July 20, 2009

     

Retail-meat advertisers aim to navigate the summer doldrums, searching for items that tempt consumers while still generating a profit.

 

Grocers are frustrated with consumers who seem more interested in price instead of any particular product, while shoppers are focusing on featured products, leaving other cuts untouched.

 

Advertisements through the rest of July and August will likely hold a mix of meat products, but no standout items.

 

"Pick your poison," said Bruce Longo, market analyst with Urner Barry's Yellow Sheet.

 

Grocery advertisements this week held a variety of products, according to the Dow Jones Newswires survey, but ads in various cities showed grocers tended to avoid heavy meat advertising.

 

If there was a pattern, it was focusing on grillable items including hamburger, steak, pork chops, ribs and chicken breasts. Some stores also included roasts, but it wasn't the focus item.

 

The same pattern can be expected into August, analysts and buyers said.

 

Few plans have been made for the Labuor Day weekend. That holiday is generally thought of as a beef event, but at a lower intensity than other summer events such as Memorial Day or Independence Day.

 

Many retailers complain about the sluggish nature of beef sales to shoppers, saying nothing seems to spark interest in quantity buying. Some reported shoppers visiting multiple groceries and picking up just the featured items, including meat, particularly beef.

 

While retail beef movement seems slow, that's not unusual for July, Kevin Bost, president of Procurement Strategies Inc., wrote in an email.

 

The only "cut" that showed any kind of consistent pattern of acceptance among shoppers was ground beef, according to analysts and buyers. The item, which may at times be more expensive that other products such as pork or chicken, is considered a value to shoppers because it can be used in many ways. Steaks, for example, have far fewer menu possibilities than hamburger. For busy and/or out-of-work families in the summer, versatility at a price is an attractive meat purchase.

 

Based on the rate of forward bookings in the last several weeks, Bost didn't see much advertising activity for beef for the rest of the month. August could be better for beef and pork, he added. Several good beef values were available in wholesale markets for beef middle meats and rounds, that could offer good featuring opportunities.

 

Looking past the dog days of summer, some grocers are beginning to plan Labour Day advertising campaigns. Some may have booked their expected beef needs for the holiday ahead of seasonal late-summer wholesale price increases, the analysts said.

 

The average price of the 15 cuts of beef in the Dow Jones Newswires survey was US$3.60 a pound, down from US$3.75 a week ago and US$3.94 a year ago.

 

Market analysts said this week's rise in pork cutout values indicates some bargain buying in the product market, and some think more pork could show up in grocery advertisements in late July and early August.

 

The loins were seen as a particular value, they said. Shoppers could see chops and whole-boneless loin items in the stores. Meat department heads like the whole loins because they can put them in the case without opening the Cryovac and slicing them into chops for repacking, an analyst said.

 

Some of the whole boneless loin ads could be seen in southern US groceries this week, said Jim Kenney, market analyst for Urner Barry's Yellow Sheet.

 

As of now, grocers have made no Labour Day plans in reference to pork, Kenney said. Buyers are keeping their tentative plans close to the vest and are waiting for the market to tell them the specific balance of pork to beef, and chicken for that weekend.

 

The average price of the 13 cuts of pork in the Dow Jones Newswires survey was US$2.40 per pound, up from US$2.27 a week ago and US$2.26 a year ago.

 

After rising for several weeks, chicken prices are declining, and one market analyst blames weak Independence Day sales.

 

Producers and retailers "staged" chicken for holiday sales, but shoppers went after beef, leaving the chicken to languish, said Eric Scholer, market analyst with EMI Analytics. Now, with exports to China shut off and holiday movement less than hoped for, wholesale prices are sagging, he said.

 

Eventually, this could produce good buying opportunities for retail meat buyers, but the current market is downward, Scholer said.

 

The only strong point for the chicken market is wings, Scholer said. Demand continues to move higher for these items, even as production continues to operate at below-year-ago levels, Scholer said.

 

The average price of the four cuts of chicken in the Dow Jones Newswires survey was $1.45 per pound, compared with US$1.42 a week ago and US$1.48 a year ago.