In a few days it will be Thanksgiving, that great holiday where people consume huge quantities of turkey, stuffing, cranberry sauce, and pie for dessert. One of the strange things about this holiday is that a few days before everyone starts cooking, turkeys go on sale! In my family, we almost never eat turkey except at Thanksgiving. Why does the price come down at the one time in the year when demand for the product spikes?
Most people think the price should rise because more people are buying turkeys. This is true. There are more people buying and cooking turkeys, which pushes the price up.
However, stores are interested in maximizing profits and turkeys are not very profitable items, even at full price. The store knows that if you are coming in to buy a turkey, you will likely purchase other items too, such as seasonings, disposable roasting pans and soda. The other items are where the store makes its money since the profit margins on these items are much higher than on commodities like frozen turkeys.
Because of the desire to attract people to stores, the supply of turkeys skyrockets just before the holiday. Freezer cases are overflowing with the birds. This dramatic increase in supply happens because turkeys are slaughtered continuously throughout the year and then put into cold storage. Below is a graph based on US Department of Agriculture data that shows in millions of pounds the amount of turkey in wholesale freezers since 2010. Turkey stocks slowly build up each year until they reach a peak in September. Between September and December turkey stocks plummet as stores purchase them and put them on sale. Then farmers, meat processors and wholesalers slowly rebuild their stocks for the next year’s holiday.
Frozen turkey meat in cold storage waiting to be sold since 2010.
What does this mean for the typical consumer? If you like to eat turkey, now is the time to stock up, when prices are cheap. Otherwise, your wallet will get plucked.