Corn prices tank and grocers pitch low-price holiday meals
Corn prices have plummeted by more than 50 percent over the past six months, while food prices are up 6 percent for the year, according to data released recently by the Bureau of Labor Statistics.
At the same time, energy costs fell 17 percent and transportation expenses dropped 10 percent in November.
“The truth is corn prices have almost no effect on grocery store prices, and apparently even the impact of fuel costs is minimal,” said Randy Woodruff, president of the Wisconsin Corn Growers Association, in a press release.
“There are literally only pennies of farm value in that goose, turkey or roast you will eat for Christmas dinner. And while corn growers and consumers alike suffer the effects of a shaky U.S. economy, some of this country’s top food companies continue to ring up record profits.”
In fact, an 18-ounce box of corn flakes today contains less than 4 cents worth of corn but still costs as much, if not more, than it did last summer, Woodruff said.
Nevertheless, cereal giant Kellogg’s reported $342 million in net earnings, a 12 percent rise, while competitor General Mills reported $632 million in operating profits this fall, a 9 percent increase. Kraft Food’s revenue rose 19 percent and Campbell’s earnings rose 45 percent.
Grocers are pushing big deals to get value-minded shoppers into their stores for holiday meal shopping.
For most grocers, the current quarter holds three big “eating” holidays: Thanksgiving, Christmas and New Year’s, so they often hold large promotions this time of the year. But 2008’s economic woes have given holiday grocery marketing a more modest tone.
“With everyone trying to stretch budgets this holiday season, we are giving even better deals on our high-quality products so our customers don’t have to compromise,” Fresh & Easy Neighborhood Market Chief Marketing Officer Simon Uwins said in a statement.
The El Segundo, Calif.-based chain halved prices on key holiday items such as pecan pie and cooked shrimp to draw shoppers.
Low-cost grocer Save-A-Lot has developed five plans for feeding 10 people for $25 or less. Some suggest a full meal with main dishes, sides, desserts and beverages, while others are designed for parties — with an array of hors d’oeuvres or desserts.
“These are very difficult times for many Americans,” said Bill Shaner, president and CEO of Save-A-Lot.
The retailer will continue seeking ways to help its customers save money in the New Year, including offering ideas for $1 school lunches, meal plans that feed a family of four for $4, and more, Shaner said.
Other grocers, like Kroger Co. and Safeway Inc., have been pushing deals that tie spending at the store with savings at the gas pump.
Grocers have been one of the bright spots in retail during the downturn, but they say they have seen consumers focus more on staples and store brands than more expensive food.
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