Center Store Ups and Downs

High prices and a return to more normalized eating and food preparation behaviors are taking their toll on center store sales.

Despite more meals still being prepared at home—82% in January 2022 versus an average of 77% during the past two years, according to IRI—food price increases have tempered lucrative pantry stocking behavior. Powdered milk, shortening/oil, dry fruit snacks, sports drinks, carbonated beverages, bakery aisle croissants, and salty snacks posted some of the highest price increases in the store for the 12 weeks ending Jan. 23, 2022, IRI reports.

If prices continue to rise, more than half of consumers say they would cut back on desserts and candy, prepared foods/deli items (47%), organic/premium items (46%), and soda/juices (45%), according to a February 2022 survey of grocery shoppers by market research firm Numerator. Nearly one-third (31%) would cut back on alcohol, 23% on sustainable or environmentally friendly items, 23% on meat, poultry, fish/seafood, and 18% on fresh produce.

Riding the Roller Coaster

In the center store baking aisle, IRI data show that dollar sales dropped from +16.1% in 2020 to -0.8% in 2021. Shelf-stable vegetable dollar sales fell from +17.7% to -15.1%, while sales in the shelf-stable breakfast aisle dipped from +10.0% to -9.9% in 2021.

Snacks, fresh bread/rolls, chocolate candy, cookies, and cold cereal remain the largest center store categories. Dried meat snacks posted unit sales gains of 11.3% for the year ended Feb. 20, 2022, according to IRI, followed by 8.8% unit sales gains for rice/popcorn cakes, 7.3% for other snacks, 5.9% for snack bars/granola bars, 5.5% for pies and cakes, 5.0% for pastry/doughnuts, and 4.8% for dry fruit snacks. Hit by double-digit unit sales losses for the same time period, meanwhile, were soup, shortening/oil, spaghetti sauce, pasta, canned seafood, dry packaged dinner mixes, sugar, baking mixes, flour, and syrup.

The small category of frozen cookies posted the only unit sales gains in the frozen aisle—13.2%, while refrigerated cheesecakes jumped 23.3% in unit sales for the year ended Feb. 20, 2022, IRI reports.

For center store beverages, the largest categories in dollar sales continue to be carbonated soft drinks, bottled water, regular coffee, shelf-stable bottled juices, and sports drinks. Canned juices, drink mixes, cocktail mixes, coffee filters, and powdered milk, however, suffered double-digit losses in unit sales for the year ended Feb. 20, 2022, according to IRI. The $2.1 billion plant-based milk category stayed essentially flat in unit sales at -1.4%.

Among the larger center store beverage categories, energy beverages and aseptic juices posted the largest unit sales gains, up 17.0% and 10.9%, respectively. Refrigerated tea/coffee products brewed up 9.7% in unit sales increases. Unit sales of shelf-stable drink concentrates jumped 26.8%, and liquid drink enhancers climbed 8.4% from their small base.

Convenience Reigns

The good news for center store is that convenience/meal solutions will continue to be a top priority. According to IRI’s October 2021 grocery shopper survey, 37% of dinners were prepared from scratch during the week, 30% were heat and eat, and 17% were prepackaged (no heating required). Unit sales of refrigerated (chilled) entrées jumped 14.1% for the year ended Feb. 20, 2022, with refrigerated side dishes up 12.6% and refrigerated lunches up 7.4%, IRI reports.

Dollar sales in the $11.9 billion frozen meal/entrée sector grew 5.2%. Seafood remained the second-largest frozen food category with dollar sales of $7.2 billion; frozen pizza sales were $5.9 billion.

Breakfast foods (up 8.5%) continue to lead dollar sales gains in the frozen aisle, followed by appetizers/snacks and desserts/toppings, which both rose 4.8%, and frozen novelties at 4.2%. Unit sales of pizza, processed/prepared frozen poultry, and frozen juices fell 10% or more, according to IRI.