, %
Cash & Equivalents 16.3 18.2 23.1 20.6 25.3 n/a n/a
Trade Receivables (net) 6.2 10.5 8.3 9.2 6.4 n/a n/a
Inventory 20.1 22.7 17.1 20.9 18.2 n/a n/a
All Other Current Assets 1.9 0.9 2.4 4.8 4.7 n/a n/a
Total Current Assets 44.5 52.4 51.0 55.5 54.5 n/a n/a
Fixed Assets (net) 34.0 32.1 29.8 28.3 31.9 n/a n/a
Intangibles (net) 14.1 9.7 11.2 7.5 4.6 n/a n/a
All Other Non-Current Assets 7.4 5.9 8.0 8.7 8.9 n/a n/a
Total Assets 100.0 100.0 100.0 100.0 100.0 n/a n/a
Total Assets ($m) 553.5 656.4 1,072.5 922.9 15.2 29.7 878.0
Liabilities, %
Notes Payable-Short Term 14.4 14.3 6.6 8.3 8.0 n/a n/a
Current Maturities L/T/D 2.5 3.6 3.6 2.6 3.1 n/a n/a
Trade Payables 16.7 13.1 12.5 8.8 6.6 n/a n/a
Income Taxes Payable 0.1 0.1 0.2 0.1 0.1 n/a n/a
All Other Current Liabilities 12.5 9.3 9.4 12.2 14.3 n/a n/a
Total Current Liabilities 46.3 40.4 32.3 32.0 32.2 n/a n/a
Long Term Debt 18.0 19.4 23.5 22.0 28.2 n/a n/a
Deferred Taxes n/a n/a 0.1 0.1 n/a n/a n/a
All Other Non-Current Liabilities 19.5 14.7 9.6 8.3 8.6 n/a n/a
Net Worth 16.3 25.6 34.5 37.7 31.1 n/a n/a
Total Liabilities & Net Worth ($m) 553.5 656.4 1,072.5 922.9 15.2 29.7 878.0
Source: RMA Annual Statement Studies, rmahq.org. RMA data for all industries is derived directly from more
than 260,000 statements of member financial institutions’ borrowers and prospects.
Note: For a full description of the ratios refer to the Key Statistics chapter online.
WWW.IBISWORLD.COM Meat Markets in the USDecember 2019 33
Industry Jargon BROILERA young chicken that is bred and raised for POINT-OF-SALEThe location where a transaction
commercial slaughter. occurs at a retail establishment or store.
ELECTRONIC DATA INTERCHANGE (EDI)The
transmission of data between businesses from one
computer system to another.
IBISWorld Glossary BARRIERS TO ENTRYHigh barriers to entry mean that INDUSTRY REVENUEThe total sales of industry goods
new companies struggle to enter an industry, while low and services (exclusive of excise and sales tax); subsidies on
barriers mean it is easy for new companies to enter an production; all other operating income from outside the
industry. firm (such as commission income, repair and service
CAPITAL INTENSITYCompares the amount of money income, and rent, leasing and hiring income); and capital
spent on capital (plant, machinery and equipment) with work done by rental or lease. Receipts from interest
that spent on labor. IBISWorld uses the ratio of royalties, dividends and the sale of fixed tangible assets are
depreciation to wages as a proxy for capital intensity. High excluded.
capital intensity is more than $0.333 of capital to $1 of INDUSTRY VALUE ADDED (IVA)The market value of
labor; medium is $0.125 to $0.333 of capital to $1 of labor; goods and services produced by the industry minus the
low is less than $0.125 of capital for every $1 of labor. cost of goods and services used in production. IVA is also
CONSTANT PRICESThe dollar figures in the Key Statistics described as the industry’s contribution to GDP, or profit
table, including forecasts, are adjusted for inflation using plus wages and depreciation.
the current year (i.e. year published) as the base year. This INTERNATIONAL TRADEThe level of international trade
removes the impact of changes in the purchasing power of is determined by ratios of exports to revenue and imports
the dollar, leaving only the “real” growth or decline in to domestic demand. For exports/revenue: low is less than
industry metrics. The inflation adjustments in IBISWorld’s 5%, medium is 5% to 20%, and high is more than 20%.
reports are made using the US Bureau of Economic Imports/domestic demand: low is less than 5%, medium is
Analysis’ implicit GDP price deflator. 5% to 35%, and high is more than 35%.
DOMESTIC DEMANDSpending on industry goods and LIFE CYCLEAll industries go through periods of growth,
services within the United States, regardless of their maturity and decline. IBISWorld determines an industry’s
country of origin. It is derived by adding imports to industry life cycle by considering its growth rate (measured by IVA)
revenue, and then subtracting exports. compared with GDP; the growth rate of the number of
EMPLOYMENTThe number of permanent, part-time, establishments; the amount of change the industry’s
temporary and seasonal employees, working proprietors, products are undergoing; the rate of technological change;
partners, managers and executives within the industry. and the level of customer acceptance of industry products
and services.
ENTERPRISEA division that is separately managed and
keeps management accounts. Each enterprise consists of NONEMPLOYING ESTABLISHMENTBusinesses with no
one or more establishments that are under common paid employment or payroll, also known as nonemployers.
ownership or control. These are mostly set up by self-employed individuals.
ESTABLISHMENTThe smallest type of accounting unit PROFITIBISWorld uses earnings before interest and tax
within an enterprise, an establishment is a single physical (EBIT) as an indicator of a company’s profitability. It is
location where business is conducted or where services or calculated as revenue minus expenses, excluding interest
industrial operations are performed. Multiple and tax.
establishments under common control make up an VOLATILITYThe level of volatility is determined by
enterprise. averaging the absolute change in revenue in each of the
EXPORTSTotal value of industry goods and services sold past five years. Volatility levels: very high is more than
by US companies to customers abroad. ±20%; high volatility is ±10% to ±20%; moderate volatility
is ±3% to ±10%; and low volatility is less than ±3%.
IMPORTSTotal value of industry goods and services
brought in from foreign countries to be sold in the United WAGESThe gross total wages and salaries of all
States. employees in the industry. The cost of benefits is also
included in this figure.
INDUSTRY CONCENTRATIONAn indicator of the
dominance of the top four players in an industry.
Concentration is considered high if the top players account
for more than 70% of industry revenue. Medium is 40% to
70% of industry revenue. Low is less than 40%.
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