051228 Retail Meat: Grocers Hope to Bolster January Sales

Kansas City - With New Year's holiday features in place and grocery stores ready for heavy shipping activity heading into the final weekend of 2005, U.S. retailers are turning their attention to how to attract more customers in January, a period in which food sales tend to turn slower.

Many people go on diets after the holidays since there is a tendency is to overeat during the festive period from Thanksgiving through New Year's. And what could be an even bigger factor for food sales next month than in years past are higher energy costs. Paying more to heat the homes and for gasoline to get back and forth to work may pinch the food budgets of more households this winter, some meat market analysts said.

Most wholesale and retail sources contacted this week predict that early- January meat and poultry features will focus on the mid- to lower-priced items from each of the three main categories.

Beef

The beef category was well represented in the printed advertisements this week, with many stores featuring one or two ground beef items and premium steaks along with some mid- to lower-priced steaks. There were several standing rib and other premium roasts as well. Many of the upper-end stores advertised premium steaks and lobster or shrimp for New Year's celebrations.

Other retailers featured mainly lower-priced items such as ground beef on the front pages of the newspaper inserts and store flyers.

A Midwest-based market analyst said there has been a general opinion among grocers that wholesale prices for middle meat beef cuts will decline into early January, so they are holding off buying larger quantities for now while waiting for more attractive prices. Therefore, most grocers are expected to focus on the end cuts, or items produced from chucks and rounds, and ground beef items through most or all of January.

The average price of the 15 cuts of beef in the Dow Jones Newswires survey was $3.52 a pound, compared with $3.92 last week and $3.58 last year.

Pork

Grocers featured a fair amount of pork this week, but with the exception of a few hams and chops, the advertised pork cuts were mainly found in the middle pages of the inserts.

There were several bone-in and boneless hams in the ads as well, but the price points generally weren't as aggressive as last week. Market analysts said there apparently was good ham clearance last week in most areas of the country.

More stores featured butt roasts and fresh or smoked shoulder picnics this week as well. Wholesale prices were low enough in late November and early December to encourage grocers to feature these items, sources said.

Market analysts said pork chops along with butt steaks and roasts likely will be more actively promoted in January due to the attractive pricing and availability of these products.

The Midwest-based analyst said there were expectations that wholesale prices for butts and loins would move up after the middle of December and continue to trend higher into January. However, "wholesale prices stuttered this week," which caused some grocers to take a wait-and-see attitude until after the New Year's holiday, the analyst said.

Some sources said that with the way the Christmas and New Year's holidays fell on the calendar this year - on Sundays - there was less disruption to the plants' slaughter schedules, resulting in a considerably larger hog slaughter last week than during the same week a year ago. The U.S. Department of Agriculture estimated last week's slaughter at 2.052 million head, up about 343,000 head, or 20%, from the same week a year ago.

Perhaps the market was not fully prepared to absorb the additional pork that was produced by the larger slaughter and with average carcass weights also up considerably from a year ago.

Roll sausage and bacon were widely promoted as well. Analysts said these products can be used for breakfast meals or as ingredients in other foods that are popular at the holidays, so more grocers included them in their promotions.

The average price of the 13 cuts of pork in the Dow Jones survey was $2.20 per pound, compared with $2.29 a week ago and $2.31 a year ago.

Poultry

The chicken category continues to struggle with low wholesale prices and not enough feature activity to generate active sales, analysts and other sources said.

Wholesale chicken prices remain well below a year ago. Bone-in and oneless/skinless breasts are down about 25%, leg-quarters are off nearly 22%, and even wings are down about 24% from the same period last year.

Despite lower feed costs, the weak wholesale prices have trimmed chicken processors' margins from the higher levels they enjoyed last year, the analysts said. However, the major chicken processors so far haven't reduced production levels. The USDA's latest egg-set and chicks placed report showed that the industry placed 2% more broiler eggs than a year ago into the incubators during the week-ended Dec. 24, which is consistent with the figures in recent weeks.

The chick-placed data also showed a 2% increase from last year and up slightly from the average of the previous five weeks.

Market analysts said the low wholesale prices may result in more feature activity for the category in January and February when consumers typically are more closely watching their food budgets. However, because the wholesale markets have been weak throughout the fall and early winter, grocers are not concerned about a sudden run-up in prices so are content to order the products as they need them rather than buy in large quantities.

The average price of the four cuts of chicken in the Dow Jones survey was $1.32 a pound, versus $1.38 a week ago and $1.36 a year ago.

RETURN TO HOME PAGE

E-mail: sflanagan@sprintmail.com