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Published: Sunday, 6/28/2009

Households benefit as glut of milk sends prices down

BY GARY T. PAKULSKI
BLADE BUSINESS WRITER

DAIRY-INDUSTRY travails have combined with recession-fueled disruptions in shopping patterns to create sweet deals on moo juice.

Milk, which averaged nearly $4 a gallon nationwide early last year, is priced below $2 at many grocery stores in metro Toledo.

I m not going to call it a milk war, but everybody watches their prices, said Rick Koepfer, a dairy manager at Sautter s Five-Star Market in Sylvania.

At The Andersons store in Maumee, milk was on sale for $1.79 a gallon last week.

We don t use a lot of milk, but it is a nice break, said shopper Ginny Sturgill of Perrysburg.

A retired teacher from Toledo said that, as the economy has weakened, she has become a more cautious shopper. She rarely buys any groceries that are not on sale and appreciates the drop in milk prices in recent months.

I buy a lot of milk, she said, declining to give her name. Every little bit helps.

Milk sales have increased nearly 10 percent at Kroger Co. stores in the Toledo area since the chain dropped its price to $1.98 a gallon on May 1.

Other chains have matched that. In cities with less competition, Kroger s decision to reduce milk prices has yielded even larger increases in milk purchases, spokesman Amy McCormick said.

In response to the recession, the chain has targeted popular products including milk, ground meat, and chicken for aggressive pricing, the spokesman said.

Meijer Inc. dropped milk prices to below $2 in response to competitive pressures and changes in shopping habits, spokesman Frank Guglielmi said.

Customers are making fewer quick stops on the way home from work and are buying in bulk during less-frequent shopping trips, he said.

In response, Meijer has concentrated price-cutting on staples such as milk, bread, and eggs.

With milk at under $2 a gallon, retailers say they barely break even despite decreases in wholesale prices.

Nationally, the retail price of a gallon of milk last month averaged $3.07, down 14 percent since January and 21 percent since January, 2008, according to federal estimates.

Americans drank slightly more milk in 2008, when consumption of other beverages commonly found on store shelves recorded a rare decrease, according to figures from the consulting firm Beverage Marketing Corp.

Milk can be found in 90 percent of the nation s households.

Children are the largest consumers, according to the research firm Data Development Worldwide. Consumption drops off in the teen years.

In 2007, milk sales nationally equaled 21 gallons annually per person, the U.S. Department of Agriculture says.

Whole milk accounts for less than a third of sales; the rest are of fat-free and reduced-fat milk.

One factor that could help to keep prices down in the near term: Consumption typically decreases when school lets out for the summer, retailers said. In hot weather, many people prefer beverages such as soda pop and iced tea.

In the long term, industry analysts expect retail prices to follow wholesale prices higher because producers are moving to reduce supplies by culling their herds.

Contact Gary Pakulski at:gpakulski@theblade.comor 419-724-6082.



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