Hot turkey and cold cash

Sunday, November 19, 2006

Turkey prices are up, but will you pay more?

Come for the turkey, stay for the cranberry sauce. And Sprite. And Crest toothpaste.

At least that's what grocery stores are hoping customers will do as they prepare to absorb a hit from higher turkey prices. The wholesale cost of the birds was 96 cents per pound in October -- a key turkey-buying month for retailers -- up 17 percent from the previous year, according to the Agriculture Department.

But like any year, grocers will throw out an array of turkey promotions and discounts, hoping to drive traffic to their stores.

Customers could see a slight increase in the price of a turkey -- especially for fresh birds -- but industry observers said grocers are reluctant to raise prices too much on the huge holiday draw. Several industry observers said customers should expect to pay less than wholesale prices this holiday season.

"Funny thing is that very few shoppers actually pay the price they should for turkeys over the holidays because of promotions -- so I would expect that this increase will not be passed on to consumers," said Phil Lempert, editor of supermarketguru.com.

The average American ate nearly 17 pounds of turkey last year, a figure that has doubled since 1970. Turkey production has increased, but the increased demand has taxed the supply and raised the asking price.

Since many shoppers plan their grocery trips around getting a bargain bird, stores often sell turkeys at a loss, hoping to recoup the difference on other items, said supermarket analyst David J. Livingston, managing partner at DJL research. Livingston said he's discussed the price of turkeys with several retailers this year.

"They're going to try to make it up by increased sales volume," Livingston said. "The price of turkey has a huge psychological bearing on shoppers. A lot of shoppers will go where they see the price of turkey is going to be the lowest. They may not realize that they may be paying more for everything else."

Giant Eagle, a chain of 216 supermarkets in the Midwest, said customers should expect "similar" prices to last year and that it's offering to match any competitor's price on frozen turkeys. A spokesman said the company negotiated favorable wholesale prices with its high-volume buy.

The country's three biggest grocery chains -- Kroger Co., Supervalu Inc. and Safeway Inc. -- didn't respond to requests to discuss turkey pricing.

Fresh turkeys -- which are harder for stores to stockpile -- would be more likely to reflect the increase in wholesale price, but customers should still expect to pay less than the wholesale price, said David Harvey, a USDA economist.

"It would still be quite a discount," Harvey said.

But should you find your local grocer is bucking the turkey discount trend, have no fear. You might find that another bird's a better bargain: Harvey says the wholesale price of chickens was 65 cents per pound in October, down 6 cents from the previous year.partner at DJL research. Livingston said he's discussed the price of turkeys with several retailers this year.

"They're going to try to make it up by increased sales volume," Livingston said. "The price of turkey has a huge psychological bearing on shoppers. A lot of shoppers will go where they see the price of turkey is going to be the lowest. They may not realize that they may be paying more for everything else."

Giant Eagle, a chain of 216 supermarkets in the Midwest, said customers should expect "similar" prices to last year and that it's offering to match any competitor's price on frozen turkeys. A spokesman said the company negotiated favorable wholesale prices with its high-volume buy.

The country's three biggest grocery chains -- Kroger Co., Supervalu Inc. and Safeway Inc. -- didn't respond to requests to discuss turkey pricing.

Fresh turkeys -- which are harder for stores to stockpile -- would be more likely to reflect the increase in wholesale price, but customers should still expect to pay less than the wholesale price, said David Harvey, a USDA economist.

"It would still be quite a discount," Harvey said.

But should you find your local grocer is bucking the turkey discount trend, have no fear. You might find that another bird's a better bargain: Harvey says the wholesale price of chickens was 65 cents per pound in October, down 6 cents from the previous year.

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