June 12, 2020
Peanut Butter Jelly Time
The state of retail and foodservice channels keeps evolving as coronavirus restrictions ease and the industry adjusts to this “new normal.” Labor, production and transportation complications will lead to price hikes throughout the industry.
- Retail: Will the center of the store outpace the perimeter?
- Foodservice: Are current gains in employment a permanent trend?
- Agriculture: What does the future hold for dicamba?
“There is an enormous movement back to basics. Center aisle products that were sort of being shunned have become comfort food and practical food.”Joe Perez, Goya Foods (Food Dive)
Retail in Demand
The center aisles of grocery stores — an area neglected by trends over the past several years — have experienced a bit of a renaissance. The coronavirus pandemic has consumers seeking value, shelf life and familiarity for their cupboards.
- Demand for the classic PB&J has never been higher; Smucker’s had an excellent quarter (Food Business News). Agri-Pulse called peanut butter “a COVID-19 silver lining” as the high-protein spread is in high demand by households, food banks and foreign markets.
- On June 11, CPG data analytics leader IRI made public its Demand Index to “provide an unprecedented view of key CPG metrics to help manufacturers benchmark their performance.” Growth in demand for frozen and “general” foods outpaced produce and deli since March.
- On June 9, Annie Gasparro from The Wall Street Journal reported several indicators of rapidly rising food prices, citing pandemic-related increases in labor and transportation. The article suggests consumers are seeking value via private-label, center-store packaged goods and buying in bulk.
- Food Dive’s Lillianna Byington fleshed out the center-store trend with quotes from leaders at ConAgra, Goya and Mintel, whose analyst said, “consumers will be looking for foods that feel low risk and a good value for their money.”
Foodservice Regaining Some Footing
Job losses, restaurant closings and changing plans have been prevailing foodservice themes. But signs of resiliency are emerging as industry leaders talk about adapting, reopening and rehiring workers.
- On June 6, The Wall Street Journal outlined the overall foodservice situation: 6 million workers lost jobs (roughly half of the total restaurant employees in February), a scant 3% of foodservice operations improved sales over last year, “ghost kitchens” gained traction and many pivoted to take-out and delivery operations.
- Business Insider covered a report released by Buyers Edge Platform that showed restaurants face huge meat price increases, which will drive up costs for all menu items.
- While Bloomberg listed prominent fine-dining restaurant closures such as David Chang’s Momofuku in Washington, Slate explained how Starbucks (which announced 400 store closures over the next 18 months) will actually end 2020 with about 100 more stores than in January.
- On day 4 of NRN’s Restaurants Rise virtual conference, industry leaders spoke about how marketing has changed in foodservice. Speakers, including Chris Hollander from Panera, cited flexibility and a willingness to demonstrate safety to customers as key to a successful marketing narrative (Nation’s Restaurant News).
- NPD Group posted a positive sign of loosening restrictions: as of May 31, 68% of restaurants nationwide can reopen.
- On the heels of these loosening restrictions, Food Business News shared federal employment data indicating an improved situation. The industry has added back approximately 1.4 million new jobs as of June 5.
“I don’t know about the rest of you, but the ads feel like a sea of sameness, they all start with that lilting music.”Chris Hollander, Panera Bread (Nation’s Restaurant News)
On June 3, a federal appeals court threw a wrench in farmers’ plans by revoking EPA approval of the herbicide dicamba. The court’s ruling stemmed from concerns about the weedkiller’s tendency to damage neighboring plants if applied under the wrong weather conditions. Dicamba gained popularity in the past three years after Bayer developed genetically modified soybeans that tolerate the herbicide.
- On June 8, EPA Administrator Andrew Wheeler stated, “The Court’s decision has threatened the livelihood of our nation’s farmers.” He clarified that dicamba can no longer be sold, but farmers may still use existing supplies until July 31.
- George Kimbrell of Center for Food Safety, one of the groups that sued the EPA, called the court’s decision “massive win for farmers and the environment.” On June 11, the group filed an emergency hearing to overturn the EPA action, stating: “EPA needs a lesson in separation of powers.”
- American Farm Bureau Federation President Zippy Duvall thanked the EPA for “[providing] certainty for farmers who were left wondering how they would protect their crops and stock America’s pantries.”
- Successful Farming writer Bill Spiegel reported that the same set of activist groups also sued EPA in the same court using many of the same arguments for another herbicide: Corteva Agriscience’s Enlist Duo. Corteva pointed out that its herbicide offers “reduced potential for drift and near-zero volatility” — issues key to the dicamba decision. However, Spiegel noted that the Endangered Species Act will play a larger role in the Enlist case.
Some important points of view worth checking out this weekend.
World Food Prize
On June 11, Donnelle Eller of the Des Moines Register showcased this year’s World Food Prize winner: “Rattan Lal, a distinguished professor of soil science at Ohio State University, showed how plants could pull carbon from the atmosphere and sequester it in the soil, preventing it from combining with oxygen and creating carbon dioxide, a greenhouse gas that contributes to global warming.” Begun in 1986, the prize is the brainchild of Nobel Laureate Norman Borlaug, the father of the Green Revolution.
Solving Food Waste With Wasted Food
Researchers at Rice University’s engineering school developed an egg-white-based coating that helps prevent produce from rotting. The researchers used eggs that would not have made it to market — the university estimated that 200 million are rejected by manufacturers annually — doubling down on food waste reduction. Lead researcher Pulickel Ajayan commented, “The work is a remarkable combination of interdisciplinary efforts involving materials engineers, chemists and biotechnologists from multiple universities across the U.S.”
After much criticism, and even a harsh rebuke from a U.S. senator, Instacart changed its policy on tip baiting. Delish reported on June 8 that the company will only allow 24 hours for customers to change tip amounts and, if a tip is changed after delivery, will require them to leave feedback.
Milking the Books
On June 3, Agri-Pulse reported some impressive dairy sales at retail, citing IRI data: “milk sales for the period from March 8 to March 22 were up 43% from last year, while butter doubled, yogurt rose 31%, ice cream grew 40% and cheese jumped 76%. Dairy sales fell from March 23 to May 17, but remained 25% higher than the previous year.” However, a week later the same publication revealed U.S. Dairy Export Council data indicating China is importing far less U.S. dairy than expected under the “Phase One” trade agreement.
The Fab Floor, Illustrated
Want to learn more about pork and beef fabrication without the grisly details? The New York Times produced an infographic explaining how the process works and a few steps that companies are taking to minimize the spread of COVID-19.
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