Winnipeg Free Press - PRINT EDITION

Got a beef over high prices? Then switch to chicken or pork

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Food Fare's Munther Zeid says if wholesale beef prices keep rising, he will have to pass on the increases to customers.

WAYNE GLOWACKI / WINNIPEG FREE PRESS FILES Enlarge Image

Food Fare's Munther Zeid says if wholesale beef prices keep rising, he will have to pass on the increases to customers. Photo Store

BEEF prices are hitting what one local retailer describes as "ridiculous" levels, and one food industry analyst said consumers ultimately will decide where prices go from here.

"It's all in the hands of consumers now," Kevin Grier, senior market analyst with the not-for-profit George Morris Centre, a Guelph-based, independent economic-research institute, said in an interview. "If consumers hold their nose and keep buying, these higher prices will have a good run in them."

But if they balk at paying the higher prices and switch to lower-priced pork or chicken products, that would likely force beef prices back down, he added.

Grier said beef prices have been rising for the past year in response to escalating North American cattle prices, which has been sparked by a decades-long decline in the size of the North American beef herd. As the supply of slaughter cattle tightened, that drove up the prices meat-packing companies charge wholesalers and wholesalers charge retailers.

But because of mounting competition in the retail food sector, retailers may opt to pass along all, some, or none of the wholesale price increases to their customers, Grier said, depending on whether their biggest concern is protecting profit margins or maintaining market share.

Munther Zeid, whose family owns and operates five Food Fare supermarkets in Winnipeg, said he has held off on passing along the latest price hike -- his suppliers raised beef prices across the board last week by about 20 per cent -- until he sees whether it was just a temporary spike, or part of a longer-term trend.

"For one week, I won't make as much but I'll keep my (sales) volumes. And if next week I have to raise my prices, so be it."

Zeid made it clear he's not happy about what's been happening with beef prices.

"They (beef prices) have gone stupid. What we're seeing now is ridiculous. Right now were holding down our retail prices, but if they (wholesale prices) go up any more, we'll be raising our prices, too."

He said if he passes along all of last week's wholesale-price increase, the price of a cross-rib roast in his store will jump to $4.99 a pound from $3.99. And the price of blade roast will rise to $4.49 a pound from $3.99.

Gilbert Cohlman, meat department manager for another independent grocer in the city -- Cantor's Grocery Co. on Logan Avenue -- said Cantor's has passed along about half of last week's price hike, boosting its beef prices pretty well across the board by about 20 cents a pound. For example, the price of a rump roast went from $3.39 a pound to $3.59.

"I'm going to try and hold it here for a bit," Cohlman said, until he sees what happens with prices later this week.

He and Zeid predicted if prices go much higher, consumers will rebel.

"I've seen it before. When beef prices go too high, people start eating more pork and chicken," Cohlman said. "Pork and chicken prices haven't gone up yet."

Grier wouldn't say what he thinks is likely to happen with beef prices once barbeque season arrives and the demand for steaks heats up.

But he predicted the "featured products" specials retailers offer this summer on beef products won't be as attractive as last summer. For example, instead of $4.99 a pound for a T-bone steak, Winnipeggers could be paying $6.99, he said.

Grier also predicted grocers will be featuring more chicken and pork products in their advertisements in a bid to keep meat lovers coming through their doors.

There are already signs of that happening. Supermarket chains such as Sobeys, the Real Canadian Superstore and Price Chopper are featuring things such as pork back ribs, pork chops, pork tenderloin, whole chickens, and chicken breasts more prominently in recent advertising flyers.

Spokesmen for Sobeys and Superstore could not be reached and a Canada Safeway spokesperson declined to comment on how it's dealing with rising beef prices.

murray.mcneill@freepress.mb.ca

Republished from the Winnipeg Free Press print edition January 16, 2014 B5

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