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INITIATIVE 1:Cope With Ongoing Price Inflation

Driven by factors ranging from worldwide droughts to burgeoning demand for corn-based ethanol, food prices rose steadily last year. And there are several indications most notably the federal mandates to continue increasing ethanol production for the next several years that prices will be headed even higher in 2008. Smart promotions, however, can still make shoppers feel like they're getting a great

Driven by factors ranging from worldwide droughts to burgeoning demand for corn-based ethanol, food prices rose steadily last year. And there are several indications — most notably the federal mandates to continue increasing ethanol production for the next several years — that prices will be headed even higher in 2008.

Smart promotions, however, can still make shoppers feel like they're getting a great value at their local supermarket.

“[Considering] how much more people are paying for gasoline, automobiles, heating oil and everything else in this country, food prices are still a bargain, and beef prices most definitely are,” noted Randy Irion, spokesman for the National Cattlemen's Beef Association, Chicago. “I think you almost have to be careful that you don't plant the idea that [customers] can't eat the way [they] always have. There is a segment of the population whose budgets might be very tight, but for most people, their beef intake might be one of the last things they have to change. So, I think there are a lot of strategies that allow people to keep beef on their menu at home, even in the light of increasing prices.”

Irion said that promotional tactics will vary, depending on a chain's customer base and overall pricing strategy, but regardless of format or local demo-graphics, ground beef is a great item to promote when prices are trending upward. While prices for whole muscle meats were up an average of 4.2% this year, ground beef was up only 0.9%, Irion said.

Promotions that pair meats with other items in the store are another great way to make shoppers feel like their dollar stretches further. Companion promotions were very effective for the National Chicken Council's during the September 2007 National Chicken Month, said council spokesman Richard Lobb.

Lobb suggested that retailers stay in contact with their suppliers for similar ideas, and cooking up some recipe ideas and product demos for less popular items in the poultry case — like thighs and drumsticks — could also help boost shopper interest in these lesser used, and also less expensive, items.

TAGS: Meat