Tuesday, April 19, 2022

Netflix or Pizza not Both


The ‘good old days’ of dinner and a movie look as if they are becoming a relic of a by-gone-era. At the intersection of the consumer and the producer price inflation accelerating again month is a time starved, consumer trying to figure out have to pay for both dinner and a movie at home on Netflix according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

In the U.S. wholesale prices were up 11.2% year over year in March—and up 1.4% month over month—in an inflation acceleration from February, the Bureau of Labor Statistics reported April 13.

So, last month, the Bureau of Labor Statistics (BLS) reported that producer prices had risen 10% on a 12-month basis in February and 0.9% over January levels.

March's producer prices report came a day after the BLS issued its consumer prices report for the month, which showed inflation reaching 8.5% across the economy and 10% for food at home, another 40-year high.

It gets worse, final-demand food prices were up 16.2% year over year in March, outpacing February's 13.7% climb. Month to month, wholesale food prices advanced 2.4%, accelerating from increases of 1.8% in January and 2.1% in February.

Restaurants and grocery stores must be concerned that grains and fresh vegetables saw sharp price spikes last month, with grain prices up 16% over February alone and up 40% on a 12-month basis. Fresh and dry vegetables, which had seen wholesale prices slide month to month in December, January and February, did an about-face in March: Prices shot up 42% over February levels and are now up more than 80% year over year.

Just how much can the consumer take before they start to cut back?  Well according to Bloomberg news in Europe the cost of gasoline and heating fuel because of the invasion of Ukraine consumers are ‘dropping subscriptions’ to help save money for heating fuel.  If it becomes a choice between dinner and a movie at home or a warm house.  I know I for one would pick a warm house.

If prices continue to rise in the U.S. and looking at these other inflation leaders within final-demand foods included shortening and cooking oils (up 8.4% in the month and 46% year over year), processed chickens (up nearly 29% year over year), fish/shellfish (19.7% year over year), dairy products (19.3%) and pasta products (16.7%). The choice of going out to dinner, or even takeout for dinner could soon become a choice many will opt out of according to Johnson.

Is there any light at the end of the tunnel? Maybe so, as wholesale fresh fruit prices were up 18.5% year over year but slid 8% from February. Beef and veal producer prices were up 16% on a 12-month basis (matching retail price inflation) but saw a second consecutive month-over-month decline, falling 7.3% in March after slipping 3.6% in February. How will you invite the consumer to your brand when prices keep going up?

Looking for success clues of your own? Foodservice Solutions® specializes in outsourced food marketing and business development ideations. We can help you identify, quantify and qualify additional food retail segment opportunities, technology, or a new menu product segment.  Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant niche visit us on our social media sites by clicking one of the following links: Facebook,  LinkedIn, or Twitter

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