July 31, 2020
Friday by Noon:
Losses Adding Up
Business performance drew particular interest this week, further emphasized by a record drop in GDP:
- Major food brands released quarterly earnings statements, many reflecting the realities of the pandemic.
- Coronavirus relief and worker safety rounded out conversations in Washington.
- The Intel Distillery hosted a webinar featuring food production leaders.
“Demand for high quality protein has been increasing for some time, but the pandemic certainly brought those sharp increases to light in a way that none of us could have imagined.”Emily Metz, President and CEO, American Egg Board, Intel Distillery Webinar
Ups and … Mostly Downs
In a week filled with earnings reports and corporate strategy statements, foodservice, supermarkets and packaged goods companies confirmed the impacts of the pandemic. Food industry losses reflect jolting second quarter GDP numbers released on July 30, revealing a 32.9% annualized decline, the worst since 1947 (U.S. Department of Commerce).
- Nation’s Restaurant News reported a 41% drop in Starbucks’ U.S. same-store sales for the third quarter, while McDonald’s posted a 68% decline in net income for the second quarter and announced the closure of 200 U.S.-based low-sales-volume restaurants, half of which are located in Walmart stores.
- The situation in retail remained positive. Albertsons highlighted 276% growth in digital sales, and privately held Aldi U.S. reaffirmed expansion plans to become the “third-largest U.S. grocery retailer by store count by the end of 2022,” according to Supermarket News.
- In agriculture, Meatingplace shared second quarter losses by Pilgrim’s Pride, and grain trader Archer Daniels Midland posted higher profit due to strong global demand (Reuters).
- The Wall Street Journal examined second quarter losses by Kraft Heinz and Mondelez despite strong sales. Meanwhile, Anheuser-Busch InBev beat analysts’ expectations (Bloomberg).
Congress vs. COVID
Strong voices in food and agriculture rattled off wish lists over the past two weeks, hoping to attract funds from COVID-19 relief bills. In Congress, the Democrat-controlled House of Representatives passed the HEROES Act on May 12, and the Republican-majority Senate countered on July 29 with the HEALS Act.
- In a DTN/Progressive Farmer article, reporter Jerry Hagstrom broke down how each bill tackles farm relief as well as industry groups’ responses.
- Nation’s Restaurant News Associate Editor Joanna Fantozzi highlighted changes to the Paycheck Protection Program and other provisions for small businesses.
- Colin Schwartz of Center for Science in the Public Interest called out the Senate bill for reducing hunger relief funds.
- Sens. Elizabeth Warren (D-Mass.) and Cory Booker (D-N.J.) pushed for “an Essential Workers Bill of Rights” in a July 24 statement.
- On July 28, The United Food and Commercial Workers International Union (UFCW) sued the Trump administration for loosening restrictions on poultry processing plants.
On July 27, Bader Rutter’s Intel Distillery team partnered with the Chicagoland Food & Beverage Network to deliver a 60-minute webinar: “What’s Trending in Food Production? And What About It?” The event featured experts from across food, beverage and agriculture who provided additional perspectives on the second quarter’s Top Ten Topics. Click here to watch a replay of the webinar and download a copy of our Q2 report.
- Ad Age reporter Jessica Wohl kicked things off, discussing meatless foods, a topic that fell from the Top Ten. She suggested that plant-based alternative brands need to be where people are looking: alongside protein options in the meat case.
- Karen Meinders, global sustainability communications leader for Corteva Agriscience, discussed stewardship and how Corteva helps farmers conserve natural resources and protect farmland.
- Kathir Krishnamurthy, PhD, from the Institute for Food Safety and Health at Illinois Tech highlighted food safety amid the pandemic and cast a largely reassuring tone: “In general, food safety as it relates to COVID-19 is not a problem.”
- Reflecting on the topic of protein, Emily Metz, president and CEO at the American Egg Board, told a tale of two extremes for eggs during COVID-19: booming retail sales next to struggles in foodservice.
- Dallas Hockman, vice president of industry relations at the National Pork Producers Council, shared how shifts in international trade policy and animal disease have affected the global protein marketplace.
- Meatingplace editor-in-chief Lisa Keefe opined on workers and the unique position in history we’re in to revisit systemwide workforce concerns and the impact on food prices.
- Commenting on the quarter’s #1 topic of hunger, Brett Lutz, vice president of global communications at ADM, suggested that hunger is a complex, multi-dimensional issue that has only been made worse by COVID-19.
Some important points of view worth checking out this weekend.
A Pause for Health?
NPD Group’s Darren Seifer shared food research from its National Eating Trends service that shows shifting priorities with health and wellness during COVID-19. Consumers are using certain foods to address side effects of the pandemic, like boredom. Additionally, consumers report having more snacks on hand, eating more sweets at home, and a decline in adults avoiding sugar, sodium and alcohol. Sounds about right.
Cosmo’s Boy Babies
Grist’s Nathanael Johnson captured some of the excitement as a team of UC Davis researchers, including animal biotechnologist Alison Van Eenennaam, witnessed the birth of Cosmo, a genetically enhanced bull-calf. Cosmo is the result of more than five years of intense research and testing with the intention of producing a bull that can sire 75% male calves. The article outlines the environmental gender advantages of male calves, including fewer methane belches. Van Eenennaam remarked: “They are more like a Prius than a Hummer.”
‘New CDC Director’
In a New York Times op-ed, Bill Saporito quipped that Walmart is “the new CDC director” after the retail giant began requiring customers to wear masks last week. Given the lack of national requirements, Saporito commented: “It is this vacuum of responsibility that is compelling the businesses that are expert at selling coffee, underwear and groceries to manage the pandemic across their swath of the economy.”
A wave of speculation about “mystery seeds” appearing in mailboxes worldwide — sent from China — caught the attention of many influential voices. The Wall Street Journal on July 30 reported that tested samples have shown no signs of plant diseases or pests and seed samples may indicate nothing more than “brushing” marketing scams (Better Business Bureau).
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