Food shoppers trading down on expensive items like soda, wine, snacks

It's not a return to the ketchup sandwiches that some survivors of the Great Depression remember, but it's a drastic change in behavior that reaches from kitchen counters to corporate profits.

Julie Gleason walks past the artisan bread section at Top Food & Drug in Shoreline, wistfully remembering a time when her family could afford a good rosemary bread.

"Now, it's usually a double-loaf pack of wheat bread from Costco that costs about $3.50," she said. "With artisan bread, the next day it starts getting stale and you can't make sandwiches out of it."

Gleason also stopped buying soda pop, chips and cookies after her husband, Schy, was laid off last summer. She's cut her grocery bill almost in half, to about $400 a month for a family of five, including two teenagers and her mother.

Restaurant visits are out unless it's a birthday. Her new shopping and eating habits reflect the cost-cutting moves of a country well into its second year of recession.

It's not a return to the ketchup sandwiches that some survivors of the Great Depression remember, but it's a drastic change in behavior that reaches from kitchen counters to corporate profits.

Sales have stagnated at some of the country's biggest food stores, including Costco Wholesale; Safeway; Supervalu, which runs Albertsons; and Kroger, which operates Fred Meyer and QFC.

"People are trading down," said Joe Cohen, owner of Ralph's Grocery & Deli in downtown Seattle, which was remodeled this summer despite the recession.

After years of indulging every culinary whim, from extravagantly priced salt to vitamin-fortified dog water, unemployed and economically wary shoppers have turned to gardening, baking and Hamburger Helper.

Official numbers aren't available for each food category, but the trend toward value has supermarket executives scrambling to offer the next great deal.

Metropolitan Market took a chance by carrying some primrose plants earlier this year when sales of cut flowers dropped.

They sold out so quickly that the six-store chain added bulbs, planters and other gardening products. "It's more than compensated for the floral business being down," said Brad Halverson, vice president of marketing.

Flour and sugar sales are growing faster than most other categories at Bellingham-based Haggen, which runs 33 Haggen and Top Food stores in the Pacific Northwest.

And store brands, which are cheaper than big-name brands, have taken off. They now account for one in five items sold by U.S. supermarkets, drug chains and mass merchandisers, according to the Private Label Manufacturers Association.

Seeking good value

Trading down also means that people who used to frequent restaurants now buy pre-made deli dishes like baked beans and macaroni and cheese, and parents who once shopped in the deli now make meals from scratch.

Hamburger Helper has made a comeback because "it's an easy item for stretching the dinner," said Lynda Tickner, who manages the Top Food store in Kirkland. "You can make it bulk out."

Juice is popular, too, which many shoppers now prefer to soda pop because it has more nutritional value, according to Kari Kostyshak, a cashier and food demonstrator at the PCC Natural Markets store in Fremont.

Sales at Coca-Cola and PepsiCo have fallen. By contrast, sales at General Mills — which makes Hamburger Helper, Cheerios and Bisquick — are up; the food manufacturer recently posted a 94 percent quarterly profit increase.

Kostyshak notices shoppers buying products that are healthy, like vitamins, "but they wait to buy the vitamins on discount days."

Healthy foods were all the rage before the recession struck. For a while, they took a back seat to coupons and bargain shopping, according to recent surveys sponsored by ConAgra Foods on behalf of the National Grocers Association. Now, healthy is coming back.

"We're seeing people still using coupons and their shopping lists, but now they're interested in health again. People figured out they can eat healthy without it costing more," said Phil Lempert, editor of SupermarketGuru.com.

"They buy a can of Hunt's crushed tomatoes for $1.50 and add their own spices, instead of a jarred sauce that's $6 or $7, that's loaded with sugar," he said.

Often, the canned tomatoes are generic, or what the grocery industry calls "private-label." At Costco, private-label items are gaining ground about six times faster than usual.

"It's not unlike people questioning an affordable luxury," said Richard Galanti, chief financial officer. "They were brand-loyal and never thought about trying private label until now."

Fewer dining out

The trading-down trend has put restaurants out of business. The U.S. lost 4,000 in the past year, according to the market-research firm NPD Group.

Louisville businessman Greg Barrett cooks his own meals in a hotel kitchenette when he travels to Seattle for work, rather than put restaurant meals on the corporate account like he used to.

"I try to go the extra mile, keep my CFO happy," he said while shopping for salmon at Ralph's.

Kelly Pehr, a tourist from Florida, spent her Seattle evenings drinking Michelob Ultra at Ralph's outdoor tables — $2.18 a bottle with tax — then asked the checkout clerk to recommend a nearby bar where she could buy a T-shirt.

"There's jazz music, a view of the Space Needle. It's great here," she said of her makeshift happy hour.

Still, Ralph's sales have suffered in the recession.

Cohen notices it in the wine department, where sales have slumped 7 percent even though the store is selling almost as many bottles as it used to. People who used to go for $16 bottles are opting now for bottles at $12, Cohen said.

Even families with steady incomes are cutting back as a precaution.

Chris Littlefield, a landscaper and musician, buys fewer cookies, chips and crackers for his two small children.

"I make my own coffee every day and take it to work," he said while shopping for diapers, coffee and half-and-half at a Safeway in Rainier Valley. He also buys a cup of drip coffee at a coffee shop midday, but that's largely so he can use the bathroom while he's landscaping.

For Annie Barrett, the economic climate is a reminder of 2001, when her husband left a high-paying corporate job to go back to school.

Now, with one child and another on the way, Barrett has stopped going out to eat and learned to be creative with leftovers.

"If we have a whole chicken one day, we'll make chicken enchiladas later in the week," she said.

Grocery executives often talk about whether consumers' old spending habits will return when the economy improves. Shoppers like Barrett offer one answer.

Although she no longer tries to keep the family's grocery budget to $100 a week, Barrett's family eats mostly at home, and she has developed a strong affinity for the quick-meal recipes in Fine Cooking magazine.

"I started reading it in 2002," Barrett said. "We kind of went through this then."