New York (CNN Business)Shoppers are already taking a hit at the grocery store. Soon, even their cheapest meat options will get more expensive.
Tyson Foods (TSN), Conagra (CAG) and Kraft Heinz (KHC) have notified their retail customers in recent weeks that they will raise prices in January for some frozen and refrigerated meats. Products that will see increases include Ball Park hot dogs and burgers, State Fair corn dogs, Jimmy Dean frozen breakfast, Hillshire Farm sausage and lunch meat, and Hebrew National and Oscar Mayer hot dogs, according to supplier letters to wholesale customers viewed by CNN Business.”All the packaged meat suppliers are coming to the price increase party,” said a leader at one regional distributor to stores who spoke on the condition of anonymity to protect their company’s relationship with suppliers.
Prices for higher-end meat cuts like steak, veal and pork chops have surged over the past year. But prices for cheaper meats like ground beef and lunch meat have gone up more slowly, while hot dog prices were actually 1.2% lower in September than they were at the same time last year, according to the latest data from the Bureau of Labor Statistics.
Prices are set to rise on meat brands such as Jimmy Dean, Ball Park, Hebrew National and Oscar Mayer. If top suppliers’ customers — which include big box stores, supermarkets, drug stores and others — decide to pass on these latest increases, even the meats shoppers typically look to trade down to when prices rise will become costlier. That may prompt some shoppers to avoid meat cases at grocery stores or turn to discount chains such as Aldi and dollar stores, analysts predict. Read More”Meat is center of the plate for Americans, and these price increases will hit hard,” Chris DuBois, the senior vice president for protein practice at market research firm IRI and who consults with grocers on meat trends and strategies, said in an email. Meat producers are hiking prices and reducing promotions on items to combat higher costs for commodities, packaging, labor, transportation and other inputs.Tyson sent a letter to at least two regional distributors last month in which it said that prices on Ball Park, Hillshire Farm, Jimmy Dean, State Fair and all deli meats will increase by a range of 5% to 10.2% beginning January 2 for “all retail customers.” The distributors shared the letters with CNN Business on the condition of anonymity.”We continue to face accelerating levels of extraordinary inflation,” Tyson said in the letter. “The sustained duration and significant impact of the inflation necessitates additional pricing action.”A Tyson spokesperson said in an email to CNN Business that the company was “carefully managing these inflationary pressures through pricing actions and efforts to reduce costs.”Conagra alerted one of the distributors this week that it will hike prices starting January 24 for varieties of Hebrew National hot dog packages, such as beef franks, 97% fat free beef franks, and jumbo beef franks, as well as quarter-pound and bun-length beef franks. The price increases range from 10.9% to 12.6%.
Grocery store shelves aren't going back to normal this year In the letter, Conagra said it was cutting costs throughout its operations, but the “sustained increase in packaging and ingredients will require” the company to raise prices.A spokesperson for Conagra did not say how many retail customers were notified of price increases.Kraft Heinz said in a November 1 letter to retail customers that it will raise prices for varieties of Oscar Mayer beef, lean beef and Angus hot dogs, as well as cheese dogs, by around 8% effective January 9.A spokesperson for Kraft Heinz told CNN Business the price increases applied to all of the company’s retail customers. The company has increased prices by an average of 5% on 80% of its products “to help offset the escalating inflation that the entire industry is facing,” the spokesperson said. At the same time, Kraft is also introducing more affordable price points and value sizes on brands such as Lunchables.
Price increases on meat and other grocery store staples may force changes to consumer behavior and pose a threat to supermarkets, said IRI’s DuBois. When prices at customers’ regular stores become unaffordable, they are more willing to leave the store for cheaper ones.”That’s the big unspoken danger that many retailers are worried about right now. We could see some big retail market share shifts starting next year.”
Source: edition.cnn.com
