The dairy product market has slightly increased in units due to the growth of cottage cheese, while deli items have gradually decreased in both units and dollars from month to month. However, there have been gains from prepared products like pizza, according to Anne-Marie Roerink, the president of 210 Analytics, during an International Dairy Webinar by the Deli Bakery Association, as cited by DairyReporter.

"Purchases happened much further out from the holiday. It had to do with a lot of the stockouts that we faced in '21 and '22, which pushed a lot of the more important items for these types of holidays into the weeks prior. What we saw in '23, a lot of those purchases are happening again in the holiday week."

This year, egg prices led to the increase in dollars in the dairy product category for the year, and Thanksgiving shopping propelled units slightly higher in November, Roerink said.

Dairy sales totaled $72.4 billion, up 5.3% in dollars and down 1.4% in units, according to IRI MULO data for the 52 weeks ending on November 26, 2023. In November, dairy sales reached $6 billion, down 5.1% in dollars and up 0.1% in units, as egg prices began to stabilize.

"Dairy is the category where we had so much egg inflation, and it's still really impacting the 52-week look. That's why those prices are still high. But if you just look at November or the third quarter, for example, when egg prices started to stabilize and deflation in the category drives a lot of the dollar performance right now for dairy with eggs being one of those big, big sellers."

Desserts in a dilemma

Desserts, alternative dairy cheeses, and processed cheese experienced the largest decline in units, decreasing by 10.5%, 7.8%, and 3.6%, respectively, for the 52 weeks ending on November 26, 2023. Similarly, in November, desserts and alternative dairy cheeses were among the steepest declines (9.5% and 8.6%), while cheese snacks decreased by 10.8%.

In terms of growth, natural cheese, toppings, and cottage cheese units increased by 1%, 2.1%, and 7.7%, respectively, for the 52 weeks ending on November 26, 2023. In November, cottage cheese unit growth accelerated by 14%, topping units increased by 4.9%, yogurt by 2%, and natural cheese by 0.7%.

Cottage cheese has "been on a roll," and retailers looking to capitalize on the trend can use promotions and other activities to showcase the product to consumers, Roerink noted.

Hybrid foods propelling the deli section

In the deli department, prepared items surpass the rest of the segment as the overall category experiences some softness in November.

Deli department sales amounted to $46.1 billion, up 4% in dollars and down 1.4% in units for the 52 weeks ending on November 26, 2023, according to IRI MULO data. In November, deli sales rose to $3.5 billion, recording a 0.5% decrease in dollars and a 0.8% decline in units month-over-month.

Deli meat, including grab-and-go, pre-sliced, and service options, sold for $8.3 billion, up 0.4% in dollars and down 5.6% in pounds. In November, deli meat experienced steeper declines, with sales reaching $599 million, down 4.1% in dollars.

Similarly, deli entertaining items have been soft in recent months. In November, deli entertaining sold $386 million, down 1.7% in dollars and 2.2% in units.

Despite the overall declines in the deli section, deli prepared foods managed to grow in both dollars and units. Deli prepared foods sales reached $24.9 billion, up 5.9% in dollars and 0.6% in units for the 52 weeks ending on November 26, 2023. For November, deli prepared product sales were $1.9 billion, up 0.9% in dollars and 0.5% in units.

Pizza segment grows, grows...

Pizza units increased by 10.1%, prepared meals by 2.9%, toppings by 2.6%, and appetizers by 1.7% for the 52 weeks ending on November 26, 2023, according to IRI MULO data. For November, prepared meals increased by 6.2% in units, pizza by 3.2%, toppings by 3.2%, and appetizers by 1.5%.

"For years, grocery stores have struggled to get those deli prepared items to really be a restaurant replacement, which seems to be finally happening. I think the assortment is getting to the point where consumers are starting to think of it as a restaurant replacement, and certainly, the prevalence of hybrid meals where they cook some items themselves and then introduce some items that are either hot and eaten or ready to eat from the deli seems to be where a lot of meal preparation is growing."