US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Rising Prices Are Another Reason for Out-of-Stocks at Grocery Retailers

Grocers are pushing back against food suppliers over rising prices.

Some grocers are refusing to stock goods if the food suppliers can't justify their price increases, won't negotiate, or won't delay price increases...especially if they have a similar item (e.g., another brand, same product in a different package size, fresh v. frozen) that is selling well.

This is expected to have an effect on product assortment at your local grocery store. There will likely be fewer new products, more store brands, possibly fewer specialty items, and different cuts/types of meat, among other effects.

Even if the negotiations with food suppliers don’t result in lower prices, it's good press for the grocers to be able to tell their shoppers they are fighting for them.

On the other side of the coin, food suppliers know they have to watch out for customers who might find alternatives and start switching which products they buy. While they have to guard against loss of profit margins, it's expensive to win back a customer after they have developed new shopping habits.

Our expectation is that this trend is not limited to food and will also be happening – where it isn’t already – in other markets and industries hit harder by inflation. More companies are pushing back (where they have the power) and seeking alternatives.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially coverage in the Consumer Goods markets, Packaging industries, and Automotive & Transport industries, as well as Food & Beverage coverage from our sister publisher Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Custom Research      Food & Beverage    

Trouble For Ultrafast & On-Demand Delivery

In the past week, there has been a flurry of announcements of cut-backs, closures, and staff reductions from delivery firms, particularly the ultrafast, on-demand delivery service providers.

The home delivery industry more broadly has seen its share of innovations, developments, and growing pains… but what’s going on now?

  • A tight labor market and rising labor costs are making it hard for delivery companies of all stripes to find the workers they need at a cost that allows them to keep prices at a level consumers will accept.
  • Rising grocery costs are leading consumers to think twice about convenience spending for delivery services.
  • Supply chain troubles are making it harder for on-demand delivery firms to ensure that they will have what a customer needs when stocks are low and out-of-stocks are common.
  • More grocery stores have developed their own in-house delivery services, including Walmart’s in-home delivery option.
  • Curbside pickup operations have matured to function better and more seamlessly, with a greater number of pickup times run more efficiently to accommodate more customers with less waiting.
  • More consumers are willing to venture out and do their own grocery shopping as pandemic fatigue is rampant despite ongoing high infection rates.
  • Getting enough early state funding is problematic for some, particularly as a few on-demand service providers relied on investments from Russia.

Still, there are opportunities as better established delivery firms expand beyond an initial grocery or foodservice scope. The more broad use of predictable subscription orders will also add efficiencies. Technological improvements from electric vehicles to AI-assisted ordering and drone delivery (for small orders anyway) will allow for cost reductions and greater efficiencies in more areas.

The delivery industry will continue to innovate and Freedonia analysts will continue to watch trends for additional opportunities.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially coverage in the Consumer Goods markets, Packaging industries, and Automotive & Transport industries, as well as Food & Beverage coverage from our sister publisher Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Food & Beverage    

Inflation, the US Food Market, & Consumer Behavior

There are a lot of factors behind rising prices in food, including still high demand for cooking at home, rising cost to transport food, supply challenges as processors shut down temporarily or issue recalls, seasonal/climate/weather challenges to crops, and global shifts in supply due to crisis points such as the war in Ukraine and sanctions on Russia.

Many consumers are concerned about rising or otherwise inflated prices in several product categories, but concerns are highest for food. In the Freedonia Group National Online Consumer Survey conducted in October-November 2021, 56% of respondents reported being very concerned about rising food prices. In the November-December 2021 edition of the survey, 50% of consumers strongly agreed they were concerned about rising food prices. By the February 2022 survey, this figure had jumped to 60% of consumers.

Similarly, in the October-November 2021 survey, 49% of consumers reported they were very concerned about food shortages. In the November-December 2021 survey, 27% of consumers strongly agreed they were concerned about shortages of food they typically buy, and this figure grew to 39% in the February 2022 survey.

Shortages typically mean higher prices; low supply and/or high demand brings on higher prices. So, people who are concerned about shortages are also showing their concern for rising prices. Consumers who are expecting the things they buy (in this case food) to become less available and for prices to rise will stock up now, thus assuring themselves of enough stock locked in before prices increase even more.

However, that is a self-fulfilling prophesy. As more consumers buy ahead of their need, that messes with supplies as manufacturers can’t keep up with demand, resulting in more shortages on shelves and driving prices up even more.

Freedonia analysts continue to watch inflationary trends for direct and indirect effects throughout the economy.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially coverage in the Consumer Goods markets and Packaging industries, as well as Food & Beverage coverage from our sister publisher Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Food & Beverage      Packaging    

One Company's Waste is Another Company's Raw Material

The circular economy is not just a chance to improve green-cred or as a marketing tool. It can be a financial benefit to a company’s bottom line too. If a company finds a market for something they otherwise would have to pay to dispose of, it's a financial win and a sustainability win.

We're looking at food waste for Packaged Facts this year as it’s a major issue food suppliers/retailers are targeting for sustainability goals (oh so very much waste), but not all food waste is edible or at least not edible in the same way, so...

Interesting case: Ford is using a plastic made using McDonald's coffee chaff (apparently that's coffee bean skin that comes off in the roasting process) for some of its headlight housings. They started working on this in late 2019, but talked about it recently in light of their pledge to reduce virgin conventional plastic use. Such material creativity has become more important, given the fact that recycled plastic materials are not available in large enough amounts to allow all the companies that need it for their sustainability pledges to hit their targets.

Others are also getting creative in making unconventional and more sustainable plastics. Loliware has developed a process using seaweed pellets that can be run through the same equipment that makes plastic straws, utensils, cups, etc. Right now, the company is only making straws and is able to offer these products at a competitive price because it doesn't need special equipment to make these straws. However, Loliware is expecting to expand into other areas with their molder partner Sinclair & Rush.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially coverage in the Packaging industries, as well as Food & Beverage coverage from our sister publisher Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Food & Beverage      Packaging    

Fresh, Customized, & Contactless… More Robots in Foodservice

We’ve talked before about Sally, a salad making robot from Chowbotics (which was bought by DoorDash in February 2021). Sally seemed an ideal response to interest in healthy eating coupled with concerns about salad bars in the COVID-era, as consumers and businesses were more aware of germs and interested in contactless options.

But since we’re also in an era of shortages in labor – particularly in foodservice – and experiencing rising costs for labor, food, and facilities, there is additional energy behind the idea of how automation can help. Tech innovators have stepped in. The most recent example is the RoboBurger, first placed in New Jersey. This is not an April Fools’ joke – you can’t joke about National Sanitary Foundation (NSF) certification!

The RoboBurger requires human workers to stock the machine and to check it if on-board sensors report tech trouble, such as a power outage or other reason for improper heating or refrigeration. Otherwise, this 12 square foot mobile kitchen can make a fresh burger in about 6 minutes. The unit allows for 24/7 operation in places like college campuses, airports, malls, hospitals, and other such facilities where hot food demand could fall outside of conventional restaurant operating hours.

Freedonia analysts will continue to watch for ways that robots, artificial intelligence, and other innovations will enable businesses to operate more efficiently and affordably. These and other innovations will help businesses provide customers what they want and need when and where they want and need it.

For more information on discussion of opportunities, see Packaged Facts’ Food & Beverage industry coverage, including Food Carryout & Delivery (update coming in May 2022) and The Freedonia Group’s analysis of the packaging industry, including to-go containers in Foodservice Single-Use Products and Global Foodservice Single-Use Products. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Food & Beverage      Packaging