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Fluctuating turkey prices leave Kotzebue shoppers wondering

December 22nd, 2017 | Shady Grove Oliver Print this article   Email this article  

It all started with a snapshot of a $93 frozen turkey at the end of October. The photo took social media by storm, garnering more than 300 shares on Facebook and eliciting heated responses from residents across rural Alaska, where the cost of a full holiday dinner can easily top $500 and many a credit card limit.

Kotzebue resident Leanne Viveiros, who snapped the picture in the local Alaska Commercial Company store and posted it to Facebook on Oct. 23, framed it with a simple question: "Who can afford this?"

"I heard about that post," said the company's General Manager Walter Pickett. Pickett oversees AC's statewide operations. Store prices are set at that level and not by each local manager.

Since then, Kotzebue shoppers have been scratching their heads over drastic fluctuations in the birds' price. In just weeks, the cost dropped by a whopping $1.50 per pound, leaving people wondering why and how that could happen.

"Basically turkeys are, through most of the year, at a standard price. Typically, after Easter through up until about Nov. 1, we have a that price," Pickett explained. "It's based on cost, plus shipping, plus the amount to maintain the product. You can imagine, with turkeys, we don't sell a lot during the summer months or even up until just before Thanksgiving."

At the end of October, when the nearly-$100 turkey showed up, the price per pound was still set for the off-season, he explained.

"Then, what we do is we pre-book, typically early in the summer, our forecasted needs for the holiday season — and it's not just turkeys; it's also hams and prime ribs," he said. "By buying in bulk for that time of year, we get a much better cost. And for the holidays, we do reduce our retails for Thanksgiving, for Christmas and for Easter."

Prices are set differently for each of the rural markets, based on the cost of getting products to the location in good shape. So, for Kotzebue, the pre-holiday price for a frozen Butterball turkey was $3.79 per pound, meaning a 25-pound bird would clock in at just under $100.

Once the holiday shipment arrived and turkeys became the seasonal special for the store, the price per pound for the same Butterball brand dropped to $2.29. That's why, just days after the picture was taken, the same turkey would have cost just over half the original — about $56.

Now that we're into the Christmas-shopping season, the price will likely rise slightly, by about $0.50 per pound. That's what Pickett described as the long-term price reduction amount, meaning what it will stay at until the seasonal shipment is sold out. It's not quite as low as the price for a Thanksgiving special, but it's still within the cheaper shipment.

"We have ham and prime rib as our featured items for Christmas," he said. "You associate Thanksgiving with turkeys, and that's why we ran that extra-hot price for turkeys at Thanksgiving, because it's our front-page ad item. This week, turkeys are still at a reduced price, but they're on the back page with the rest of the meat assortment. So, basically, that's the thought process we use. It's the large purchase for the holidays that we bring the prices down for, and then we get it at lower cost and make sure we've got those as an advertised special. It's very similar to pretty much any retailer throughout the country running a deeper discount for our customers during the holiday season."

Kotzebue, like its neighbors to the north, is serviced through bypass mail for air freight. Many retailers throughout the Northwest Arctic and North Slope try to ship in what they can by barge in the summertime, to keep costs lower. But that's often not possible for refrigerated items, like turkeys, which must be bought closer to when they'll be sold. That means their shipping doesn't line up with the infrequent barge service, so it has to come by air.

"Bypass mail is a higher price, so that does get factored into Kotzebue's retails," Pickett said. "It's set by the post office, but because it's further to get to northern Alaska — the high north — there's a little bit of a premium there. The other factor is, for anything that is refrigerated or frozen, the cost of those utilities. We don't get any breaks on our utility costs and we don't have any state or federal subsidies. So, in some cases, we're paying $0.60 or $0.70 cents per kilowatt hour. So, to run the refrigeration and lights, part of that expense is factored in, especially to any chill and freeze."

He noted that AC does try to upgrade their equipment, as they are able, to the most energy-efficient models possible, in order to save on overhead.

"Also, wherever we can, we go back and negotiate price and try to leverage the fact that we're the largest rural retailer in Alaska. Obviously, we're not going to have the buying power of a Wal-mart, but we still have some clout and some bargaining power when you're looking at the combined purchases of more than 30 stores," he said.

By ordering all the holiday meats in bulk early on in the year, they are able to drop the prices significantly when that shipment arrives. However, prices are still much higher for Kotzebue than for other regions, like Anchorage.

So, although high prices are a point of contention for most rural residents, Pickett said customers will likely see the same cycle reflected in future years with cheaper birds flying in special for the holidays.

 

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