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FOOD BILLS ZOOM

Millennium markups as high as 30%

Mon, Dec 13, 1999

By Tracy Tjaden and Allison Bray

STOCKING UP for the holidays? Have you looked at your grocery bills lately?

While it's normal for grocery stores to hike their prices five to 10 per cent over the holidays, this year that markup has ballooned to up to 30 per cent, the Free Press has found.

An informal study last week revealed the price of some kitchen staples has soared. For example, a can of Chef Boyardee beefaroni that cost 85 cents just weeks ago is now priced at $1.69. And a can of beans that once cost 67 cents is now selling for $1.09.

It's the basic law of supply and demand, explains Robert Warren, head of the University of Manitoba's Asper Centre for Entrepreneurship.

"This is the biggest New Year's in history and everybody is trying to make sure they get their nickel out of it."

Grocery stores usually make a two per cent profit on food, but this year's millennium madness could bump that up to three per cent for grocery store giants such as Safeway and Superstore owner Westfair Foods, Warren said.

It doesn't sound like much, but with millions of Canadians overspending on the $50 a week on average they usually lay out on groceries, this could spiral into net profits of an additional $3 billion for grocery store giants nationwide in the final quarter.

"That's a pretty healthy chunk of income," Warren said.

It's great for the stores' bottom lines, but not for low-income Winnipeg families trying to make ends meet over the holiday season, said a Westfair Foods worker, who asked to remain anonymous.

John, not his real name, stocks shelves from midnight to 8 a.m. and said price hikes this holiday season are outlandish.

"Joe Shopper probably realizes he's spending more on food, but has no idea how much more," he said. "For somebody living on the margins or just trying to get by, they're going to have a really tough time, and there's no barometer out there to help them understand what's going on."

The number of price changes late-night staff did in the past two weeks was double what it was a month ago, he said. It normally takes about 12 hours to do the average 2,200 price changes on a Saturday night, but last Saturday it took 24 hours to do 6,000.

David Northcott, director of the Winnipeg Harvest food bank, called the situation disheartening.

"We see people who can't even think about paying the prices at the old level, let alone now," he said.

He said the end result of corporate price gouging is more people will end up living in poverty and relying on food banks to feed their families.

No one at the Consumers' Bureau, the Consumers' Association of Canada or Statistics Canada, which reports the consumer price index (CPI), tracks the trend. Officials for the major food chains could not be reached for comment.

Warren said Y2K worries could also be a contributing factor.

"Even though everyone has agreed North America won't suffer at all from Y2K, there's still a segment of the population that believes, come Jan. 1, you won't be able to buy anything because every cash register will be down," Warren said.

"People are willing to pay more for the peace of mind, so why not profit from it?"

Warren said 20 per cent of people are doing some kind of stockpiling.

John agreed, adding if everyone buys even 10 more items this season to calm their Y2K worries, and prices are up to 30 per cent higher than usual, "somebody's pocketing a lot of money."

But one local grocer, who spoke on condition of anonymity, claimed the price hikes aren't just seasonal or Y2K-related.

He said the big retail grocery giants have been quietly jacking up their prices and profit margins by as much as 50 per cent over the past five years.

"The costs have not matched the increases in prices. When there's no inflation, the cost to the manufacturer doesn't change by 20 to 40 per cent.'' Chains will try to disguise the hikes by offering discounts on certain items while jacking up prices on others, he said.

If people don't notice the hike in their grocery bill, they might notice a jump in their restaurant tab.

Restaurants and hotels will be pulling out all the stops this season, Warren said.

Beef Wellington is the hot menu item this year, and the jump in demand is driving up prices.

A spokesman for the Beef Information Centre in Calgary said a 25 per cent rise in the price of beef tenderloin is directly related to the millennium.

"Demand skyrocketed and the big buyers wanted to lock up supply," said Michael Young, noting the trend was felt across North America.

Young said tenderloin was selling for $10 a pound in August and peaked at $15 in October.

With files from reporter Darcy Gillespie

-- Johnny Canuck (j_canuck@hotmail.com), December 14, 1999

Answers

Well, at least if the stores are busy ripping everyone off, they will be inclined to keep inventory high enough to make the most profit.

This might be a good thing overall.

Bryce

-- Bryce (Bryce@nospam.com), December 14, 1999.

Wow. Quite an increase. Probably will continue well into next year. Reading an article like this one makes me feel good that I prepped early. As it happens it is 3:00 am here in Minneapolis and I'm going to leave for Winnipeg in 20 minutes. Uncle died and have to attend funeral. Rest of relatives are totally DGI. This will I'm sure prove to be an interesting interaction with them. Well--gotta go--got 7 hours of drive time to think of what to say. Although--there really isn't much I can say at this point in time.

-- incredulous (cantbelievit@aol.com), December 14, 1999.

Yep. Just picked up some groceries last night. It cost $56 for what would have cost about $30 a couple weeks ago. What the hell is going on?

-- Hawk (flyin@high.again), December 14, 1999.

"People are willing to pay more for the peace of mind, so why not profit from it?"

Gee, they're hoarding *profits*.

How gauche.

-- Ron Schwarz (rs@clubvb.com.delete.this), December 14, 1999.

I heard about a month ago that retailer would raise the price of good in the last two weeks of the year. I find it interesting that 99% of the population hasn't prepped yet thus profits should be very good.

-- y2k dave (xsdaa111@hotmail.com), December 14, 1999.

Buying two months of supplies at the start of December would have cost a 1% premium in lost interest. That alone was enough reason to stock up, regardless of whether you do or don't get it.

We are a greedy, manipulative and stunningly short sighted and stupid species. I just hope we leave enough fossil fuels behind to give the squirrels a chance to do better.

-- Servant (public_service@yahoo.com), December 14, 1999.

Six years ago our spending at the supermarket approximated $100/week. The changes we've made since then: we've quit smoking, cut out Cokes, cut other sugary purchases by half, and now buy all our pet supplies at PetsMart. Our weekly bill now runs more like $150, not counting extras for Y2K possibilities. If our purchasing habits were still the same, our supermarket bill would be double what it was six years ago. It's not just Y2K.

Thanks goodness I don't need to go to the store for quite some time, not unless I want to pick up fresh produce and fresh milk (as opposed to the heat-treated milk which is good for five months). I still have a variety of lettuce in the garden and the strawberries and tomatoes have only just now petered out.

As noted previously, I have had some health problems this year and it has been a great relief to forgo the weekly shopping trip and effortlessly select the ingredients for healthy and hearty meals--and take care of our cats' needs. We are not well-off, we have merely changed our spending priorities. My thanks to the GIs on this forum for helping me stay the course and behave wisely regarding prudent preparations.

-- Old Git (anon@spamproblems.com), December 14, 1999.

Same here. Food up, gas way up! What's this crap about low inflation?

-- (Polly@troll.com), December 14, 1999.

Hey, aren't there laws against price gouging?

If this isn't stopped, some of those stores might make a profit!

-- Clyde (clydeblalock@hotmail.com), December 14, 1999.

lol ron!!!

-- mrunderhill (prancing@pony.com), December 14, 1999.

Increased gas prices are "driving" everything up.

-- GoldReal (GoldReal@aol.com), December 14, 1999.

I have noticed a pric increase at Sam's. The items that I bought a few months ago are way up. Teabags, spices, bleach, juice even the clothing. I only buy on sale. Yesterday I found Ocean Spray Cranberry sauce for .50 a can. Evaporated milk .25 a can and Armour chili .50 a can. Bargains are out there you just have to be aware.

-- Carol (glear@usa.net), December 14, 1999.