Inflation and other economic headwinds are continuing to impact the U.S. grocery industry, but overall, products like seafood are in a good position to navigate the challenges in the marketplace, according to executives from FMI – The Food Industry Association.
In a 12 July webinar, FMI executives reviewed findings from the organization’s new report, “The Food Retailing Industry Speaks 2023,” which included survey responses from 100 food retail and wholesale companies representing 39,000 stores.
The report found that food inflation is down significantly since last August, when it peaked at 13.5 percent, but retailers, suppliers, and consumers continue to feel the impact from the past year’s inflationary and economic pressures.
Grocery retailers surveyed said their sales rose 4.9 percent on average in 2022, but those numbers were mainly due to inflation, not volume increases, FMI President and CEO Leslie Sarasin said.
“Many are negotiating the impact of cost increases to minimize impacts on customers when possible,” she said.
Overall food inflation rose 5.7 percent in June, according to new Consumer Price Index data from the U.S. Bureau of Labor Statistics. Food-at-home prices increased 4.7 percent during the month compared to June 2022, but that was down from a 5.8 percent hike in May. Food away-from-home inflation, on the other hand, jumped up 7.7 percent.
USDA’s Food Price Outlook predicts a 5.9 percent increase in retail food inflation for the remainder of this year, along with a significant 7.9 percent increase in restaurant inflation, Sarasin noted.
Regardless of whether the data actually bears it out, 78 percent of Americans in June believed they spent more on groceries than they did a year ago, Sarasin said.
Consumers, however, aren’t the only ones concerned about inflationary pressures.
The majority of retailers (76 percent) and food suppliers (88 percent) believe inflation negatively impacts their bottom line, FMI Senior Vice President of Industry Relations and Chief Collaboration Officer Mark Baum said.
However, products such as seafood still have many factors working in their favor, Baum said. Most seafood consumption in the U.S. prior to the Covid-19 pandemic took place at restaurants, but many more consumers are now preparing it at home. Restaurant price inflation is currently higher than grocery price inflation, favoring continued eating at home rather than dining out, according to FMI Director of Research Steve Markenson.
Additionally, fresh seafood is “a little more of an expense, but many consumers want to keep eating seafood and will continue to purchase it, even if they scale back the amount they use by including it as part of a cheaper meal alternative, such as in a shrimp stir fry, rather than a center-of-the-plate protein," Markenson said.
Grocery retailers revisiting and revising their layouts and services should also help boost seafood sales this year. For instance, 74 percent of food retailers are expanding in-store space allocation for freshly prepared grab-and-go items, the FMI report said.
Private-label seafood suppliers will also benefit, as 90 percent of retailers say private brands are “extremely important” to their organization, and 80 percent plan to increase private brand investments in the next two years, according to FMI. Additionally, 70 percent of retailers are showcasing private brands as “high-quality value alternatives,” the report said.
Seafood will also benefit from a tinned fish consumer craze, which is continuing to gain traction, Baum said.
“Tinned fish have been experiencing a moment right now,” Baum said. “You’re going to see an uptick there going forward.”
Providing recipes and traceability for fish products will continue to help boost sales across all types of seafood at retail, according to Baum.
“A lot of us didn’t grow up on the coast,” Sarasin said. “The way retailers are engaging with customers is going to make a difference.”
There are some positive trends occurring in retail, but both suppliers’ and retailers’ overall confidence that things will improve in 2023 is “low,” Baum noted. Eighty percent of retailers and 56 percent of suppliers expect their operating costs to increase in 2023.
Thirty-six percent of retailers along with 21 percent of suppliers believe the ongoing war in Ukraine will negatively impact their businesses.
Out-of-stocks and supply chain issues have improved over the past year, yet around 45 percent of retailers and 32 percent of suppliers say supply chain challenges will negatively impact their businesses this year.
In terms of retail pricing, meat, poultry, fish, and egg prices declined 0.2 percent in June, compared to June 2022, and overall fish and seafood prices realized a bigger decline of 0.9 percent.
Photo courtesy of The Toidi/Shutterstock
