August 2021

DELCO FOODS

AUGUST 2021 VOL. 26, NO. 8

COMMODITY WHEAT & FLOUR UPDATE SUMMER AND FALL 2021 MARKET UPDATE:

By James Mueting, General Mills

TRENDS EMERGE AT INTERNATIONAL PIZZA EXPO

By Peter Thor, President, Bellissimo Foods Company A sure sign that life is returning to normal is the return of the International Pizza Expo to be held in Las Vegas, August 17-19. Normally held each year in March, the Pizza Expo dates were moved to August to enable the “hands-on” cooking and sampling that are so key for restaurateurs to choosing ingredients or spotting new trends. Covid related restrictions have been relaxed and Las Vegas is again full of people and fun. Not only is the Pizza Expo a great place to meet with current and prospective customers, but also it provides an opportunity to learn more from suppliers and industry leaders about emerging trends.

Perhaps most important, demand for all things pizza and casual Italian has remained strong despite the reopening of dine-in and other cuisine concepts.

Also, removal of covid related restrictions has not brought a rush return to downtown office blocks. Rather, working from home has been popular and will continue at least into 2022. There is speculation that workforce companies are now positioned to see advantages and disadvantages to morale, productivity, and sense of organizational teamwork.

Coupled with an industrywide worker shortage, producers and operators are determining which processes can be mechanized or eliminated. Savvy restaurant operators are actively exploring labor-saving products such as shredded cheese instead of block, precooked or RTC protein instead of raw, fully prepared sauces and other items to buy rather than preparing from scratch. Increases in wages are expected to continue which will also drive efficiencies and labor-saving changes throughout the supply chain. Most distributors are also realizing that ingredient cost increases are likely to last into next year and encouraging restaurateurs to adjust prices accordingly. This will be one of the headline topics at Pizza Expo, how to deal with the new normal cost inflation.

Having missed a year, speakers at Expo will be presenting the latest cooking concepts, menu ideas, and ways to take your business to the next level. Top trends to shape the industry will be discussed in detail including (1) food safety, (2) technology/digital presence, (3) healthy eating trends, (continued on page 2)

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There are a few important themes that will continue to play a vital role in where commodities trade this summer and fall. The first is the inherent weather/quality premiums being built into the Minneapolis spring wheat contract and the other spring grains. Second, inflation and its overall compounding effect on the markets. Third, we will continue to see the interconnected spreads between various commodities and the overall effect to stocks. It is no surprise that spring wheat has gained nearly 30% value since 2021 started and other commodities have performed similarly.

(continued on page 3)

MARKET UPDATE Dairy Cheese Blocks

PRICE

$1.692

LAST MONTH

DIFFERENCE

$1.500

$0.192

During the last five years, cheese block prices averaged 4.4% higher July vs June. Butter prices usually fade some in July, since 2016 they still averaged the second most expensive for any month during the year.

Beef 50% Trimmings

PRICE

$1.181

LAST MONTH

DIFFERENCE

$0.978

$0.203

While there were some higher prices recently, the bulk of the individual items retreated. Still, we can’t help but focus on the beef 50’s, recently closed around the $1.20’s. Amid escalating prices, purchases have been on the decline.

Poultry

PRICE

Wings(Jumbo) $3.157

LAST MONTH

DIFFERENCE

$2.970

$0.187

The USDA is reporting that chicken slaughter has exceeded the calculated avilability of placements by about 2.75% across the past four weeks, so apparently the chickens out there will keep this growth moving forward.

As of 7/12/21

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TRENDS EMERGE AT PIZZA EXPO

(continued from page 1)

(4) off-premise options, and (5) what is working for restaurants.

Food safety has never been more important. Many consumers are concerned not just with the safety of the prepared food, but also the serving and perceived cleanliness of their exposure to foodborne and airborne virus. While mask wearing may not be required, consumers now have a heightened sense of their surroundings.

New regulations will also probably mandate some of the pandemic related changes such as single served condiments and disposable containers.

Technology and digital presence took center stage during the pandemic, accelerating what was already an important trend. Chain restaurants have invested heavily in technology, and it has paid off in ways important to consumers. Online menu and ordering options, touchless payment options, connection with delivery and other services made off-premises business flourish during the pandemic. These tools are now available for independent restaurants at reasonable costs, and coupled with superior menu choice and food quality, independents can incrementally add to their business post-pandemic.

Most independents did well during the pandemic except were dependent on downtown office workers. Still, embracing technology and enhancing a digital presence will increasingly become a necessity going forward.

Healthy eating trends are growing in importance, including meatless and vegetable-based toppings, gluten-free crusts, and regulatory focus on calories impacting portion control. The meatless beef toppings like hamburger meatballs, sausage, and most recent pepperoni are joined by meatless chicken tenders. There is a debate about how healthy some of the above are, but their main claim is “meatless”. Gluten-free crusts have improved to the point that operators are embracing them as an alternative for Celiac and those wishing to avoid gluten.

Consumers have fundamentally changed their approach to dining. While dine-in is making a comeback, offpremises dining of take-out and delivered meals continue very strong. Operators who developed this business during the shut-down are encouraged by results to continue. It is expected that we will see many restaurants reduce front of house space to make room for graband-go and delivery models. What works for operators seeking this business is offering compelling value, upto-date digital menu and ordering, combination bundles, and food options that travel well. Combining the unique characteristics of independents restaurants with a digital presence and off-premises options developed during the Covid-19 pandemic are a sure winning combination for success in future!!!

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MARKET UPDATE

(cont from page 1)

With spring wheat ending stocks predicted to be near record lows, coupled with record low quality crop conditions, spring wheat could be hitting even higher values into the fall. The same premiums are built into corn, hard red winter wheat, and the soybean complex, but as of now these crops don’t have the level of concern that exists for spring wheat. These contracts’ upside is tied more to overall inflation while the downside will follow further positive crop reports. Looking closer at this, inflation in commodities follows the overall trend of higher input prices being passed through the supply chain and robust managed money accounts investing in commodities as a hedge against inflation. If inflation continues at higher than trend levels, all commodities will hold value and rise in value. However, if interest rates rise, then managed money will take money out of commodities. The last theme to consider is the connection between this year’s hard red winter wheat crop and the spring wheat crop. hard red winter wheat harvest is shaping up to be low protein. Vital wheat gluten is scarce in the market, which is forcing millers to buy up high protein spring wheat. This could mean a stronger cash price for all spring wheat as we head into the fall, regardless of where the futures go.

Di Prim'Ordine Farina Flour

SALES UPDATE:

By Tom Santos, General Mills We have seen inflation and pricing pressures across the nation. James captured the commodity pressures well in the market update; it would be wise to heed his counsel. On the sales side, there is difficultly moving any product from Point A to Point B. Freight will continue to be an issue well into the future and will impact both pricing and availability of products.

There most important action to take is to adjust your pricing to reflect the market. With the current surge of inflation, increasing prices is a necessity, not an option. Using the pizza industry as an example, raising the price of an average Pizza by 10% amounts to an increase of around $2 per pizza. A good idea is to take one larger increase versus several smaller ones.

This avoids having to change menus and negates the customer perception of continuous price increases.

Customers are enduring the same sticker shock when they go to grocery store, gas station, or open their energy bill. Coming from a background of an independent retail establishment (I owned a bakery from 19801997), I know customers understand a price increase when they are personally experiencing it themselves.

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AUGUST 2021 VOL. 26, NO. 8

INSIDE THIS ISSUE

ES

• Trends Emerge At International

EE

Pizza Expo

• Commodity Wheat & Flour

Update Summer and Fall 2021

• Market Update

. c/o BELLISSIMO FOODS 1600 Riviera Ave. Ste. #315 Walnut Creek, CA 94596

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