July 31, 2009

Meat and poultry cuts shared advertising space this week with seasonal items such as fresh fruits and vegetables, and in some areas of the country back-to-school goods were found among the front-page features.

 

No clear leader was found among the meat and poultry categories as most grocers offered a wide mix of protein options. Some chains and store groups included additional premium steaks and boneless pork chops in printed advertisements this week, hoping to entice shoppers to spend a little more money for the higher-quality cuts this weekend at the beginning of the new month.

 

Grocers are trying to meet the diverse needs of their customers, analysts said. Some families are taking vacations or travelling during the summer break, while others are back home and beginning to prepare for the startup of the new school term. Backyard grilling remains active, so the stores are featuring a mix of items to have something for everyone.

 

Retailers featured numerous ground-beef products this week along with some premium steak items. To reduce the per-pound cost to consumers, several of the supermarket chains promoted bone-in steaks versus the more expensive boneless alternatives. Retail prices for bone-in steaks were commonly found from US$3.99 to US$5.99 a pound, versus comparable boneless cuts at higher price points.

 

Many shoppers continue to look for good deals and ways to reduce costs by stretching their food dollars. Bruce Longo, analyst with Urner Barry's Yellow Sheet, said ground beef continues to be a good mover at both the wholesale and retail levels. The stores are keeping regular hamburger and other ground-beef items in the ads.

 

A few loss-leader deals, where the retail price is below cost, were seen as well this week, mainly on cuts produced from the round or chuck. Roast sales are slow at this time of the year, but the stores need to sell these products as well so hot deals are seen from time to time as grocers seek to bring more customers into the stores.

 

Ground beef and grilling cuts are expected to be widely seen in the printed advertisements throughout August and September, but additional roasts will be featured after the Labour Day holiday.

 

The average price of the 15 cuts of beef in the Dow Jones Newswires survey this week was US$3.63 a pound, compared with US$3.74 a week ago and US$4.07 a year earlier.

 

Grilling cuts such as bone-in and boneless loin chops, spare ribs and country-style ribs were the most widely featured fresh-pork items this week. Bacon and hot dogs also were actively promoted from the processed meats group.

 

Analysts and meat brokers said low wholesale prices for most pork cuts offer grocers the opportunity to feature the items at attractive levels and still generate good margins on the sales. Grocers have kept pork cuts in their weekly features throughout the summer, alternating the items weekly.

 

They said retailers tend to use pork mainly in a sub-feature role but include one or two items as leaders on the front pages of the advertisements when applicable.

 

Wholesale pork prices, based on the US Department of Agriculture's daily market reports, have averaged only about 74 percent of a year ago since late April and have fallen sharply this week. Production is outpacing demand, analysts said, so wholesale prices remain under pressure.

 

Sufficient supplies of pork at low prices should ensure some spots in the weekly promotions the balance of the summer and throughout the fall, analysts and brokers said.

 

The 13 cuts of pork in the survey averaged US$2.21 a pound, up from $2.06 last week but down from the US$2.52 year-ago figure.

 

Broiler-chicken meat prices at the wholesale level have been soft in recent weeks amid disappointing sales volume throughout most of the month, analysts and meat/poultry brokers said.

 

The USDA reported wholesale prices for boneless/skinless breasts delivered into the northeast US at US$1.45 a pound, down 5 to 10 cents a pound from two weeks ago and off 15 to 20 cents from four weeks ago. Bone-in breasts and bulk-packed leg quarters also were lower.

 

The price declines were disappointing to some analysts, especially with the production cutbacks that have been in place since last summer. The USDA's broiler eggs-set report for last week showed a 4 percent reduction from a year ago. That was on par, percentage wise, with the reductions during the previous six weeks. Broiler slaughter during the past three weeks has averaged 4 percent below a year ago, according to USDA data.

 

The lower wholesale prices could encourage grocers to feature more chicken in August and September, but the other meats will be competing for the business, analysts said.

 

This week's features focused mainly on the boneless/skinless and bone-in breasts, but a fair number of leg quarters and whole birds were seen as well.

 

The four cuts of chicken had an average price of US$1.55 a pound, up from US$1.43 a week ago and US$1.51 a year ago.