Economic pinch takes bite out of school lunches
MILWAUKEE — 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 steadily rising and eating into food companies' profits. So big names like Kraft Foods, 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 $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.
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, like Moors, will save is to stop buying prepackaged snacks, especially the 100-calorie ones that hit the markets 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.
Many food items have been shrinking as companies try to make up for higher ingredient costs. The companies are also raising prices, but making products smaller gives them another way to make up the difference. At the same time, though, customers are getting less food — and they're not paying any less.Here's a look at how some big-name products are shrinking:• Cereals: In June, Kellogg Co. said it was shrinking, by an average of 2.4 ounces, the packages of 14 items sold under the brands Apple Jacks, Cocoa Krispies, Corn Pops, Froot Loops and Honey Smacks. Rival General Mills more than a year ago shrank some of its boxes, including Cinnamon Toast Crunch and Trix.• Orange juice: Large jugs by Tropicana are now 89 ounces, down from 96 ounces. The company is part of the PepsiCo family of products.• Peanut butter: The Skippy brand, made by Unilever, now sells in packages of 16.3 ounces, down from 18 ounces.• Deli meats: Some packages of Hillshire Farms deli meats, made by Sara Lee Corp. are now in 9-ounce tubs, down from 10 ounces.• Mayonnaise: Certain Jars of Hellmann's, also by Unilever, are now 30 ounces rather than 32 ounces.• Margarine: Some Country Crock tubs, by Unilever as well, are now 45 ounces, down from 48.• Ice cream: Certain packages of Breyer's, also made by Unilever, and Edy's, by Dreyer's Grand Ice Cream Holdings, are now selling in 48 ounce cartons, down from 56 ounces.• Chocolate: Mars plans to decrease the volume of some of its package types. It makes Snickers bars and M&M candies, among other brands, and hasn't announced specifics.• Gum: Wm. Wrigley Jr. Co. now sells brands like Juicy Fruit, Big Red, Doublemint and Winterfresh in 15-stick packages, down from 17.Source: The Associated Press and Edgar Dworsky, editor of consumer education Web site Mouseprint.org.
