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DELCO FOODS

JANUARY 2021 VOL. 26, NO. 1

DISTRIBUTION STRUGGLES

SUPPLY and DEMAND By Peter Thor, President, Bellissimo Foods Company

While restaurants face another round of shutdowns, the COVID pandemic has, and will continue to affect the entire food chain, from growers and producers to freight and distribution. Food service distributors who have remained open during the pandemic are working hard to supply and support their customer partners. Here are some of the issues that food service distributors around the country are working tirelessly to overcome.

Approvals to distribute covid vaccine have led some to say we are seeing “the beginning to the end of the pandemic”, meaning that the devastating rapid spread of the virus will begin to slow so that in Q2 we will start seeing not only fewer covid cases, but the gradual return to growth in the economy. While retailers and consumers are getting much of the attention, we believe it will be the available skilled labor (or lack of) in production and logistics which will determine the pace of growth in 2021. There are several reasons why: continued covid related labor shortages, testing requirements, and new operating processes. Changes in supply chain, logistics, and consumer demand for alternate products complete what promises to be an exciting but uncertain year ahead.

Sourcing food products is a significant problem for distributors. Products like pepperoni, yeast, flour, and other common pizza items have been

Uncertainty and changing availability of labor are limiting both foreign and domestic manufacturers from fulfilling demand for food products. Because politics and the pandemic have dominated the news, few noticed that there have been severe delays in off-loading import containers at the port. As of this writing, for example, there are 17 container ships waiting in the ocean off the port of Los Angeles to be unloaded. This is causing stock outs and week’s long delays in delivery of many goods. Maersk Line reps have called it a “perfect storm” created by a mix of rising demand, reduced capacity, and congestion in terminals. To illustrate the point, they cite record freight import volume on the West Coast, up more than 30% from last year. Capping it all, there is a shortage of truck drivers to deliver inland, which has caused domestic product delays as well as increased costs.

The CME cheese block and barrel markets have fallen to their lowest levels since August. Cheese prices may have some additional downside potential from here but may find support soon from the likelihood of increasing export demand.

Plant and logistics workers including truck drivers have experienced a much higher Covid virus infection rate than the general population. All this while trade demand has rebounded. The inverse moves of supply and demand have led to higher logistics costs, sometimes much higher. Since the middle of the year, for example, the pandemic-driven boom has resulted in a doubling of container freight rates to reach the current record high. Domestic freight rates have also increased by an average of more than 20%. (continued on page 2) A PROUD DISTRIBUTOR OF BELLISSIMO

(continued on page 3)

MARKET UPDATE Dairy

PRICE

LAST MONTH

DIFFERENCE

Cheese Blocks $1.6055 $1.7145 ($0.109)

Beef

PRICE

LAST MONTH

DIFFERENCE

50% Trimmings $0.3960 $0.4140 ($0.018)

The beef trim and grinds complex have remained consistent and anticipated seasonal price increases may only be modest going into 2021.

Poultry

PRICE

Wings(Jumbo) $2.337

LAST MONTH

DIFFERENCE

$2.323

$0.014

Wing prices remain in the mid-to-upper $2.20s, bucking the usual lower seasonal trend into years end. Anticipate price softness across the wing markets, but breasts and tenders are anticipated to head higher.

SUPPLY and DEMAND

(continued from page 1)

Unfortunately, the restaurant industry is facing the opposite sword-cross, with customer demand falling while food and non-food costs are rising. As a result, an unprecedented number of restaurants are failing; hardest hit being independents with limited financial resources. The National Restaurant Association are lobbying Congressional leadership supporting a bipartisan relief package; sharing new survey findings that illustrate continued business deterioration across the restaurant industry and asking for immediate financial help. The survey found that more than 500,000 restaurants of every business type—franchise, chain, and independent—are in an economic “free fall”. Their recent survey results found the near-term future looks bleak: • Eighty-seven percent of restaurants (independent, chain, and franchise) report an average 36% drop in sales revenue. • Fifty-eight percent of operators expect continued furloughs and layoffs for at least until Q2. • 17% of restaurants—more than 110,000 establishments—are closed permanently Indeed, 100% of our industry are experiencing supply constraints and higher costs, coupled with reduced demand due to Covid and more recently forced shutdowns in many parts of the country. Mixed politics and messages on how to confront these challenges have paralyzed the nation and virtually guaranteed that the pandemic will last longer than necessary. Willful disobedience to the shutdowns means partial and disproportionate results, but hoped for vaccine distribution should enable the supply-side to recover in Q2.

Be Inspired. Be Creative. Be Original.

Source: Technomic’s MenuMonitor Q4 2017-2018

CUSTOMIZED PIZZA WITH NUTELLA®

Nutella® dessert pizza menu offerings have increased 16.7% in the last year. Source: Technomic’s MenuMonitor Q4 2017-2018

THE PLANTS THAT PLEASE

These tasty, plant-based toppings allow pizza operations to attract new diners without sacrificing on quality. Choose from pepperoni-style topping, Italian crumble topping and chorizo-style crumble topping. All made with traditional spices, so plant and pork enthusiasts can appreciate them.

Demand-side? Will restaurant consumers be back? The industry will not truly be back until dine-in becomes safe. In this case, perception is reality. Some believe in pent-up demand and over exuberance will bring a tidalwave of customers, while others believe consumers will be more cautious. The work from home phenomenon may also cause a permanent realignment of foodservice demand away from downtown business districts. These are unknowns that will eventually drive the next phase of restaurant demand and technology. We eagerly await the end of 2020 and look forward to the challenges of 2021; hoping the New Year brings healing for those who are sick, rest for those who’ve cared for them, and recovery for our much loved foodservice industry. A PROUD DISTRIBUTOR OF BELLISSIMO

DISTRIBUTION STRUGGLES

(cont from page 1)

a real challenge to source on a consistent basis. For starters, the demand cycle for these products has changed dramatically. Manufacturers have shifted significant portions of business to retail where demand is the strongest, leaving the food service segment under-serviced. In addition to a change in demand, most manufacturing facilities are struggling with adequate labor as personnel are sick or having to quarantine. This leaves facilities operating at a fraction of the normal output putting them weeks behind normal production schedules leading to significant order delays and shortages.

issues leading to the increase. Ocean shipping has seen record demand since June, which in turn is causing massing congestion at ports leading to delivery delays and extra costs. Once the product lands in the country, getting a truck under it is yet another problem as there are not enough truck drivers available with most capable drivers worried that the travel would increase there chances of contracting the virus. In response to these procurement challenges distributors are needing to look at multiple product sources to try and get the best product matches at the best possible prices leading to inconsistency in product, and pricing on key items.

Food service distributors, in particular the BFC distribution network, have been working tirelessly to ensure you have the best chances of making it through this pandemic. They are finding product, they are managing freight, they are controlling costs; they are working on your behalf to make sure the operations that they service survive. No matter what kind of operation you work for, or where you are in the supply chain, these issues affect all of us, and it will be up to all of us to work hard to get our industry back to Freight has also seen massive changes over the where it was. For questions on products or service please previous 10 months. Freight rates are on average 20contact your local Bellissimo brand quality products 30% higher than they were in 2019, and there are many distributor.

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For the Best

IN QUALITY AND CONSISTENCY IN MOZZARELLA CHEESE Vantaggio D’Oro, premium Italian Style Mozzarella, delivers with taste, consistency and performance. With Vantaggio D’Oro on your pizza, you will give your customers more than a meal – they’ll have an experience that will keep them coming back for more. Made with only premium ingredients, Vantaggio D’Oro is available in traditional loaf and shreds.

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flour milled from a select blend of domestic hard winter wheat. It's excellent for hand stretching and a hot, fast bake and packed in an operator-friendly 27.5 lb bag.

w w w. v a n t a g g i o c h e e s e . c o m VantaggioCheese_PMQ.indd 1

12/4/18 11:31 AM

A PROUD DISTRIBUTOR OF BELLISSIMO

The Spirit of Giving

This past holiday season, Delco Foods made tribute donations to several organizations in honor of our customers... As the restaurant industry continues to be impacted by the lasting effects of the COVID-19 pandemic, many state Restaurant Associations have setup funds to provide financial support to restaurant workers in need. These funds help service industry staff (bartenders, bussers, waitstaff, line cooks, dishwashers, and others) who have suddenly found themselves without a paycheck, breathe a little easier knowing that this immediate help can assist with buying groceries, paying rent, filling prescriptions and taking care of their children. Caroline Symmes was three years old when she was diagnosed with Wilms Tumor Disease. Although this kidney cancer has a 90% survival rate, Caroline had a very aggressive tumor and there was little in the way of research for pediatric cancers. Caroline lost her future, not because of lack of care or resources, but because of lack of funding for pediatric cancer research. This foundation is the gift she leaves behind so other children can have a bright future. To learn more visit: Illinois: www.illinoisrestaurants.org/Page/IRAEFReliefFund Indiana: https:inrlarelief.com/ Kentucky: www.aproninc.com Ohio: www.ohiorestaurantsrelief.org/

Happy New Year! Here’s to a happy, healthy & successful 2021!

Comments, Questions & Suggestions

Please contact us toll free at 800.536.1234, locally at 317.876.1951, or visit us online at www.delcofoods. com. We truly value your opinion. As always, our number one goal is to keep you happy. Our newsletter is just one way we share new information about the products and services we offer, as well as industry news we think may be interesting and useful. For personal service and support, please contact your Delco Foods Sales Representative. 5000 Anson Blvd . Whitestown, IN 46075 . toll free 800.536.1234 . tel 317.876.1951 . fax 317.870.7803

Remember you can visit us online at www.delcofoods.com, “Like Us” on Facebook and follow us on Twitter & Instagram

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BELLISSIMO PHILLY STEAK Authentic, Versatile, Satisfying Born in Philadelphia and loved nationwide, Philly Steak can add delicious versatility to any menu, attracting customers looking for that succulent, juicy flavor. For a commitment to quality product and competitive pricing, turn to Bellissimo for its authentic Philly Steak products – available raw and fully cooked, marinated and non-marinated. Bellissimo’s Philly Steak is from 100% of the freshest USDA Domestic Beef, providing excellent flavor and marbling to make every bite unforgettably satisfying. The small batch, hand trimmed portions are frozen and readyto-cook, providing time and labor savings and a high-quality consistency your customers can count on. If you’re looking for best in class value, choose Bellissimo’s traditional flat steak products as the basis to craft your own signature Philly Cheese Steak Sandwich.

Contact a Bellissimo Rep Today!

BFC Distributors are the exclusive source for Bellissimo Philly Steak.

www.Bellissimo.com

A PROUD DISTRIBUTOR OF BELLISSIMO

JANUARY 2021 VOL. 26, NO. 1

PermitStandard #810 Presorted EC US Postage K PAID PIZ INS Oakland, CA ZA IDE Permit 810 IND FO US R TH TR Y NE LA c/o BELLISSIMO FOODS EW TES 1600 Riviera Ave. Ste. #315 T S

INSIDE THIS ISSUE

• Supply and Demand • Distribution Struggles • Market Update

Walnut Creek, CA 94596 RETURN SERVICE

PH:317-876-1951 FAX:317-870-7803 www.delcofoods.com

Delco Foods is a proud distributor of Bellissimo authentic Italian ingredients.

Visit Bellissimo.com for more information on Bellissimo authentic Italian items, specials & more!

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