As food prices continue to rise, and many signs suggest that they will, shoppers are expected to change their buying patterns. Among those changes is a shift to cheaper cuts of meat, as well as whichever protein offers the deal of the day.
Jim Hertel, a retail analyst and managing partner with Willard Bishop, predicts food inflation could run as high as 7 percent to 11 percent annually for at least the next two years. The mitigating factors include increased global protein demand, reduced global grain production and biofuels competition for feed inputs such as corn.
Sales of premium and indulgent foods will decline and private-label brands will increase, he says.
Whole Foods is even expanding its private label offerings. Among the "premium" products likely to be effected are natural and organic. In a recent NBC Evening News report where the reporter asked food shoppers what changes they may make in response to higher food costs, many said they would switch away from organics.
"As much as I want to shop organic, it's just getting too expensive," said one female shopper. Another said, "We will eat less meat and dairy."
And, those prices may rise further, between the impact of higher transport costs and the Midwest floods. Early reports are that organic feedstuffs will be in tight supply.
Functional foods, products which include those with health-enhancing additives, may take an even bigger hit, he says. He sees them as the most vulnerable category as it relates to cost savings.
Finally, consumers also will visit restaurants less often, and go to more mid-range venues when they do dine out. However, consumers may not be willing to fully give up convenience and may still purchase prepared-foods at retail outlets.