Expansion and Contraction

• Eager to attract new customers, some brands have stretched their footprints.
• High food prices and inflation are causing consumers to cut corners.

Innovation Nation

Amid all the inflation and supply chain hiccups, brands are still pushing innovation in some interesting directions. From offbeat extensions to trying new things altogether, below are some of the latest attempts to cross category lines:

• As part of its “partnership to extend select iconic brands into some of the fastest-growing alcohol beverage segments,” Boston Beer Company, maker of Sam Adams beer, and Beam Suntory launched Twisted Tea Sweet Tea Whiskey. We might need a minute; lots going on there.
• After a pandemic pause, Taco Bell announced the return of Mexican pizza to its menus. The New York Post discussed the matter with the company, which denied any conspiracy theory that removing the item was “a ploy by Taco Bell to fuel demand by making it unavailable.” The New York Times described on August 8 how Mexican pizza has become a genre on its own.
• Beverage Daily interviewed Monster Energy CEO Rodney Sacks about the company’s latest foray into alcoholic beverages — “The Beast Unleashed” — and how the product would “carve out its space in the beverage alcohol sector” to be “distinguishable” from the many other hard seltzers out there. Tall order, even for a 16 oz. energy-enhanced 6% ABV beverage.
• The Wall Street Journal’s Heather Haddon reported on the history of, and recent demand for, salads at burger-centric McDonald’s. After introducing salads to the menu in 1987, the chain has had a back-and-forth relationship with the healthy option. After pulling salads from the menu in 2020, Haddon documented strong customer demand to bring them back.
• Hostess lended its distinctive Twinkie and Ding Dong flavors to the ready-to-drink category. Food Ingredients First summarized big growth for the products sold at Walmart.
• One extension did not work. CNN’s headline summed it up best: “Domino’s tried to sell pizza to Italians. It failed.”

Trading Down

Industry analysts observed a growing trend: ongoing food price inflation is encouraging consumers to “trade down” to cheaper options. Premium options are taking a hit as consumers reevaluate where and what to eat.

• Progressive Grocer’s Lynn Petrak reported that food-at-home prices — climbing to 13% in the past year — run counter to overall inflation, which leveled off in July.
• In its August 9 earnings call, Tyson Foods CEO Donnie King explained that the company saw a slump in steak sales, contrasted with a surge in chicken demand (Food Business News).
• Beyond Meat’s plant-based alternatives suffered the same fate as the beef it seeks to replace — other protein options remain cheaper (Reuters).
• Supermarket News reviewed data from Organic Produce Network, finding that conventional produce sales volume fell less than organic produce sales. While conventional prices climbed faster, relatively speaking, organic produce remains nearly twice as expensive pound-for-pound.
• Associated Press reporter Dee-Ann Durbin covered a shift away from grocery delivery due to fees and tips. Easing of pandemic restrictions has played a role, too.
• Restaurant traffic declined overall, but segments like fine dining took a bigger hit: “Price-conscious consumers are favoring the value-obsessed QSR and fast casual segments.” (Nation’s Restaurant News)
• Bloomberg added a global perspective, looking at how families in the U.S., India, Brazil and Nigeria have balanced food costs with other budgetary needs. There’s a lot to be learned from charts that compare the nations’ inflation rates.

Hey, What’s Good This Week?

On August 10, Pizza Hut partnered with Dairy Farmers of America to get farmers involved with efforts to reduce greenhouse gas emissions. The pizza chain has committed to sourcing the majority of its cheese from farms that participate in its Farmers Assuring Responsible Management and Environmental Stewardship program by 2025. Unlike some brands’ emissions targets that rely on suppliers to do the legwork, Pizza Hut’s commitment has set up a pathway to map the environmental footprint of dairy and directly provide farmers extra resources to tamp down emissions.