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Clipping, Scrimping, Saving
Egg prices are up 35 percent, with milk and bread not far behind. Consumers are scrambling to find ways to cope.

By Jane Black
Washington Post Staff Writer
Thursday, May 1, 2008

The last thing Marti Tracy wants to do on a Saturday is clip coupons. But last month the 34-year-old Bowie resident felt she no longer had a choice. She'd already given up organic meat and decided to buy organic milk only for her 2-year-old son, not for the whole family.

Tracy and her partner also stopped buying the cereals they like in favor of whatever was on sale; stopped picking up convenient single-size packs of juice, water or crackers; and, in order to save gas, stopped going to multiple stores. "I find the whole thing a huge hassle, but I've reached a tipping point," said Tracy, a government human resources specialist who is pregnant with her second child. "Clearly, I'm not unable to feed my family. But I just can't feed my family the way I'd like to feed them."

Since March 2007, according to the Bureau of Labor Statistics, the price of eggs has jumped 35 percent. A gallon of milk is up 23 percent. A loaf of white bread has climbed 16 percent. And a pound of ground chuck is up 8 percent. Overall, U.S. food prices in 2008 are expected to rise 4 to 5 percent, about double the increases of recent years. And while the total rise is far less drastic than elsewhere around the world, the sharp hike for staples means everyone is feeling the pinch.

"We are in shocking new territory," said Todd Hale, senior vice president of consumer shopping and insights at Nielsen Consumer Panel Services. "With the exception of the very affluent, everyone is looking to save by altering where they shop, how they shop and the brands they buy."

Take the uptick in coupon clipping. According to NCH Marketing Services, a coupon clearinghouse in Chicago, the number of grocery coupons redeemed in 2007 increased by 100 million, or 6 percent, to 1.8 billion. The rise reversed a seven-year decline. "Every year, manufacturers have made coupons more difficult to redeem by shortening the expiration date and increasing the purchase requirements. And every year, people redeemed them less," said Charlie Brown, NCH's vice president of marketing. "This tells me that consumers are now more determined to save money."

The crunch for American shoppers pales compared with the challenges faced by those in the developing world. Americans spend just 9.9 percent of household income on food, according to the Agriculture Department. Compare that with poor countries such as Ethiopia and Bangladesh, where it's not uncommon for families to spend 70 percent. Diets also are more varied here: If the price of milk or flour jumps, shoppers can opt for other items. A typical poor family in Bangladesh, said John Hoddinott, a senior research fellow at the International Food Policy Research Institute, gets 70 to 80 percent of its calories from basic staples, commodities whose prices have risen fastest.

"Internationally, it's appropriate to say the sky is falling," said Ephraim Leibtag, an economist with the Agriculture Department's Economic Research Service. "The average household is affected here, but it's not a dire situation."

Still, the timing has spooked shoppers. The bad news about the mortgage crisis has helped sink consumer confidence to a five-year low. The average price of a gallon of gas reached $3.60 this week.

The drumbeat of ominous headlines is also alarming. U.N. Secretary General Ban Ki-moon said in Geneva on Tuesday that he would set up a task force to tackle rising food prices in an attempt to avert "social unrest on an unprecedented scale." President Bush has freed up $240 million in food aid to meet emergency needs around the world, bringing the total U.S. contribution since October to $1.36 billion. Members of Congress and even Secretary of State Condoleezza Rice are starting to question whether ethanol mandates, which have been linked to rising prices, are the best answer to America's reliance on imported oil. Today, Sen. Charles E. Schumer (D-N.Y.) will hold the first congressional hearing on how skyrocketing food prices are affecting American families.

"You used to hear people talking about increases on specific items; now it's much more broad," Schumer said. "When you go down the street now, you hear people complaining about food prices almost as much as gas prices."

The price hikes have hit home for Nicole Gindraw-Parrott, a 29-year-old trainer at an Atlanta gas utility and a mother of two. Since January, she said, she's been transformed into a "coupon-clipping, price-matching monster."

Gindraw-Parrott no longer buys brand-name products unless she's at a warehouse store like Sam's Club or BJ's Wholesale Club. She's even begun sending herself reminders on her BlackBerry so she doesn't forget a case of water on sale at CVS or the twice-monthly sale on milk at Kroger: On Saturday nights, after the kids are in bed, she sometimes hits the grocery store to pick up a gallon of milk before the sale ends at midnight. If she buys at the last minute, the milk will last through the next week. Sometimes she freezes it.

Despite her efforts, Gindraw-Parrott said, her grocery bills are up about 25 percent recently, from $400 per month to $500 or more. "I used to be one of those people who would stop at the nearest gas station and pick up what I needed," she said. "It was all about convenience."

Other shoppers, like Kathleen Holly, are coping by visiting fewer stores and shopping closer to home. The Congress Heights senior said she hadn't yet made big changes to what she buys. Instead, she's conscious of "making a circle" when she gets in the car. "If I'm driving, I go to the bank, the grocery store, the cleaners all in one trip. That way, I can save money on gas and keep buying the things I'm buying."

In March, Nielsen reported that the annual number of shopping trips per household had dropped 9 percent, from 181 in 2001 to 164 in 2007.

Getting the best price and shopping close to home can be mutually exclusive, however, as large discount stores tend to be far from cities.

Recent data reflect several consumer strategies to cope. For example, Nielsen reported, 70 percent of consumers said they planned to try to combine errands to use less gas, while 27 percent said they planned to go to supercenters, such as Wal-Mart and Target, more often.

Already, such stores are gaining revenue. In March, BJ's same-store food sales jumped 5 percent. Departments with the strongest sales increases over last year included coffee and tea, dairy, eggs, juices, frozen goods, and produce. Wal-Mart does not break out food sales, but a company spokeswoman noted that customers have increasingly used gift cards for groceries in recent months. Sales of peanut butter and pasta, staples for bagged lunches and cheap dinners, also are on the rise, she said.

For large families, price is a main driver. Until recently, Pauline Adutwun, 38, shopped regularly at five stores -- Bloom, Costco, Shoppers Food & Pharmacy, Bottom Dollar and Aldi -- to feed her five children. But since January, the Occoquan resident said, she is spending more time at Aldi, a discount grocer, which has 10 stores in the Washington area and plans to open seven more this year.

Unlike bigger grocery stores, which stock 25,000 to 100,000 items, Aldi carries just 1,300. The limited selection, along with Aldi's policies not to take credit cards and to charge for plastic or paper bags, helps keep costs down. Adutwun can easily rattle off the price differences between local stores: a loaf of white bread at Aldi costs 75 cents vs. $1.09 at Bottom Dollar across the street; conventional 2 percent milk, of which Adutwun buys about five gallons per week, costs $3.38 vs. $3.75. "I used to shop around. I'd go to Costco to buy the big packages of cereal, but now I mostly buy here," Adutwun said. "I can't afford to buy brands anymore."

Consumers also are saving by stocking up on sale items, then trying not to waste. (According to a 2004 study at the University of Arizona, the average American household wastes 14 percent of food purchases; nationwide, that adds up to $43 billion.) NPD Group, a market-research firm, reported that 56 percent of financially challenged adults said they are trying to use leftovers more than they did last year; 54 percent said they are stocking up when items were on sale.

"We're that older generation that feels we need to have food to feed half the block if they happen to get hungry," said Holly, the Congress Heights senior. "I am not stuffing the freezer anymore. I just buy what I need when I need it, or I try to use up what I already have. That's a form of cutting back I haven't done in the past."

Others are taking more direct action: growing their own food. Inspired by the victory gardens of World War II, Eddie Beuerlein, 31, a computer security consultant, planted one of his own this spring. Using old tires he found in the woods near his home in Aldie, Va., he created raised beds where he could plant potatoes, onions and radishes, plus lettuce, zucchini, snow peas, peppers and, soon, watermelons. "With all the increase in the fuel costs and in vegetables, it seemed like it would be a good idea," Beuerlein said. On average, Beuerlein estimated, his household of five spends about $100 per week on fruits and vegetables. The cost of the seeds and soil for the garden was less than $50. "Based on what I've read, I think we'll have more than we can possibly eat."

One thing consumers haven't skimped on are organic products. Over the past 12 months, organic food and beverage sales jumped 25.5 percent, to $4.3 billion, according to Nielsen. Many shoppers who prefer organic are finding other ways to cut back rather than give up products that they think are healthier and better for the environment.

Case in point: Poli Marinova, a Bethesda marketing communications manager, said she has cut her grocery bills by almost 30 percent without switching to conventional foods. Instead, she skips "luxury items" like sushi and prepared sandwiches and soups. "We're buying a lot less overall at Whole Foods. We used to buy juice, biscuits and baby food from there," she said. "Now, we get a lot of that stuff at Costco or the Giant so we can afford to keep buying organic."

That there are myriad ways American consumers are making ends meet doesn't surprise Harry Balzer, vice president of NPD Group. Every generation, he said, spends a smaller percentage of its income on food than the one before. Today, the portion of income Americans spend on food is 58 percent lower than in 1929. "Everyone will find ways to moderate, to keep costs down," Balzer said. "There will not be a recession in eating."

But the long era of cheap food may be over. Global forces -- economic, agricultural, political -- have combined to create a new order that could prevent prices from dropping back, as they have in the past.

That troubles Pat Carroll, a retiree in Congress Heights: "I'm concerned, especially for families with children and for seniors. It's a problem for anyone on limited income. And I don't know anyone with unlimited income."

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