Holiday food, drink seen strong amid retail blues

By Lisa Baertlein and Bob Burgdorfer - Analysis

LOS ANGELES/CHICAGO (Reuters) - Grocery sellers are poised for a hearty holiday season as harder-to-get credit and rising unemployment promise to keep consumers close to home and family.

U.S. shoppers, who have been putting off purchases of clothes, furniture and cars in what could be the worst retail environment in three decades, are stretching their food dollars by visiting fewer restaurants, clipping coupons and trading down to store brands.

"Every retailer who does a penny-a-pound for turkey is going to win this year. People are more concerned about saving money than ever before," said Phil Lempert, editor of SupermarketGuru.com.

The American Farm Bureau Federation tracks 12 items to estimate the cost of the average Thanksgiving dinner and expects that the cost for a family of 10 will be up 6 percent to $44.61 this year, largely due to higher prices for turkey -- the centerpiece of the traditional Thanksgiving meal.

Plentiful supplies of ham, another popular holiday main dish, could translate into lower prices this season and wine, beer and spirits are still expected to have a part in at-home celebrations.

"There is a great re-emphasis on meals and entertaining," said Thom Blischok, president of innovation and consulting at Information Resources Inc (IRI).

Grocery sellers of all stripes are optimistic.

Supervalu Inc (SVU.N) CEO Jeff Noddle told Reuters in October that he sees strong Thanksgiving sales and Winn-Dixie (WINN.O) Chief Executive Peter Lynch said that he was expecting a good holiday season for grocers.

Wal-Mart Supercenters (WMT.N), SuperTarget (TGT.N) and other big box retailers that can undercut grocery stores on price are expected to post overall sales growth -- including nongrocery items like clothes, shampoo and toys -- of 9 percent this year.

Low-price grocers like Supervalu's Save-A-lot and Aldi (ALDA.O) are expected to expand sales by 4.8 percent, while growth at traditional supermarket chains like Kroger (KR.N), Safeway (SWY.N), Publix (PUSH.OB) and Winn-Dixie is targeted at 3.1 percent.

Sales of lower-cost store-brand items -- called private label or corporate brands -- are also on course to grow this year both in terms of dollar and units, Euromonitor retailing analyst Phil Park said.

In addition to helping consumers save on grocery bills, grocery stores make more profit on sales of private label than national brands.

"Private label is what's for dinner this holiday season," IRI's Blischok said.

TURKEY OR HAM?

Consumers have seen grocery prices rise for much of this year, and analysts are watching consumer prices of traditional holiday meats.