Destination Deli

Mix-and-match meal preparation, changing employment patterns, and a surge in at-home entertaining are among the factors creating deli department sales opportunities.

Consumers in nine out of 10 U.S. households buy deli prepared foods. Two-thirds of consumers buy deli salads, about half purchase prepared meats, and one-third buy entrées or side dishes in the deli department, according to data from market research firm Circana (formerly IRI and NPD Group) and the International Dairy Deli Bakery Association (IDDBA).

Here’s a closer look at three trends driving deli sales:

Meal Prep Simplified

One-quarter of shoppers are buying more prepared foods versus a year ago, according to FMI, The Food Industry Association. That’s especially true for men, city dwellers, employees with hybrid office/work-from-home schedules, and households with kids, per FMI.

Dollar sales of prepared foods topped $24 billion for the year ended April 2, 2023, Circana reports, up 10.1% over the prior year. Pizza, prepared meats, soups/chili, entrées, and sandwiches enjoyed double-digit dollar sales growth.

The number of consumers who purchase deli prepared foods for lunch more than once a week grew from 13% to 21% in the past year, and the number who opt for deli fare for breakfast increased from 11% to 17%, according to a report from FMI. With one-third of prepared food users buying on impulse most of the time, daily specials, suggestions for tomorrow’s lunch, and portable on-the-go items can add incremental sales.

Lunchtime Solutions

As of February 2023, 52% of employees worked exclusively away from home, 22% exclusively at home, and 25% had a hybrid work schedule, per FMI. Changing workplace patterns likely contributed to the fact that, according to Circana, 38% of employees carried their lunch more often this year versus the prior year.

Sales of prepared deli sandwiches grew 9.8% to $3.3 billion for the year ended April 2, per Circana. Consumers in one-third of U.S. households buy prepared deli sandwiches, IDDBA reports.

For the year ended April 2, deli meat generated $8.3 billion in sales, Circana reports. At $4.9 billion, service deli meat sales remain the largest segment of this category, although unit sales in this area decreased. Dollar sales of grab-and-go deli meat increased by 18%.

Boar’s Head is now the largest deli brand in terms of dollar sales in U.S. multi-outlet grocery channels for the year ended April 2, according to Circana. A supplier of premium meats and cheeses, Boar’s Head has introduced Bold Peppenero Garlic Ham, which mixes the flavors of Asia and Mexico and Bold BourbonRidge Uncured Smoked Ham, which features a flavor note of Kentucky bourbon.

Grab-and-go was the bright spot in the $8 billion deli cheese segment, with sales up 10.6% for the year ended April 2, per Circana. Specialty cheese sales reached $5.1 billion, up 5.6%. 

Easy Entertaining

When at-home entertaining occasions arise, the deli department is a shopping destination for consumers in three-quarters of U.S. households; 72% shop for specialty cheese, 64% shop for dips/sauces, 35% look for spreads, and 17% seek deli trays, IDDBA reports. More than one-third (35%) of consumers say they expect to entertain more this year, according to a survey by the International Housewares Association.

Sales of products for entertaining reached $4.9 billion for the year ended April 2, up 6.1% versus a year earlier, per Circana. For deli holiday meals for entertaining, unit sales shot up by 15.9% for the same time period.

Given the popularity of charcuterie boards among home entertainers, products like Noel Alimentaria’s Tapas de España, which features an assortment of meat and cheese, have good market potential. New dessert options include sweet dessert products like The Cannoli Factory’s Cannoli Chips & Dip.

Empty Bowl Queso made with Hatch green chile peppers popular in New Mexico brings a taste of the Southwest to the menu. Mediterranean Beet Dip from Haig’s Delicacies is among the trendy new vegetable dip options. Haig’s also offers Zucchini Fritters with Tzatziki, another nod to the popularity of Mediterranean fare.