Throughout the World, Convenience Stores Are a Rapidly Growing Venue for U.S. Red Meat
Source: U.S. Meat Export Federation (USMEF)
Sep 3, 2019
The desire for work-life balance and pre-packaged meals requiring little or no kitchen time is leading consumers around the world to a surprising new destination for breakfast, lunch and dinner: the neighborhood convenience store.
And we're not just talking about beef jerky and pepperoni sticks.
Convenience stores are offering a wide selection of entree and full meal options that are winning over customers and creating more demand for U.S. red meat. For every gourmet hot dog sold in a South Korean GS25 store, every bowl of beef noodle soup ladled from a 7-Eleven hot food counter in Taiwan and every pork sausage sandwich pulled from a shelf in a Mexican Oxxo outlet comes another trade opportunity for the U.S. beef and pork industries.
Working to stay a step ahead of the competition for this rapidly growing sector, The U.S. Meat Export Federation (USMEF) uses funding from the USDA Market Access Program (MAP), the Beef Checkoff Program and the National Pork Board to promote U.S. beef and pork — especially processed beef and pork items, but also raw material for further processing — as the centerpiece of convenience store fare in several international markets.
"Just as important as promoting existing products, we are developing brand new ideas for packaged meals and protein snack items featuring U.S. beef and pork that fit well with consumer trends in each individual market," said USMEF President and CEO Dan Halstrom. "USMEF recognizes the scope of this opportunity and the enormous demand that is driving it. As the convenience store sector has taken off in various parts of the world, suppliers realize they need products to help meet the demand for these meat snacks and packaged meals. The trend is toward high-quality meat, and that is definitely an advantage for U.S. beef and pork."
Halstrom said USMEF staff around the world report encouraging developments in this sector, including the fact that convenience stores in many Asian markets not only offer high-quality food but allocate considerable shelf space to beef and pork items such as pre-packaged lunch boxes and beef bowls.
Solid data supports USMEF's pursuit of a larger share of the bustling global convenience store market.
According to a 2019 report by Euromonitor, which tracks retail sales and maintains a category dedicated specifically to convenience stores, per capita spending on foodservice products at convenience stores increased 14% worldwide between 2013 and 2018 and is projected to increase another 11% by 2023. South Korea has led the way, experiencing a whopping 142% increase in per capita convenience store foodservice spending from 2013 to 2018 with another 47% increase projected by 2023.
Japan, Taiwan, the ASEAN region and Mexico are other fast-growing markets identified by Euromonitor, while a USDA report suggests China's convenience store chains, which have historically focused on lower-priced processed foods, are beginning to expand premium and imported food offerings. This trend is likely to continue as younger Chinese consumers shift away from traditional retail outlets.
These numbers lend further perspective to the Euromonitor data: In 2018, the average American spent $44.50 on foodservice items at a convenience store, which ranks fourth globally. Japanese consumers ranked first with an average of $240.80, followed by Taiwan at $80.70 and Norway at $72. The average Korean spent only $39.70 last year — good for fifth place on the list. But projected growth puts Korean spending at $58.40 by 2023. If these projections hold true, Korea would move ahead of the U.S., which is expected to reach $54.60 by 2023.
Even in less-developed markets, spending is on an impressive trajectory. In Thailand, for example, the average consumer forked over $28.80 on convenience store foodservice items in 2018 (good for No. 6 on Euromonitor's list), but the amount is projected to exceed $50 within the next five years.
"Obviously there is tremendous potential for U.S. beef and pork in the convenience store sector, but competition is intense, so we must focus our efforts on identifying ways to highlight the advantages of U.S. products," said Halstrom. "The quality and consistency that U.S. beef and pork deliver in processed products are really what set us apart. USMEF staff on the ground in these markets are doing a great job of conveying this message to distributors and their clientele, and this puts more U.S. beef and pork at the center of the world's convenience store offerings."
Following is a glimpse of some of the markets where the convenience store trend is strongest, along with USMEF's promotional efforts in these destinations:
Though it is by far the leader in per capita spending on foodservice products at convenience stores, Japan still has room for growth. Euromonitor indicates spending increased 16 percent between 2013 and 2018, and is expected to rise another 7 percent by 2023.
A pioneer of sorts in the pre-packed, ready-to-eat meal game, Japan's convenience stores often resemble a supermarket/restaurant combination. There are more than 20,000 7-Eleven stores in Japan, competing with major chains Lawson and Family Mart.
Both beef and pork are well-utilized in Japan's convenience store offerings, which range from bento boxes, to beef bowls, to sandwiches to noodle dishes.
USMEF has long promoted the use of U.S. beef and pork to importers that supply Japan's convenience stores and this experience has helped the U.S. red meat industry improve efficiency when supplying specific cuts and processed products.
Takemichi Yamashoji, USMEF director in Japan, said spreading the word about U.S. beef and pork's presence in convenience stores has been made easier with social media. USMEF often partners with chains to distribute promotional messages through social media platforms. Food bloggers, who have great credibility with consumers, play a significant role in showcasing U.S. beef and pork items sold at convenience stores.
In Mexico, demand has increased for convenience foods and prepared meals due to population shifts toward urban centers and more women entering the workforce.
According to Euromonitor, per capita spending on convenience store food items rose 24% between 2013 and 2018, to $8.90, and is expected to expand another 12% over the next five years. Euromonitor also reported that the packaged food market in Mexico is expected to reach $53.5 billion by 2022. High-growth categories in this forecast include processed meat and seafood snacks and "ready" meals — pre-packaged sandwiches, entrees and side items.
Oxxo is the largest convenience store chain in Mexico with more than 17,000 locations throughout the country, and USMEF is working behind the scenes with companies that supply Oxxo stores. For example, USMEF has conducted educational seminars and trainings to the processing companies that supply hams and sausages for sandwiches sold by Oxxo, as well as by Mexico's 7-Eleven convenience stores. The trainings emphasize the quality and consistency of U.S. pork and beef and introduce distributors to new product options.
"One of the hottest trends in convenience stores across Mexico is the emergence of uniform sandwiches and meal items," said Gerardo Rodriguez, USMEF marketing director in Mexico, Central America and the Dominican Republic. "Until recently, if you bought a sandwich at a convenience store here, you really had no idea what you were going to get. That is no exaggeration. But the consistency of U.S. ham, for example, has made sandwiches more reliable. That may not sound like a big thing in the U.S., but in Mexico it has made a huge difference that the consumer definitely notices. For them, consistency is the key. It doesn't matter when or where you buy the product, it must be exactly the same."
Along with promoting the consistency and quality of U.S. products currently offered in Mexico's stores, USMEF is also working to develop new products. Rodriguez said USMEF is focusing on consumers who use convenience stores as a foodservice option for lunch. There are very few options for healthy items, he noted, so developing salads that include a side item of U.S. pork or beef will fill a large void in the convenience sector.
There were only about 10,000 convenience stores in South Korea in 2007, but that number tripled over the next decade. Recent growth has been even more aggressive.
"With lifestyle changes among Koreans coupled with a growing number of single households, convenience store expansion accelerated rapidly and by the end of 2018 there were more than 40,000 stores in the country," said Jihae Yang, USMEF director in Korea.
Korea's home meal replacement (HMR) market more than doubled between 2011 and 2018 and the meal kits — a supermarket and wholesale chain store item now offered by convenience stores — continue to gain popularity.
"Continuous lifestyle changes for Koreans have created great demand for convenience foods," said Yang. "The popularity of meal kits is driving demand for meat products, so USMEF has been working hard to demonstrate how U.S. pork and beef work well as centerpieces of these kits. Koreans are looking for quick meals that require no preparation, and we are coming up with new ideas and new products to meet this demand."
A recent example of this strategy was USMEF's launch and promotion of a ready-to-eat corn dog at convenience stores across Korea.
"In the past, items like corn dogs were sold in the refrigerated food section of convenience stores, and customers would have to microwave them at the stores before eating them," said Yang. "But we worked with stores to introduce more items that are cooked and served hot, so consumers could come in, pick out an item and eat it with no preparation."
Another development is the protein snack boom among Korean millennials.
"Convenience stores in Korea have aggressively touted snacks made with sausage and processed meat ingredients," said Yang. "Protein snacks are mostly dominated by pork, often manufactured from mixed pork ingredients from U.S. and the EU, as well as domestic pork. But USMEF has launched premium brands of U.S. processed pork products that have been very well-received by consumers who are looking for something that really stands out among numerous sausage items."
Beef is in the mix, too. USMEF teamed with Korea's second-largest convenience store chain and a U.S. red meat supplier to launch a cube steak promotion aimed at Korean consumers who pick up their lunches at convenience stores. The "Cube Steak Lunch Box" is offered at GS25 convenience stores, a chain with 12,500 locations in Korea. It is perfect for students and workers looking for healthy meal options for their hectic lives.
"The healthy lunchbox is a great way to conveniently and inexpensively put high-quality protein in the diets of people who don't have time to prepare their own lunches," Yang said. "It creates yet another avenue to increase Koreans' consumption of U.S. beef."
Recent data showed there are nearly 11,000 convenience stores in Taiwan, or one for every 2,222 people. This is the second-highest density worldwide, according to Taiwan's Ministry of Economic Affairs. Taiwan trailed only South Korea (one store for every 1,452 people) and was ahead of Japan (one store for every 2,248).
Besides 7-Eleven (5,281 outlets as of mid-2018) and Family Mart, the other major convenience store chains in Taiwan are Hi-Life and O.K. Mart.
Taiwan's 7-Eleven stores have been labeled as "food heaven" by the country's consumers.
"You can pick up a ready-to-go meal, something like pork chop rice or beef noodle soup, or grab something from the refrigerated case and heat it up in the in-store microwaves," said Alex Sun, USMEF marketing manager in Taiwan. "Consumers in Taiwan are looking for quick meal solutions but want something fresh. So convenience stores have stepped up their selection of these offerings, along with popular protein snacks including beef sticks of many different flavors and spices, beef jerky and other items made with processed meats."
USMEF-Taiwan has strategically promoted U.S. beef and pork by partnering with the convenience store chains.
"If a chain is going to launch a campaign to sell a specific product that contains red meat, we make sure that we show them how the quality of U.S. product improves the item's appeal," Sun explained. "USMEF also helps chains make their customers aware of this fact, which really expands our reach."
A recent USDA GAIN Report described China's convenience store sector as 100,000 strong and "one of the most rapidly developing retail models in China, with sales of more than $28 billion in 2017." Meiyijia, Family Mart, 7-Eleven and Lawson are the top chains, with locations spread across the country.
While the sector has traditionally focused on lower-priced processed foods, several chains are increasing their premium and imported food offerings.
In its 2019 report, Euromonitor showed per capita spending on convenience store foodservice items in China increased 50% between 2013 and 2018 and projected a 67% increase by 2023.
Ming Liang, USMEF marketing director in China, said consumers in many regions of China still buy meat and other foods at traditional markets. In more urban settings, modern supermarkets and butcher shops are more prevalent.
However, retail trends are changing with a new generation.
According to statistics from Family Mart, younger Chinese consumers are a major force in the convenience store market, with those born in the 1980s and 1990s accounting for 88.4% of total customers. Statistics from 7-Eleven indicate that consumers aged 20 to 40 make up 88% of its customer base.
Both companies report that most of their customers in China are office workers.
"Younger people are more concerned about time and less inclined to go through a long process when shopping for food," said Liang. "We've seen this happen in other Asian cultures such as Japan and Korea, where people want quick and easy meals instead of spending time going to the market. Chinese consumers are looking for these same options."
USMEF's strategy is increase awareness of U.S. beef and pork and help a new generation of Chinese consumers develop a taste for U.S. products as they expand their shopping options.
"Convenience stores satisfy an important demand from young working parents who often face lengthy commutes and do not have much time to cook at home," said Liang. "Parking and traffic have led customers to cut back on the time they spend shopping in markets, and we believe convenience stores in China will become an important outlet for U.S. red meat."
Once concentrated only in urban areas, convenience stores are becoming more and more popular in South America, especially in Colombia and Peru. South American convenience store chains have been reluctant to offer ready-to-eat meals, but Jessica Julca, USMEF representative in South America, said the Mexican chain Oxxo is expanding rapidly in the region, creating potential for future partnerships.
Meanwhile, USMEF has been working on strategies for other players in the convenience store sector.
"In Peru, we approached Tambo, which has 300 convenience stores, to introduce a 'Power Breakfast' campaign that includes a U.S. beef liver sandwich or liver empanada," explained Julca. "We were planning a big launch of that campaign during the second quarter of this year, but the company that owns the chain went through some changes. So we are now in a holding pattern, but still hoping to promote U.S. beef liver items as a convenience food soon."
Consumer demand for convenience has not skipped Southeast Asia, where there are roughly 73,000 convenience stores across the region. According to Nielsen's recent report "What's Next for Southeast Asia?" convenience stores are increasing by 10% year-on-year. In addition, the number of mini-market stores in the region, which currently stands at 50,000, is growing by nearly 5% annually.
Euromonitor reported that per capita spending on foodservice products in convenience stores rose 87% in Malaysia between 2013 and 2018 and is projected to increase another 139 percent over the next five years. The Philippines saw a 93 percent jump the past five years and is expected to achieve another 81% growth by 2023.
Convenience stores in the region have moved from providing impulse products such as snacks, beverages and tobacco, to competing against quick-service restaurants by expanding their range of ready-to-eat food items.
Sabrina Yin, USMEF director in the region, said consumers — especially busy young professionals — are seeking food sources that are close to home and easy to access, boosting the number of convenience stores and mini-markets.
"Every country has its own needs and wants, and the convenience element will expand differently across the region," said Yin. "As with restaurants and supermarkets, USMEF's goal is to introduce and promote U.S. products that help these retailers differentiate themselves from their competition."
The U.S. Meat Export Federation (www.USMEF.org) is the trade association responsible for developing international markets for the U.S. red meat industry. It is funded by USDA; the beef, pork, lamb, corn and soybean checkoff programs, as well as its members representing nine industry sectors: beef/veal producing & feeding, pork producing & feeding, lamb producing & feeding, packing & processing, purveying & trading, oilseeds producing, feedgrains producing, farm organizations and supply & service organizations.
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