Shrinking Packages, Pricier Foods Fluster Parents

By: AP
By: AP

Kids may be worried about homework, teachers and that pesky bully this school year. But parents? They're leery about lunches.

With food prices rising and packages shrinking, parents are wondering how they'll stretch their food budgets. Children are going to get an unwitting lesson in economics, analysts say, as parents change their food-buying habits to keep costs down.

Some kids will eat more hot lunches this year. Some will carry baggies full of snacks like home-packed chips and crackers rather than prepackaged ones. Maybe there will be more peanut butter, if it hasn't been banned in school because of allergies, instead of lunch meats, or cheaper items like Spam.

This year's lunchroom will be less about convenience and more about the bottom line, said Marcia Mogelonsky, senior research analyst with Mintel International in Chicago. Parents will be shopping for deals but still wanting all the basics - fruits, veggies, proteins and fun things like chips and cookies. It won't be easy, she said.

"Parents are sort of entering this with trepidation," she said. "It's not how much it costs. It's how much more it costs relative to what they're used to spending."

The costs for key ingredients - like corn, wheat, soybeans and other items - are high and eating into food companies' profits. So big names like Kraft Foods Inc., Sara Lee Corp. and Hormel Foods Corp. are passing along price increases as they try to keep making money.

Some companies are also shrinking products or getting rid of certain lines to lower their costs. Skippy peanut butter, made by Unilever, now sells in 16.3 ounce jars that look the same size as the previous 18 ounce jars because of a larger indentation at the bottom. Kraft is reducing the number and in some cases the size, of items in its Deli Selects cheese line, for example. Sara Lee has reduced the size of some of its Hillshire Farm deli meat packages from 10 ounces to 9 ounces. The prices, for the most part, don't go down.

Some stores - like grocery store chain Save-A-Lot - are advising parents on what to buy. The chain, which targets bargain shoppers, has a new campaign telling parents how to make meals like turkey slices wrapped in tortillas that cost about a $1 a serving.

In Los Altos, Calif., Hollis Bischoff's two children have been packing their own lunches for years. It saves money because they know what they'll eat, she said, and it teaches them a lesson in how to spend and save. Jordana, 12, and Nate, 14, have never bought milk because they think it's too expensive at school, she said, and they ask teachers if they can use the microwaves in their lounges when they want hot food.

The kids also go and buy food at the stores, or leave a list for their parents if they run out - always with costs in mind, Bischoff said. They get some money from their parents for lunches and if they go over a set amount, it comes out of their allowance. Bischoff said they'd rather save their money for more fun things, like a Nintendo Wii, so they opt to skip the $2 slices of pizza, for example.

"They've learned the meaning of saving money and spending money because they've seen what's happened during the years in the stores," said Bischoff, 49, who owns a yarn shop and works a full-time job as a market analyst.

The cost of food is soaring. In the U.S., retail food prices rose an average of 6 percent this year. That's three times the normal inflation rate. Prices are rising because companies are paying more for key ingredients, due to increased demand around the world, the weak U.S. dollar and weather that destroyed crops.

Economists say the high prices won't be coming down anytime soon.

The pinch consumers are feeling is affecting their shopping habits, said Harry Balzer, vice president of consumer research firm NPD Group and an expert on American eating patterns.

"These rising food costs have to be paid for by somebody," he said. "The question is how are you going to pay for them? Are you going to pay for them in keeping your out-of-pocket cost constant by buying smaller portions, or are you going to be paying more for what you paid last year?"

People typically spend 10 percent of their income on food and that won't change, he said, so instead they're looking for deals, eating less or changing brands.

Mogelonsky said many parents will have to put more thought into what they're giving their kids. Lots of changes will be in the snack realm, she said, because people are more price-sensitive for snack foods.

One way many parents will save is to stop buying prepackaged snacks, especially the 100-calorie ones that hit the market a few years ago, Mogelonsky said.

Kids should probably expect to see fewer treats this year, as well, she said, since that'll be seen as a luxury. Parents will have to talk to them about what they want to eat and why - and explain why those cookies may be gone this year.

"It's a good time to teach economics, nutrition and budgeting. It could become a major focus in parent-child relations, making lunches," Mogelonsky said.

She said there could also be a benefit to childhood obesity rates, much like traffic fatalities are coming down because people are driving less. If people cut back on their food spending, they may end up eating better, she said.

Parents say they won't be giving their kids less food - so don't expect hunger pangs in the afternoon. They just say they're approaching it differently and buying with cost more in mind.

Debbie Moors' daughters, ages 8 and 10, will bring their own milk from home, saving $1 a day this year. They'll also get a half sandwich instead of a full one, since Moors learned that's all they were eating last year. Chips and fruit snacks will be made from bulk bags rather than prepackaged ones.

It all means more thinking and planning, said Moors, 44, of Berthoud, Colo., and she hopes she can keep her momentum going all year.

"By the middle of the year you just get tired of trying to think of something different to put in there," said Moors, a magazine editor. "I tend to lose motivation a little bit. But I think this year I'm going to be more motivated just from a cost-savings standpoint."

Retailers are trying to help consumers make these choices at their stores.

Wal-Mart Stores Inc. has its "Mealtime Ideas" campaign and upscale grocer Whole Foods Market Inc. has pamphlets of coupons and back-to-school lunch ideas in its stores.

Save-A-Lot, which has 1,200 discount-oriented grocery stores in about 40 states, is extending its "Fuel Your Family" campaign in the next few weeks, using ads and signs in stores to help parents find meals they can make for about $1 a serving, typically using the company's exclusive lines of products. Meals - devised with a family of four in mind - include a grilled cheese sandwich and soup lunch that's 94 cents per serving, tuna pot pie for 74 cents per serving, and turkey bologna on wheat sandwiches with grapes for 86 cents a serving.

Bill Shaner, chief executive of the chain, a division of Supervalu Inc., said the company got meal ideas from its own workers. They're worried about costs just like everyone else.

"Everybody's trying to pinch their pennies. They're all struggling to allocate their food dollars," Shaner said.

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