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The Honolulu Advertiser
Posted on: Thursday, May 29, 2008

Americans embracing Spam as food prices climb

By Emily Fredrix
Associated Press Business Writer

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Spam: www.spam.com

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MILWAUKEE — Love it, hate it or laugh at it — at least it's inexpensive.

Sales of Spam are rising as consumers are turning more to lunch meats and other lower-cost foods to extend their already stretched food budgets.

Spam sales were up 10.6 percent in the 12-week period ending May 3, compared with last year, according to information from Hormel Foods Corp., provided by the Nielsen Co. In the past 24 weeks, sales were up nearly 9 percent.

What was once cheeky, silly and the subject of a musical (as Monty Python mocked the meat in a can) is now back on the table as people turn to the once-snubbed meat as costs rise, analysts say.

Food prices are increasing faster than at any time since 1990, up 4 percent in the U.S. last year, according to the Agriculture Department. Many staples are rising even faster, with white bread up 13 percent last year, bacon up 7 percent and peanut butter up 9 percent.

There's no sign of a slowdown. Food inflation is running at an annualized rate of 6.1 percent as of April, according to the Bureau of Labor Statistics.

The price of Spam is up, too, with the average 12 oz. can about $2.62. That's an increase of 17 cents, nearly 7 percent, from the same time last year. But it's not stopping sales, as the pork in a can seems like an affordable option to consumers.

On a per capita basis, Hawai'i leads all states in Spam consumption, according to Hormel. Spam is celebrated in an annual festival called Spam Jam in Waikiki as well as in Austin, Minn., where Hormel has its corporate headquarters.

Other states with heavy Spam consumption are Alaska, Texas and Alabama, according to Hormel's Web site.

Kimberly Quan, a stay-at-home mom of three who lives just outside San Francisco, has been feeding her family more Spam in the past six months as she tries to make her food budget go further.

She serves meals such as Spam fried rice and Spam sandwiches two or three times a month, up from once a month previously.

Having Spam on the shelf prevents last-minute grocery store trips and overspending, said Quan, 38, of Pleasanton, Calif.

"It's canned meat and it's in the cupboard and if everything else is gone from the fridge, it's there," she said.

Hormel reported last week that it saw strong sales of Spam in the second quarter, helping push its profits up 14 percent.

The company, also known for the Jennie-O Turkey Store, has embarked on its first national advertising campaign for the 71-year-old Spam brand in several years. It credits the sales increase to that, along with new products such as individually packaged Spam Singles slices. Also helping sales, executives said in an earnings conference call, is the fact that people looking to save money are skipping restaurant meals and eating more at home.

LESS-EXPENSIVE MEAT

Spam sales are reaching across all spectrums, young and old and rich and poor, said Swen Neufeldt, Hormel's group product manager for Spam. Many of the eaters are new to Spam, which was created in 1937 and gained fame as the meat that fed Allied troops during World War II.

"We have significantly increased our household penetration," Neufeldt said. "I think it's a lot of folks that are coming into the brand perhaps for the first time and coming back to the brand."

Consumers are substituting meats like Spam and other processed foods for more expensive meats as a way of controlling costs, said Marcia Mogelonsky, a senior research analyst at Mintel International in Chicago.

These products have protein and decent nutritional value, and provide some variety for consumers who may be bored because they're eating more at home, she said.

"They might not have Spam at every single meal, but they might supplement a couple of meals," she said.

Consumers are also using more coupons and paying more attention to sales to save money, she said. You may be able to cut back on your driving to deal with high gas prices, but you're not going to stop eating because of high food prices, she said.

Other companies are seeing similar boosts in their lunch meats. Kraft Foods Inc. reported last month that subsidiary Oscar Mayer, which makes hot dogs, bacon and cold cuts, saw double-digit revenue growth in the previous quarter in its Deli Fresh cold cuts. The company, based in Madison, Wis., has recently introduced new products, including family-size deli meat packs and deli carved meat (thicker slices).

MACARONI AND RAMEN

Quan just bought a couple more cans of Spam on sale and some ramen, the instant noodles long a staple on college campuses.

Her favorite Spam meal? Spam and macaroni and cheese. She doesn't skimp on nutrition, though. Quan serves her husband and three children — ranging in age from 4 to 11 — organic salads, broccoli and carrots.

"It balances out," she said.

April Smith has been changing the way she feeds her family in Broken Arrow, Okla., to keep up with rising costs. This summer, the 33-year-old administrative assistant will feed her two boys, ages 11 and 8, more ramen for lunch. Normally they eat the noodle soup on Saturdays, but since ramen costs only about a dime a pack, they'll get it twice a week. Smith says she'll throw in some leftover frozen vegetables to make it more nutritious.

"Since it's cheap and easy, I figure why not let them eat it twice a week instead of once a week," Smith said.