New Report Says Retailers Can Capitalize on Rising Food Costs

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New Report Says Retailers Can Capitalize on Rising Food Costs

NEW YORK -- According to a new report by Deloitte Touche Tohmatsu, commodity prices might soon reach its peak; however, consumer behavior and retail strategies are forecasted to tighten.

The report, "Food and Beverage 2012 -- a taste of things to come," noted high commodity prices continue to offset the market balance, which further erodes related economic conditions such as higher energy costs and the availability for cheap credit.

Bruce Westbrook, Deloitte's Consumer Products Consulting Leader in the U.S., said in a released statement: "We are already seeing signs of higher food prices leading to a shift in purchasing patterns towards lower-priced private label and discount products and shopping at low-priced retailers. It could also result in a shift away from eating meals in restaurants and bars -- as was the case in the last economic downturn. In poorer countries, where governments are less able to afford food price subsidies, the increases in food prices are far more serious and have resulted in violent protests in parts of Asia, Latin America and Africa."

The report found that since 2000, the prices of maize and rice have doubled while the price of wheat has tripled. In 2007 alone, wheat prices rose 52 percent while the Food and Agriculture Organization of the United Nations reported that its global food price index rose 40 percent compared to only 9 percent in 2006.

For retailers, a new market emerges. "Consumers switching from eating out to shopping for food for home should protect growth. Price inflation also presents retailers with an opportunity to protect and enhance margins as consumers become more accepting of price increases," Pat Conroy, vice chairman and Deloitte's U.S. Consumer Products Leader, said in a released statement.