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.

Cereal: Is it Popular Again Just For Now or Will the Habit Stick?

Before the coronavirus pandemic, the main story on breakfast cereal was that it was just one more thing that millennials had killed… they don’t like using dishes and utensils for on-the-go breakfast, they are looking for more protein content in their breakfast, they don’t eat breakfast anymore, etc.

Then came the pandemic and demand for breakfast cereal shot up, from the sugary kids’ cereals to the high-fiber “adult” cereals. We were looking for foods we could easily stockpile. We were eating breakfast at home, not on-the-go. We were leaning into nostalgia and comfort foods, as well as those with a health halo.

But, a year on into the pandemic… more kids are back in school, and more people are vaccinated and looking to go back to at least some of their pre-pandemic habits.

So, what’s next for cereal? How do cereal companies move forward and keep those renewed cereal habits going?

Packaging is part of the story. Package it perhaps in a stand-up pouch for dry consumption, as a snack or a topper for yogurt or oats. Package it for individual servings in a single-use bowl (preferably molded fiber or other eco-friendly type) for away-from-home consumption. Package it for e-commerce, considering the minimum needed to protect the cereal in-transit while saving space in shipments.  

Reformulating is another part of the story. Elements that add protein or versions that are made gluten-free, vegan, or with less sugar appeals to many modern consumers. Additionally, classic, fun flavors have nostalgic appeal and attract those who look for a treat or dessert, so incorporating classic flavors or brands into snack bars, cookies, ice cream, or other complementary food items gives consumers more ways to enjoy cereal.

Marketing and reframing is the rest of it. Cereal companies were already doing some of this before the pandemic, but cereal need not only be for breakfast. Other eating occasions that fit this sweet, but nutritionally fortified, nostalgic treat include snacking and dessert. For many older consumers, favorite childhood cereals are now too sweet for the morning meal, but are attractive as an end-of-the-day mini-indulgence.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including the packaging category with titles such as Pouches and Corrugated & Paperboard Boxes. Related food and beverage industry analysis from our sister publisher, Packaged Facts, include Global Breakfast Cereals, Dairy & Egg Alternatives: Outlook for Plant-Based & Cell-Cultured Consumer Products, Vegan, Vegetarian, & Flexitarian Consumers, Home Baking: US Market Trends & Opportunities, US Food Market Outlook 2020: Home Cooking, Grocery Shopping & Food Trends in the Age of Coronavirus, Global Food E-Commerce, and Online Grocery in the US. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage    

Ready-to-Bake v. Ready-to-Eat: You Can Now Get Both From Pillsbury as the Company Preps For a Post-COVID World

The coronavirus pandemic left many of use ready to eat ALL. THE. COOKIES.

In The Freedonia Group National Online Consumer survey (conducted November-December 2020), 51% of respondents agreed that they were eating more snacks and treats because of the coronavirus pandemic, and 25% of those who bake noted that they have baked more since the start of the pandemic.

However, in 2021 we are also looking to see where we go next…how many pandemic habits will we continue and what can companies do to support customers continuing habits started or expanded during the pandemic?

For instance, General Mills’ Pillsbury line – one known for ready-to-bake cookies, crusts, biscuits, and crescent rolls – is launching its first ready-to-eat baked cookie with a line of packaged cookies with a soft texture reminiscent of home-baked versions. As pandemic restrictions ease and we return to a world with daily commutes and kids eating lunch at school, consumers will seek more convenience for their indulgences, creating space in the market for products that give us a feeling of comfort with additional convenience.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Pouches and Frozen Food Packaging. Related reports from our sister publisher, Packaged Facts, include Home Baking: US Market Trends & Opportunities, Consumer & Corporate Food Gifting in the US, US Food Market Outlook 2020: Home Cooking, Grocery Shopping & Food Trends in the Age of Coronavirus, Global Food E-Commerce, and Online Grocery in the US. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage    

Grocery Sales: 2021 Outlook

Historically strong year for retail grocery sales in 2020 were driven by a variety of factors, including:

  • the shift home – meals were cooked at home rather than in school cafeterias and restaurants near workplaces
  • stock-up efforts to minimize shopping trips – especially early on in the pandemic period
  • restaurants closed or dine-in capacity was limited – consumers were not going out with friends or eating on the go

However, that won’t last. More people are being vaccinated, pandemic restrictions are being lifted or will be in the coming month, more people are returning to workplaces, and schools are opening for in-person learning.

As a result, many major grocers are expecting declines in same-store sales in 2021, most foreseeing declines around 3-5%.

So what will grocery retail trends include in 2021?

  • as consumer again look for convenience and meals-on-the-go, store-made prepared meals and prepacked meal kits will continue to be important drivers of sales
  • promotional pricing –consumers who were less price sensitive in 2020 (buying whatever was available) will be expecting it this year
  • an emphasis on private labels and store brands – part of the emphasis on value pricing
  • increased automation as curb-side pickup operations become more established
  • ongoing improvements in online ordering to boost impulse purchases and encourage consumers to add items related to those already in their cart
  • an emphasis on wellbeing as stores offer health information and meal planning
  • return to sustainability measures, including reusable grocery bags and reduced use of single-use plastics in areas such as produce bags, and produce and carryout packaging

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Frozen Food Packaging, Pouches,Global Foodservice,Foodservice Single-Use Products,Global Foodservice Single-Use Products, Retail Bags, Commercial Refrigeration Equipment, and Global E-Commerce Packaging. Related reports from our sister publisher, Packaged Facts, include Food Carryout & Delivery, Food Carryout & Delivery: Special COVID-19 Consumer Insights, Consumer & Corporate Food Gifting in the US, US Food Market Outlook 2020: Home Cooking, Grocery Shopping & Food Trends in the Age of Coronavirus, Global Food E-Commerce, and Online Grocery in the US. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage    

COVID-19 Pandemic Changing Table Model of Restaurants

Perhaps no segment of the US has been more affected by the pandemic than that of the restaurant industry. Restaurants that specialize in sit-down, table service have found their entire business model challenged, while fast-food and fast-casual restaurants have had to adjust their business models to one serving carry-out and delivery customers. Furthermore, nearly all US restaurants have had to make significant investments in personal protective equipment, cleaning supplies, partitions, and disposable packaging to continue in operation.

One restaurant change that will be permanently changed by the pandemic is Steak ‘n Shake, which announced that it would be converting its restaurants from offering table-side service to one customers will serve themselves. Rather than give their orders to a server, customers will use a touchscreen kiosk to order and pay for their meals.

This switch offers a number of potential advantages to restaurant owners and managers, such as:

  • reduced labor costs, as fewer employees will be needed
  • enhanced safety for workers and guests, as there will be minimal interaction between customers and kitchen crews
  • improved operational efficiency – a far lower risk of lost orders or errors by kitchen staff in transferring orders to point-of-sale (POS) systems

However, the change also offers an element of risk:

  • Some customers – especially those who are older or less technologically savvy – prefer to order through a server, rather than enter their own orders.
  • The chain will be less likely to be perceived as a sit-down restaurant and more of a quick-service chain.
  • Many restaurant owners and managers may not have the funds to make further investments in their facilities right now.

Many restaurants are making adjustments to their plans and their facilities to enable more efficient carryout and delivery operations and to better accommodate third-party delivery firms (e.g., Uber Eats, GrubHub). However, time will tell as to the success of this initiative and if other chains will follow in the footsteps of Steak ‘n Shake to convert tableside ordering service to a reduced contact, tech-centered model.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including US Restaurant Reopening: COVID-19 Impact on Supplies, Global Foodservice,Foodservice Single-Use Products,Global Foodservice Single-Use Products, Retail Bags, Protective Packaging,Commercial Refrigeration Equipment, and Global E-Commerce Packaging. Related reports from our sister publisher, Packaged Facts, include Food Carryout & Delivery, Food Carryout & Delivery: Special COVID-19 Consumer Insights, Consumer & Corporate Food Gifting in the US, US Food Market Outlook 2020: Home Cooking, Grocery Shopping & Food Trends in the Age of Coronavirus, Global Food E-Commerce, and Online Grocery in the US. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage    

Biden Administration to Investigate Global Supply Chain Issues

On February 24, US President Joe Biden signed an executive order mandating that federal agencies conduct a 100-day review of critically important supply chains, as the COVID-19 pandemic has raised focus on issues regarding access to certain products and materials generally sourced from abroad (and particularly those from China).  The review will focus specifically on four items, some of which have faced supply chain problems even before the pandemic:

  • Semiconductors:  Access to these chips, which are used for multiple purposes in motor vehicles and also are essential components of iPhones, personal computers, smart TVs, gaming systems, and more, increasingly became a problem during the pandemic. As remote working became more commonplace, demand for these chips increased greatly to accommodate the need for more personal computers and laptops. Additionally, trade restrictions placed on imports from China also caused difficulties, as many of China’s leading chip manufacturers had export restrictions placed on them by the United States. Additionally, some of these companies claim plans to expand manufacturing to the United States have been hindered by national security concerns raised by the Committee on Foreign Investment in the United States (CFIUS), due in part to the possible military applications of these products. The US-based Semiconductor Industry Association claims that the US’s share of global semiconductor manufacturing has fallen from 37% in 1990 to 12% today, and US manufacturers are pushing the White House to work with Congress to provide investment that they claim will support research and design operations and to increase domestic semiconductor production.
  • Pharmaceuticals: Shortages in certain drugs during the pandemic has also prompted a deeper examination into the pharmaceutical supply chain. A combination of increased demand for drugs to address the rising number of hospitalizations and the shutdown or slowdown of some international shipping ports led to key shortages. There are also concerns about being too reliant on China for key pharmaceutical ingredients, which has doubled over the last decade
  • Electric vehicle batteries: Global manufacturing of electric vehicle batteries is currently heavily concentrated in China, with Japan and South Korea ranking numbers two and three leading manufacturers, and the US back at number six, according to a report from S&P Global. With major US automobile manufacturers increasingly focusing on electric vehicles – including General Motors, which has announced that it intends to phase out all gas-powered vehicles by 2035 – reliable access to these batteries will be crucial in the coming years. 
  • Critical minerals: Rare earth minerals are used in a wide variety of applications, including airplanes, steel, light bulbs, wind turbines, and many more. Supply chain issues for these minerals long predate the COVID-19 pandemic, as China is the leading global producer of rare earth minerals. This problem of production being so heavily concentrated in a single country has been intensified by some of the Chinese government’s behavior in the past, including a brief restriction of rare earth exports to Japan in 2010 in response to a dispute in the East China Seas. These concerns have led to increased efforts from the rest of the world to ramp up rare earth mineral production, which has lowered China’s share over the last decade from around 98% down to 63%. In a continuation of efforts from the Obama and Trump administrations, Biden’s executive order will examine means of addressing weaknesses in the rare earth minerals supply chain. This will likely include both strengthening the US rare earth mineral industry and transitioning reliance on imports to countries with whom the US has friendlier reliance – primarily meaning a transition away from China.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

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