060109 Supermarkets Promoting “Cheaper” Meat Cuts

Kansas City, MO (Dow Jones) - The Dow Jones 10-city survey of grocers' advertisements this week revealed no prominent leader among the meat and poultry categories, and instead retailers offered a general mix of products but tended to push mainly the cheaper items on the front pages of the printed advertisements.

For the second half of the month, the lower-priced items from all three categories are expected to receive the most space in the newspaper inserts and store flyers.

Market analysts and other sources said high heating costs, gasoline prices in the area of 40 to 50 cents per gallon above a year ago, and the arrival of credit card bills from holiday shopping in December have cut into the amount of money many families have left to purchase food.

Meanwhile, wholesale prices for some meat and poultry cuts are reflecting improved buying interest for first-half February promotions including the National Football League's Super Bowl on Feb. 5 and the Valentine's Day holiday on Feb. 14.

Beef

Advertised fresh beef product this week included about an equal number of ground beef items, premium- and mid-priced steaks and roasts. However, most of the front-page features for beef were ground meats and roasts, which were at lower price points and more likely to draw customers into the stores at this time, sources said.

A fair number of premium steaks were seen in the middle pages of the advertisements. Prices varied considerably on the same cuts due to some being advertised as select while others were the higher choice grade or branded as Certified Angus or Hereford beef.

Market analysts said most stores tend to include at least one premium steak item each week in their advertisements even if the price points are not very aggressive because some shoppers prefer those cuts. Also, the stores need the higher per-pound register ring that those cuts provide to the overall mix of sales.

The analysts said buying interest at the wholesale level has increased for some middle meat cuts such as rib-eyes and strips to be featured for the week of the Valentine's Day holiday. Many people dine out to celebrate that holiday, but some may choose to prepare a steak or other high-quality meal at home instead, especially with the tightened budgets from high energy costs.

For the balance of January, trade sources expect little change from this week's product mix.

The average price of the 15 cuts of beef in the Dow Jones Newswires survey was $3.76 a pound, compared with $3.55 last week and $3.61 last year.

Pork

Analysts and other trade sources said the pork complex currently offers retailers opportunities to feature pork chops and butt steaks at attractive price points and that supplies are readily available at the present time.

This might lead to more feature activity for the fresh pork cuts into February, but there will be stiff competition from other proteins as well for that time frame.

Seasonal trends may cause retailers to be more aggressive buyers of pork cuts in the wholesale markets soon as weekly hog slaughters usually ease back a bit from the larger numbers that occur in the final quarter of the year. However, buyers might take a wait-and-see attitude this year about buying much pork ahead since slaughter-ready hog supplies have been running above a year ago and average weights in Iowa/southern Minnesota recently hit an all-time high.

The average price of the 13 cuts of pork in the Dow Jones survey was $2.20 per pound, compared with $2.32 a week ago and $2.26 a year ago.

Poultry

For several weeks now, chicken prices, with minor exception, have been essentially flat. The only cut that has shown significant change, which has been to the upside, is wings.

The U.S. Department of Agriculture reported prices for truck-load quantities of wings delivered into the northeast Thursday at 98 to 99 cents per pound, just below boneless/skinless chicken breasts at $1.00 per pound. Wing prices have climbed about 17 cents over the past four weeks while breast prices have been flat.

A meat and poultry market analyst said the buying interest for wings is due primarily to heavy feature activity of this item at retail as well as from restaurants for Super Bowl parties. The analyst predicts that wholesale wing prices will reach a top by the end of next week or early the following week.

Some market sources said there are indications that prices of other chicken cuts may soon begin an upturn, but others said they want to see more evidence of that before they are convinced the market may be ready to move higher.

The average price of the four cuts of chicken in the Dow Jones survey was $1.41 a pound, versus $1.33 a week ago and $1.48 a year ago.

RETURN TO HOME PAGE

E-mail: sflanagan@sprintmail.com