Blog, Summary15 Steve Hoffman Blog, Summary15 Steve Hoffman

U.S. Consumers Want Snacks with a “Broader Consciousness,” Survey Finds

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This article originally appeared in Presence Marketing’s February 2022 Industry Newsletter

By Steve Hoffman

A majority of consumers are incorporating their environmental and social values into what snacks they choose to buy, and these trends are likely to intensify, according to the Third Annual State of Snacking, published by The Harris Poll, Mondelez and NextAtlas.

A poll of 3,055 people globally found that 85% of consumers said they either purchase or would like to buy snacks from companies that are working to offset their environmental impact and 87% or those surveyed say they preferred products that are produced in a way that is fair and lawful to all the workers involved.

Data from the poll also revealed that between 75% and 78% of consumers say low-waste packaging, fair labor practices, animal welfare and environmental concerns are currently impacting their food choices, and these same consumers expect those issues to affect 92% or more of their food choices in the next 10 years.

"We now see data emerging that demonstrate how consumers are evolving their snacking behaviors and purchasing decisions to more fully align with their values," Mondelez CEO Dirk Van de Put said in a statement.

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USDA Faces Legal Challenge from Organic Industry Over GMO Labeling Standards

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This article originally appeared in Presence Marketing’s January 2022 Industry Newsletter

By Steve Hoffman

The year was 2014 when the state of Vermont passed a stand-alone GMO labeling law, and for a short time, U.S consumers saw major food companies disclose on the package products that contained GMO ingredients. Then in 2015, led by former Representative Mike Pompeo, Congress passed a national GMO labeling law, the Safe and Accurate Food Labeling Act of 2015, that among other requirements, preempted individual states from mandating their own, more transparent GMO labeling laws. To many critics, the passage of the act watered down transparency in the law that favored corporate interests over the consumer’s right to know. The law, known as the National Bioengineered Food Disclosure Standard, (NBFDS) took effect in July 2016 and tasked the USDA with drafting and implementing the new labeling rules.

Now, as the labeling rules are in effect as of Jan. 1, 2022, advocates for clear labeling of GMO foods say the USDA fell short of its promise of transparent GMO labeling. Moreover, the language the agency is requiring on labels to disclose genetically engineered ingredients is confusing to consumers, they claim. In an important first step in a lawsuit challenging USDA’s rules on GMO labeling (which USDA now refers to as “bioengineered or BE foods”) – filed by organic industry groups including the Center for Food Safety and the National Organic Coalition, natural products retailers Natural Grocers, Good Earth Natural Foods and Puget Consumers Co-op, and others – a California federal judge was asked on Nov. 23, 2021, to declare USDA’s GMO labeling standard invalid. The lawsuit was originally filed on July 27, 2020, the National Law Review reported in December.

“Consumers have fought for decades for their right to know what’s in their food and how it’s produced,” Meredith Stevenson, Center for Food Safety attorney and counsel in the case, was quoted as saying. “But USDA instead used its authority to label GE foods by obscuring this information behind QR codes and unfamiliar terminology and omitting the majority of GE foods. Fortunately, the law is on the consumers’ side.”

“It’s critical to shoppers that they know what ingredients are in their food and how they were produced,” said Heather Isely, EVP of Natural Grocers, a plaintiff in the lawsuit. “Hiding the presence of genetically engineered products from consumers is a blatant attempt to hide agricultural practices that continue to destroy soils, biodiversity, communities, and public health. Education is part of our core mission and we refuse to misinform our customers.” “I believe that USDA’s GMO labeling law forces me, as a grocer, to engage in deceptive labeling,” added Mark Squire, co-owner and manager of Good Earth Natural Foods. “I cannot look my customers in the eye unless I do whatever I can to stop this misleading labeling system that is so obviously designed to protect the agro-chemical and biotech industry at the expense of consumers everywhere.”

All retail food products made with genetically modified ingredients (GMO or GE), or what the USDA refers to as bioengineered  or BE foods, will be required to disclose as of Jan. 1, 2022, if they contain bioengineered ingredients via plain text or a QR code on the label, reported Food Navigator-USA. However, many suppliers are still not up to speed with the USDA labeling standards, Nate Ensrud of FoodChain ID told Food Navigator-USA. Ensrud noted that the 13 foods USDA identified as high risk to be bioengineered “can be translated into thousands of ingredients and products sources from numerous global suppliers. Companies think that they have documentation that gives them clear insight into the BE risk of their ingredients, but a lot of what we’ve reviewed doesn’t meet the standards we would expect to support compliance,” he said.

At Issue over USDA’s GMO Labeling Standards:

- The term “bioengineered,” as opposed to the better recognized terms, GMO and GE. According to Meredith Stevenson, legal counsel with the Center for Food Safety, USDA’s mandate concerning the word “bioengineered” contradicts the letter of the law itself, which, she told The Counter, as Congress passed it, allows for this word to be used interchangeably with GMO and GE. Stevenson also noted that USDA’s terminology rule contradicts the agency’s own prior stance. Until 2016, USDA insisted on using the term GMO, saying the term permeated American society and not using the term GMO would mislead consumers.

- Highly refined products derived from GMOs in which genetically engineered material is not “detectable” using a “common testing method” after processing, are exempt from labeling disclosure. That includes sugar from GMO sugar beets, which, according to FoodPrint, comprises about 70% of the sugar consumed in the U.S., GMO canola oil, and additives derived from GMO corn or soy such as flavorings, colorings, thickening agents and binders.

- Allowing companies to use QR codes as a labeling option for consumers to scan instead of providing plain text GMO ingredient information on the label. According to the Pew Research Center, approximately one-quarter of low-income residents in the U.S. do not own a smart phone. “It’s quite discriminatory that they decided to go with a QR code that excludes a significant portion of the population from the right to know what’s in their food,” Dana Perls, Food and Technology Manager at Friends of the Earth, told The Counter in December. 

- USDA adds to the obfuscation, reported The Counter, by not allowing retailers to use shelf tags or other signage to inform customers whether a product contains GMO ingredients, even if it was made in their own kitchen. However, retailers are permitted to let customers know if a products is non-GMO.

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As Supply Chain Problems Persist, Grocery CEO Predicts Food Prices Will Surge 10% in Next 60 Days; Meanwhile, Conventional Food Prices Are Catching Up to Organic

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This article originally appeared in Presence Marketing’s November 2021 Industry Newsletter

By Steven Hoffman

As the backlog of shipping containers at U.S. ports continues, Americans could see shortages of products across the country that will persist into the holidays, analysts are cautioning. Adding to the backup at the ports are driver and labor shortages across all channels of distribution. As a result, shoppers are again facing empty shelves, with pet food, diapers, frozen dinners, spices, chicken and other items listed as being in short supply in the nation’s grocery stores.

In addition to product shortages, food prices could increase 10% in the next two months, predicted John Catsimatidis, president and owner of the supermarket chains Gristedes and D’Agostino Foods.

The billionaire grocer told Fox Business that leading food companies will begin to prioritize products and raise prices. “I see food prices going up tremendously,” he told Maria Bartiromo on Mornings with Maria. “[CEOs] want to be ahead of the curve and the way they’re doing it is they’re dropping all promotions. They are dropping their low-moving items.” 

Projecting a 10% price increase in the coming weeks, Catsimatidis said the trend won’t be ending “anytime soon,” as companies make more profits. “Why give away something when you don’t have to give it away and you make more margin?” he asked rhetorically. “So, I think that now these companies are going to have record profits in the third quarter,” he told Bartiromo.

According to the New York Times, Thanksgiving 2021 “could be the most expensive meal in the history of the holiday…Nearly every component of the traditional American Thanksgiving dinner, from the disposable aluminum turkey roasting pan to the coffee and pie, will cost more this year, according to agricultural economists, farmers and grocery executives,” writes food reporter Kim Severson. “Major food companies like Nestlé and Procter & Gamble have already warned consumers to brace for more price increases,” she reported.

Organic Food Prices Holding the Line More than Conventional…for Now
Meanwhile, researchers at Magnify Money, a division of Lending Tree, reported that conventional food prices are rising at a “much faster rate than organic costs.” According to its research, since 2019, prices for select conventional meats, dairy items, fruits and vegetables have increased by an average of 13.9% – 12 percentage points higher than the reported 1.6% growth in costs for comparable organic items. 

Despite rising conventional food prices, organic foods on average remain more expensive, the Magnify Money researchers pointed out. However, they said, “For those organic-preferring shoppers, the good news is the costs of organic produce, dairy and meats are rising slower than conventional foods.”

However, while organic prices may not be rising as fast as conventional products, the $56 billion organic food industry also is grappling with a shortage of shipping containers and a tight labor market. One organic commodity being affected by the backup at U.S. ports is organic soybeans, much of which is imported into the U.S. in shipping containers, reported Reuters. Costly organic soybeans and higher priced organic products are fueling food inflation “at a time consumers are eager to eat better and focus on health during the COVID-19 pandemic,” Reuters reported. 

Bell & Evans – a 127 year old chicken producer based in Pennsylvania – feeds 500,000 to 600,000 organically raised chickens each week, and must compete for soybeans with other buyers that formerly relied on imports, owner Scott Sechler said. The company raised all chicken prices in July and will likely need to raise organic prices again, he told Reuters. "We're in the most challenging time since the organic world started when it comes to feeding animals and selling an organic animal protein. It's a madhouse now. There's not enough in America to replace all the imported organic grain," Sechler said.

U.S. sales of organic food jumped by 12.8% in 2020 to $56.5 billion, compared with a 4.6% increase in 2019, according to the Organic Trade Association. Organic accounted for 5.8% of food sales in 2020 as the pandemic motivated consumers to eat more meals at home and focus on products perceived to be healthful, OTA said.

Retailers, Consumers and Manufacturers Are Beginning to Hoard Products…Again
While food and consumer product shortages are not as acute as they were in the early days of the COVID-19 pandemic, industry analysts are reporting that shoppers are beginning to hoard products, again. That, combined with ongoing supply chain problems, and retailers and food producers alike are planning for shortages to last into the near future. 

In an interview with Spectrum News’ Bay News9 in Clearwater, FL, natural foods retailer Nature’s Food Patch General Manager Sean Balsley said some products have been hard to find, so when items in demand for the holidays are available, he buys extra. “You got to take it when you can get it,” he said, noting that some popular items for Thanksgiving have been difficult to order.

Adnan Durrani, CEO and founder of Saffron Road, producer of a popular line of natural frozen and shelf-stable foods, told Bloomberg that the company is holding onto extra inventory, keeping four months of supply in stock instead of one or two months of inventory normally held in past years. “People are hoarding,” Durrani told Bloomberg. “What I think you’ll see over the next six months, all prices will go higher.”

Food Prices Increased 4.5% in September Alone, Compared to 2020
Prices for food consumed in the home increased 4.5% in the month of September 2021 alone, compared with prices in the same month in 2020, as input costs continue to rise and more companies pass these costs on to consumers, reported The Food Institute. The question, the Institute asked, is how far can major brands push shoppers on price before they choose cheaper alternatives, search for lower cost brands, or reduce the number of items they purchase. 

According to data from the Consumer Price Index, Fox11 News in Los Angeles reported that food prices increased 4.6% in the year since September 2020. Meat prices rose 12.6%, seafood prices increased 10.7% and categories including fruit, vegetables, cereals, bakery items and non-alcoholic beverages all charted significant prices increases in the past year.

Labor shortages in the supply chain are greatly responsible for price hikes, claimed Nate Rose, Senior Director of Communications for the California Grocers Association, in an interview with Fox11 News. Rose noted that labor shortages lead to reduced supply and increased prices. “People are seeing some more significant upticks in their food costs, especially around meat, year over year…It’s a tough one because demand is strong and right now producers are struggling to meet the demand because of short labor,” he said. “There’s been a lot of coverage of the situation at the ports but it’s also the shortage of truck drivers and people at the distribution centers. It’s tough to see these prices climb continually and I know people are feeling that in their pocket books,” Rose said.

In an interview with ABC Eyewitness News, U.S. Transportation Secretary Pete Buttigieg acknowledged the shortage of truck drivers, exacerbated by the fact that many drivers are older and few young people want to enter the field. He said the Biden administration is taking steps to streamline the process by which prospective drivers can obtain commercial vehicle licenses. 

"The more red tape we can cut out of the process of getting those (commercial driver licenses), the more we can get drivers on the road, and make it possible for them to add to our supply capacity," Buttigieg told ABC. "But I should also be blunt: truck driving needs to be a more well-compensated and more respected profession. Look at the turnover margins in trucking. In large companies it can be 90% turnover per year,” he said.

Inflation Approaching a “Tipping Point at the Grocery Store”
Heading into the holidays, product shortages and purchase limits from major food and consumer product manufacturers "will be a challenge in the grocery industry" in the final months of the year, Steve Howard, VP of Merchandising for Bristol Farms, a leading California-based specialty grocery chain, told CNN. Suppliers are warning the retail chain of "potential shortages" of food products, glass jars and packaging containers, he said.

CNN reported that approximately 18% of beverages, 15% of frozen foods, 16% of snacks, 15% of candy and 18% of bakery items were out of stock at stores during the week ending Oct. 3, 2021, according to data from market research firm IRI, which tracks in-stock levels at leading U.S. grocery chains, big box stores, pharmacies and wholesale clubs. Before the pandemic, IRI reported that 7% to 10% of products were typically out of stock on shelves, according to CNN.

In response to a tighter supply as the country heads into Thanksgiving, Howard told CNN that Bristol Farms is working to bring in inventory "earlier than any other holiday ever," he said.

Noting that inflation may be “approaching a tipping point at the grocery store,” the Wall Street Journal reported that, as a rule of thumb, price increases above 5% are difficult to implement without resulting in changing consumer buying patterns.

Jamie Court, president of Consumer Watchdog, shared people’s concerns about across-the-board price surges. In a Fox11 News interview, she said, “The price of everything we need is up. The gas, the food, and the reality is we don’t know if it’s going to be short term or long term.”

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Steven Hoffman is Managing Director of Compass Natural, providing brand marketing, PR, social media, and strategic business development services to natural, organic, sustainable and hemp/CBD products businesses. Compass Natural serves in PR and programming for NoCo Hemp Expo and  Southern Hemp Expo, and Hoffman serves as Editor of the weekly Let’s Talk Hemp Newsletter, published by We are for Better Alternatives. Contact steve@compassnaturalmarketing.com.

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