Let’s Talk Turkey
The market for turkeys is somewhat of an odd duck – demand is wholly seasonal and competition is fierce. And price is typically the main lever to compete. According to the American Farm Bureau, turkey prices have gone up in the past year – but not a whole lot.
The cost of a 16-pound turkey, at $19.09 or roughly $1.19 per pound, reflects an increase of 9 cents per pound, or a total of $1.46 per turkey compared to 2007.
Still, the AFB still said that the average price of a Thanksgiving dinner, when adjusted for inflation, is still less than it was in 1988. That adds up to an unhappy situation for some food manufacturers.
With higher costs for key ingredients such as corn, soybeans and oil, turkey processors are under pressure and have to plan a year in advance for the one day a year they count on most.
Some 46 million turkeys will be eaten on Thanksgiving Day, about the same as in previous years, said Sherrie Rosenblatt, spokeswoman for the National Turkey Federation.“That’s basically most Americans having turkey at the center of their plate,” she said.
Consumers will see good prices this year, Rosenblatt said, because retailers will again heavily advertise turkey at low prices in the hopes that shoppers drawn in by lower turkey price will buy lots of other products.
Turkey sales are an interesting case study in pricing because demand is so seasonal. How do you sell more Christmas trees than the guy next door? The typical answer is to undercut him on price. Same goes for any seasonal commodity.
Happy Turkey Day from the Chief Pricing Officer!
