Taking a slice of the action

In year hit by two pandemics – Covid-19 and the “global pork pandemic” – the smallgoods category has faired remarkably well.

Smallgoods was one of the top five growth categories in total supermarkets over the latest MAT, according to data provided by Don.

Pre-pack is driving the growth of the category, up $249.1 million in the latest year, which accounted for 84% of the value growth. The shift from deli to pre-packaged smallgoods has been driven by key factors like convenience, portion size, freshness and the ability to navigate and choose items via branding. Product information has also contributed to significant change to the overall category.

Don Head of Grocery Sales Greg Wooller says the biggest trends influencing the overall category performance over the past 12 months have been price inflation off the back of global pork pandemic driven by African swine flu (ASF) and the change in behaviour of people due to Covid-19.

“Clearly with Covid-19 forcing a change in people spending more time in-home (ie working from home, kids schooled from home) there was a huge increase in occasions in-home driven primarily by breakfast (bacon), lunch (ham, salami – fillers) and meals/entertaining (platters, diced bacon, kabana),” he says.

“Arguably smallgoods was perfectly positioned for Covid-19 and the switch to more occasions in-home whilst there was a decrease in the out of home occasions (ie foodservice).”

But this increase in demand was felt in the supply chain, which was already under pressure. ASF continued to disrupt global pork production and consumption which drove significant meat inflation through the marketplace.

“The volatility and speed of these changing circumstances in different states had a huge impact on the smallgoods manufacturing throughout the year,” Mr Wooller says.

Manufacturers and retailers continue to adapt to changing consumer needs. Mr Wooller says there was an over reliance on value in recent years to drive the category – hence the role of innovation and premiumisation became important to deliver growth. However, the past 12 months has seen a change in product mix, pack size and faster growth from retailer own brands that will make trade up and premiumisation more difficult to achieve in the short term.

“Longer term in order to drive the category growth we need to unlock more occasions and trade customers up with clearly differentiated offers,” Mr Wooller says.

Read the deli and smallgoods feature in the May issue of Retail World.