Publication Note: We will not publish on Monday, December 1, as we enjoy an extended holiday weekend. Happy Thanksgiving to our clients in the US. I’m forever grateful for your readership and general support!
The Scoreboard
Commentary
- Last week, we learned that… unless you are serving beef, protein shakes or a lot of coffee, Thanksgiving dinner will cost less this year than last. The American Farm Bureau Federation’s annual survey showed it will cost $55.18 to put out a spread for 10 people, down 5.0% from last year and down 13% from the 2022 high.
According to the AFFB press release:
The centerpiece on most Thanksgiving tables – the turkey – dramatically decreased in price, which helped bring down the overall cost of dinner. The average price for a 16-pound frozen turkey is $21.50. That is $1.34 per pound, down more than 16% from last year. While the wholesale price for fresh turkey is up from 2024, grocery stores are featuring Thanksgiving deals and attempting to draw consumer demand back to turkey, leading to lower retail prices for a holiday bird.
Consulting firm Deloitte puts out its own Thanksgiving dinner figures, and what looks like a decidedly more “bougie” meal for eight costs $76.50, down 0.7%. For reasons I cannot identify (or understand), the cost of the stuffing on the Deloitte table is up 11.3% compared to last year.
Before we even set our tables, business news channels and publications will inevitably begin to fixate on the putative beginning of the holiday shopping season. How much will we spend? What will “Black Friday” and “Cyber Monday” performance look like? I’m not sure how much this matters for food commodity demand, let alone for the economy writ large. But I confess to finding the fuss fascinating, even if not critical for the markets we cover.
I collect the data, so I’ll share the data. According to the National Retail Federation, 186.9 million Americans will “shop” between Thanksgiving and Cyber Monday, up 1.9% from a year ago.
Even though more people are planning to shop over the Thanksgiving holiday, they say they will spend less during the season, with the survey average at $890 per person, down 1.3% from last year’s intentions.
Those intentions aside, the NRF seasonal forecast calls for total spending to land between $1.012 and $1.017 billion, up 3.7% to 4.2% compared to the same period in 2024.
Let the games begin!
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Oddly enough, restaurant traffic looks better. Placer.ai data has Restaurant + QSR activity up 3.4% year-over-year for the week ending November 16. Over the last four reports, traffic is up 2.7%. We’re keeping score against a weak patch in 2024, but I’m not sure that’s the only thing happening. Looking at the category-by-category and chain-by-chain traffic data, almost every player is on a four-week heater. That’s strange, especially since the surrounding macro data and overall mood seem no better (arguably, they are worse…). Is it possible that we saw lower-income households patronizing pizza chains and fast-food outlets more frequently while SNAP payments hung in the balance during the government shutdown? Maybe. But grocery visits have been better, too (could that reflect SNAP recipients making more trips to keep per-visit spending lower?). Let’s see if it continues and if we start hearing cheese marketers talking about better orders… but count me as intrigued.
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The “bifurcation quote of the week” comes from Walmart, which continues to come up a winner in the current climate. Walmart US same-store sales increased 4.5% year-over-year, topping expectations for +4.0%. According to The Wall Street Journal:
Walmart’s earnings told the story of a two-track economy, one where low-income Americans are spending less and wealthier shoppers are spending steadily. One thing unites them: everyone wants a deal. “But when we look by low-income cohort versus middle versus higher-income, we have seen some moderation in spending in the low-income cohort,” said Walmart Chief Financial Officer John David Rainey on Thursday. The moderation isn’t extreme, he said. “We’re keeping a watchful eye on it.”
On the earnings call, CEO Doug McMillon added:
Not surprisingly, we see more adjustments in middle and lower-income households than we do with higher-income households. And in discretionary categories where item prices have gone up, we see a corresponding moderation in units at the item level as customers switch to other items or, in some cases, categories. As always, our customers are aware, smart, and value-conscious. We have approximately 7,400 price rollbacks across our assortment, which is about 2,000 more than last quarter. Our rollback count in grocery was up 30% in the quarter compared to the previous year.
(Can we please pause for a moment of personal indulgence? Here’s a shout-out for Doug McMillon. He’s retiring on January 31, ending a tenure as Walmart CEO that began in February 2013. During the McMillon Era, Walmart stock gained 327% compared to +271% for the S&P500. That’s retail CEO Hall of Fame performance!)
In my opinion, Target’s results reinforce the notion that middle-income families are struggling. Same-store sales dropped 2.7% year-over-year in the third quarter, worse than the consensus call for -2.0%. Here’s what Richard Gomez, Target’s Executive VP & Chief Commercial Officer, said on the quarterly earnings call:
Turning to the consumer. Many of the themes remain largely consistent with what we’ve shared in prior quarters. Guests are choiceful, stretching budgets and prioritizing value. They’re spending where it matters most, especially in food, essentials and beauty, while looking for trend-right deals in discretionary categories. They want quality and price to coexist…
The messages in all of this should sound familiar. First, stores (and restaurants) that don’t deliver value will continue to struggle. Second, consumers are reluctant to spend with abandon.
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Here’s something that keeps working: High-protein sports nutrition drinks and powders. According to Circana data presented by BellRing brands, volume sales of ready-to-drink protein shakes increased 15% year-over-year during the third quarter, while dollar volume grew by the same percentage—ready-to-mix powders: volume +13%, dollar sales up +10%.
Traffic into fitness centers hasn’t retreated, suggesting additional wind in the sports nutrition sails. Placer.ai data for the week ending November 16 shows activity up by 5.7% year-over-year, just below the 13- and 26-week averages.
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Beef sales also seem impervious to higher prices. The National Provisioner published the latest demand data from Circana and 210 Analytics. For October, fresh beef volumes remained strong (+2.0% YOY) while pork slipped into negative territory (-1.2% YOY, worst showing since last December). Bacon volume trailed year-prior levels for the third month in a row. Chicken sales increased 4.0% year-over-year. President Trump’s actions to cut beef prices are creating a lot of noise in the cattle and beef markets at present. We’ll see what that means for animal prices over the near term, but on the surface, strong beef demand at high prices looks like good news for dairy producers running beef x dairy programs as well as for cow-calf operators.
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Fluid milk sales bounced back in September. USDA reported conventional plus organic sales at 3.55 billion pounds for the month, up 2.6% versus September 2024, breaking a two-month losing streak with the best year-over-year increase since last December. Year-to-date: 31.18 billion pounds, down 0.8% year-over-year.
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Retail butter sales stayed in the fast lane during the week ending November 16. Circana reported butter & butter blend volume sales at +4% year-over-year, with the average price at $4.58 per pound, down seven cents on the week and down 8% year-over-year. Natural cheese sales increased by about 2% year-over-year. Average price: $4.94 per pound, down three cents on the week and down 4% year-over-year to the lowest level since May 2022.
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Is it possible that grocers aren’t interested in cheese promotions because they prefer to deal in butter? For the week ahead, USDA reports that 9,202 stores have promos on six- to eight-ounce cheese shreds. While that’s up 10% on the week, it’s still down 37% year-over-year. Price averages $2.56 per package, up 14 cents from the prior week and 3% year-over-year. Activity on six-to-eight ounce chunks looks a little better week-to-week, with promotions up 22% and price down four cents ($2.53). But the store count trails last year by 31%. Meanwhile, butter promotions clock in at 12,791 stores, up 2% on the week and flat year-over-year. Average promotional price: $3.56 per pound, down 15 cents on the week and down 3% year-over-year to the lowest level since mid-July.
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