Concerns about the pandemic have generally waned, but its impact across the food industry has been in a constant state of flux. From increased consumption of alcohol and bulk snacks to how consumers frequent the foodservice industry, it is still making waves more than two years since it began.
While the restaurant and hospitality industries arguably experienced some of the greatest disruptions early on, grocery stores and shoppers continue to feel the pinch as prices rise and supply chains find their rhythm. Consumers have gained a new appreciation for the comforts and, more importantly, the possibilities of home and will push the foodservice industry to rise to their new expectations.
Recent findings indicate that foodservice and grocery retailers will continue to face challenges. Here’s a look at what the latest studies reveal.
Restaurant Dining Will Remain Stunted
Post-pandemic activity will be slow to ramp up to pre-pandemic levels. According to Deloitte’s Global State of the Consumer Tracker (a poll of 3000 U.S. consumers), almost half indicated they would cook at home over 40% more than they did pre-pandemic. However, consumers also said they would order food for delivery or take-out 20% more than pre-pandemic while eating in restaurants would continue to lag by over 10%.
How consumers are reached and satisfied will also continue to evolve. Fewer days spent at an office and traveling for business translates into fewer meals eaten while on vacation or out with colleagues, and fewer happy hours. Add to that concern regarding spending: roughly one in three Americans are worried about financial stability. On top of financial worries are concerns for health and wellness combined with concerns for the planet, all driving a new focus on eating in moderation.
Food Shortages and Brand Switching in Grocery Stores
If you’ve noticed empty store shelves while grocery shopping, you’re not alone. Many staple food items are experiencing supply chain disruption, with some regions being more affected than others.
Typically, U.S. groceries have 5–10% of their items out of stock at a given period; now the unavailability is right around 15%. Consumers are concerned with shortages and out-of-stock items, and 35% switch brands when their favorite items are not available. This switch could pose challenges as some consumers may not return to their original brands.
Common food shortages include meat and poultry due to their high demand and a dwindling labor pool. The egg market may also see shortages this year due to a new outbreak of the Avian flu.
Additional food shortages that are expected in 2022 and the reasons why include:
- Dairy products including cream cheese —high feed costs, transportation and packaging
- Plant-based proteins — supply chain issues, inflation and more competitors
- Fruits and vegetables — crop failures from climate change
- Canned goods — high prices of aluminum, driven in part by increased consumption and tighter controls on energy usage in China, the world’s biggest aluminum producer
- Imported goods — high transportation costs and supply chain issues
- Pet food — increased costs for ingredients like corn, soy, meat and oils
- Bottled water and soda — plastics supply
- Pasta — disrupted shipments and agriculture labor shortage
Higher Grocery Prices
Of course, lower supplies combined with pent-up demand typically result in higher prices. Groceries saw the highest inflation of any category at more than 7% year-over-year compared to household goods, health and beauty, baby and pet channels, according to a study by Numerator.
Many consumers are searching for lower-priced products to address price volatility, with nearly nine in 10 saying they’ll change their buying habits if prices continue climbing. One in five said they would switch to cheaper brands and nearly as many said they would shop at different retailers in search of lower prices.
Interestingly, after years of significant growth, plant-based protein sales stalled at the end of 2021 and several producers reported dismal earnings. The higher price point of plant-based proteins is a challenge for consumers given the economic changes that persist because many people have not returned to pre-pandemic activities.
eCommerce Grocery Shopping
The U.S. online grocery industry is expecting monumental forecasted growth of more than 18% CAGR through 2027, and a 21% increase in eCommerce grocery sales in the short term for 2022.
Leading the charge are millennials, with 43% saying they shop for most of their groceries online, or at least as much as they do in-store. The ease of online shopping is helping the practice to become mainstream.
While younger consumers are fully aboard the home delivery bandwagon, the majority of shoppers are likely taking a hybrid approach to grocery shopping. Consumers like options and, while they’re returning to brick-and-mortar stores, they won’t give up the convenience of eCommerce, pickup and delivery.
Some grocery stores are expanding their offerings of prepared take-home meals and side dishes. While the frozen foods aisle has long featured ready-made meals to be prepared at home, the deli and hot bar are helping to make some grocers a convenient destination that rivals take-out restaurants.
Ensuring foods deliver a quality experience throughout their freshness cycle and hold up to freeze/thaw cycles and heating or reheating at home is a critical factor in whether those shoppers return for seconds.
Ingredient Solutions to Address Product Shortages and Price Volatility
Consistent availability of ingredients is one of the best ways to ensure that shelves stay stocked and that prices remain in check. Partially replacing volatile commodity ingredients like heavy cream, cream cheese and fresh or powdered cheese with price-stable, functional whey protein is an ideal way to achieve those goals.
Produced as a natural result of the cheesemaking process, functional whey protein products don’t experience the same supply chain issues as other fresh ingredients and remain price stable.
For example, Grande Bravo® functional whey protein can partially replace heavy cream and other high-fat dairy in a variety of soups, sauces and other applications where fresh products are used. Grande Gusto® can partially replace fresh, processed or powdered cheese in macaroni and cheese, cheese soups, sauces and more.
Because of the functionality of Grande Custom Ingredients Group products, they maintain their flavor and viscosity through freeze/thaw cycles, reheating and other environmental conditions. Their natural properties appeal to clean-label consumers, and their ability to improve nutrition aligns with many health and wellness goals.
Consider the use of functional whey protein products to address many of the challenges that the retail grocery industry faces. Contact the formulation experts at Grande Custom Ingredients Group today.