Food & Beverage Store Sales Up 4.6% Through May But Far From Stellar

Cash registers at the nation’s food & beverage stores rang up 4.6% more in sales this year through June 1 compared to last year, according to the government data analyzed by The Food Institute. During May alone, sales rose 4.1% on the heels of a significantly larger 8.1% gain in April. Of the nearly quarter trillion dollars in sales, about 86% or approximately $213 billion come from supermarkets alone.

Cash registers at the nation’s food & beverage stores rang up 4.6% more in sales this year through June 1 compared to last year, according to the government data analyzed by The Food Institute. During May alone, sales rose 4.1% on the heels of a significantly larger 8.1% gain in April.  Of the nearly quarter trillion dollars in sales, about 86% or approximately $213 billion come from supermarkets alone.

To put that 4.1% increase into perspective, consider that food prices during the first four months of 2011 were running an even 4% more than a year ago, leaving so called “real” growth at supermarkets at just one-tenth of a percent.

All this indicates that they continue to lose some share to other segments of the food retailing industry, as well as alternative retailers, like warehouse clubs, dollar stores and other retailers such as Wal-Mart and Target, who continue to expand their focus on food.

A recent report from CITI noted that dollar stores continue to increase their food offerings, with some offering beer and wine as well. While the overall share of the retail food market is only around 2% to 3%, it is growing rapidly and that growth is coming from more traditional players in some markets. Smaller package sizes, convenience and consumers tuning to dollar stores for fill-ins are among the factors noted that are driving that growth.

Meanwhile The Food Institute reports that although wholesale food prices through May were running 4.8% more than a year ago but that the May Producer Price Index for finished foods actually fell for the third straight month -- the largest in 22 months. The Food Institute does note that a good portion of that monthly decline in May as attributable to sharp drop in fresh fruit and vegetable prices, always a very volatile category.  During May, wholesale coffee prices declined a very slight 1.3% as well, but were still up more than 20% from a year earlier. And that increase compared to a year ago, was topped by shortenings and cooking oils which as of May were priced a significant one-third higher than last year.

For a more detailed look at food prices, be sure to turn to The Food Institute Report and the association’s website atwww.foodinstitute.com