December 11, 2009

 

US Retail Meat: Beef in this week's advertising spotlight

 

 

Grocers featured more fresh beef cuts this week, hoping to generate larger sales of these items before turning their focus to traditional Christmas holiday items next week.

 

Some pork and chicken items found their way to the front pages of the printed advertisements as well, but beef was the leader, analysts said.

 

"The calendar is ticking toward the holidays," said Bruce Longo, analyst with Urner Barry's Yellow Sheet. After this week, the supermarkets will feature a wider array of smoked hams and more premium beef roasts, party trays and turkeys for Christmas.

 

For some grocers, next week's advertisements will likely run through Christmas, and they will issue new promotions on Dec. 26 that will be effective through the New Year's holiday.

   

Many of the supermarket chains and independent grocers in the 10 cities included in the Dow Jones Newswires weekly survey focused their lead items, including beef, on achieving attractive price points. For beef, these included regular hamburger and some roasts, such as from the chuck and arm.

 

Some also targeted the mid-range priced cuts that normally sell for around $4 to $5 a pound with feature prices from US$2.99 to US$3.49. Meanwhile, most included one or two of the premium steak cuts in the advertisements in hopes of generating more total sales dollars and improving their overall margins.

 

The number of beef items overall to be featured next week is expected to decline. Some of the ad space will be used for premium beef roasts traditionally seen ahead of the Christmas and New Year's holidays, such as standing rib roasts.

 

Hamburger and other ground beef items are expected to remain widely available and advertised because of their convenience, versatility and popularity.

 

Wholesale prices for beef have been on the decline since early last week, reflecting a seasonal downturn and fewer bookings for the category through the balance of December, analysts said. Reduced cattle slaughter due to the season's first major snowstorm that swept across the upper Midwest this week may stabilize wholesale beef prices and possibly push prices back up for some cuts.

 

The average price of the 15 cuts of beef in the Dow Jones Newswires survey this week was US$3.62 a pound, compared with US$3.53 a week ago and US$3.78 a year earlier.

  

Most grocers also promoted a fair number of pork cuts this week but mainly in a secondary role, with the items found primarily in the middle pages of the printed advertisements.

 

Analysts said pork has had a good share of promotional activity throughout the autumn due to the category's attractive wholesale prices and availability. In the past five weeks, however, wholesale prices have rallied to move above the year-ago quotes and this week advanced to 10% above this time last year.

 

The rising pork prices and declines in beef could swing the interest of grocery meat buyers to feature more beef items in their early- or mid-January promotions.

 

Smoked hams, including numerous bone-in and boneless varieties, are beginning to show up in the advertisements ahead of the Christmas holiday and the list will expand further next week, analysts said. The next two weeks will mark the peak in ham promotions for gatherings of family and friends over the holidays.

 

Interruptions in hog slaughter schedules this week because of the major winter storm have driven up wholesale prices for some pork cuts, especially loins. Prices will likely adjust back down once normal slaughter schedules resume, analysts said.

 

The 13 cuts of pork in the survey averaged US$2.18 a pound, compared with US$2.17 last week and US$2.18 a year ago.

  

Fresh chicken cuts in the advertisements this week were also found mainly in the middle pages, unlike last week in which a surprising number were lead items.

 

That resulted in a modest increase in the average price for the category over a week ago, but prices overall are down from this time a year ago.

 

Promotional activity for chicken is expected to increase in early January as grocers seek ways to attract customers into their stores with low-price features after the holidays. January is typically a slow period for meat sales since heating costs typically rise and credit card bills arrive, inflated by holiday shopping.

 

Wholesale chicken prices are expected to be generally steady near-term but that could trend a bit higher later in the month.

 

The US Department of Agriculture showed broiler egg sets for the week ended Dec. 5 down just slightly, only about 0.25% lower, than a year ago. Egg sets have averaged about 99% of a year ago during the previous six weeks.

 

The four cuts of chicken had an average price of US$1.39 a pound, compared with US$1.23 a week ago and US$1.57 a year ago.