‘Barron’s Roundtable’ co-editor Andrew Bary discusses demand in the food industry.
Although inflation may be slowing, Wells Fargo experts warn that Thanksgiving will still be a challenge, as consumers continue to feel the “bite of higher prices.”
But consumers, still adjusting to historically high food prices, will find relief by sticking to store-bought products, according to Wells Fargo chief agricultural economist Michael Swanson.
Swanson, along with Courtney Schmidt and Robin Wenzel of the Wells Fargo Agri-Food Institute, published a report, analyzing the cost of a Thanksgiving meal for 10.
Using Nielsen’s annual scan data, they tracked the prices of brand-name and store-bought ingredients including turkey, stuffing, salad, cranberries, dinner rolls and pumpkin pie.
They found that the gap between the cost of whole foods using store brands and the individual using brand name products is narrowing, giving consumers more reason to mix and match. However, a meal made entirely from store-brand items will still cost about $17 less, according to Wells Fargo.
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Brand-name meals will cost $90 this year, down 0.5% from last year’s Thanksgiving meal, Wells Fargo reports.
The same meal prepared with store-bought products will cost $73, a 2.7% increase from last year, according to the report.
A shot of Thanksgiving dinner. (Kirk Mckoy / Los Angeles Times via Getty Images / Getty Images)
“Food inflation broke through its limits, and many food companies tried to create a new normal, but it seems that some of their prices were too high,” Swanson wrote in the report, adding that “inside the grocery store, the brand name and food products in the store dance daily tango in an effort to find the perfect balance between popularity and cost competitiveness.”
Dividing food costs into each category
garlic
Wells Fargo said it’s difficult to predict the final Thanksgiving price since most turkeys are sold in the weeks leading up to the holiday.
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However, name-brand turkeys, which account for three out of four birds sold, saw price softening by 2% compared to the same period in 2023. The store brand, which is still cheap, shows a 5% price increase.
A shopper walks past turkeys displayed for sale at a grocery store ahead of the Thanksgiving holiday on November 11, 2021 in Los Angeles, California. (Mario Tama/Getty Images) / Getty Images
The total price difference between a 16-pound brand-name turkey and a store-brand bird is a few dollars, so Wells Fargo has estimated that it is unlikely that a small price difference will significantly change the decision to keep the product over the brand-name this time. category.
Stuffing
Shoppers can still save a few dollars by choosing a store brand, according to the report.
The price of packaged goods increased by 9% compared to the same period last year, and the volume of products in stores increased by 3%, the report said.
Salad
The salad category experienced year-to-date price reductions compared to 2023. Prices for name-brand products fell 2%, while store brands fell 1%, according to the report.
The cost difference between the brand name and the store brand is about $3, favoring the store brand, according to the report’s authors. However, they say cost-conscious shoppers may already be choosing a store brand.
Produce and store-bought salads. ((Photo by: Jeff Greenberg/Education Images/Universal Images Group via Getty Images) / Getty Images)
Cranberry fruits
Forecasting the price of cranberries in time for Thanksgiving involves weighing price pressure and the current crop, which Wells Fargo expects to be 2% larger than in 2023.
The name brand, which accounts for the majority of sales, is the lower-priced option, according to Wells Fargo.
A 12-ounce bag of fresh cranberries is down 3% compared to the same time last year, while the store version is up 6%.
Dinner roll is messy
The prices of branded products and store products increased by 3% compared to the previous year, “putting the bakery category in the top position of the food inflation rate,” according to the report.
The price difference between brand-name and store brands is significant, yielding about $4 in savings between several dinner roll labels, Wells Fargo reports.
A shopper at the Reading Terminal Market in Philadelphia, Pennsylvania, US, on Monday, Feb. 12, 2024. (Hannah Beier/Bloomberg via Getty Images/Getty Images)
Pumpkin pie
Pumpkin pie falls into the category of predicting pressure. Brand-name pumpkin pie prices rose 1%, while retail pies rose 3% compared to last year, according to Wells Fargo.
The authors say “these two are the same price for an 8-inch pumpkin pie,” and other name brand options are still more affordable.
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Drinks
Wells Fargo also cited data from the Bureau of Labor Statistics’ CPI index, which shows that beer prices are up 3.3% from this time last year. Meanwhile, wine prices increased by 2.4%.
In the soft drinks category, 12-ounce cans increased by 1.7%, while two-liter bottles decreased by 10.8% compared to the same period last year.
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