Impact of Covid-19 and Stay at home orders on the Snack Industry in America – a summary and analysis by Kermit Highfield of Southern Food & Snacks
Kermit Highfield of Southern Food & Snacks was asked to analyze the major impacts of the Covid Crisis to the American Snacks Industry. A summary and analysis follows.
The year 2020 was like none other in nearly a generation, if not longer. Over the past decade more and more Americans were both increasing their daily mobility while also planning and preparing less and less meals at home. Most people in America simply grabbed meals, snacks, and even beverages on an as needed basis from restaurants (including QSR), delis, c-stores, and even groceries. Just about the time most snack producers began to ramp production of small sized and single serve snacks portions the world changed virtually overnight.
In mid-March 2020 the Covid-19 Crisis hit the United States and most or all countries across the globe. The initial governmental reaction was to ask people to stay at home, and in many cases order citizens to stay at home. The initial belief across the country was that this requirement would last a week, maybe two. Several weeks in it became apparent that people would be restricted to their homes for a few months. Restaurants closed. Grocery stores were hit with an unforeseen rush. People adapted to stay at home not only during their time off work, but were told not to come to work – the office – the plant – whatever.
Americans quickly fell into place and found ways and means to stay home for both work and play. No more visits to restaurants unless it was for carry-out to bring home. No more athletic competitions on to go watch nor even watch on the television. No movie theaters. People were forced to live, work, and play at home. In a few weeks this resulted in a spike in almost all groceries.
As people were forced to “play” at home snack foods quickly became in high demand. Cable TV spiked, Netflix, Amazon, and other streaming services saw a huge uptick. What follows? Snacks! The likes of chips, pretzels, crackers, nuts, and of course popcorn all spiked. These all grew in demand overnight with no foreseen warning. The result, shortages in supply.
For Microwave Popcorn as an example people love the age old thought of fresh and hot popcorn. If you cannot go to a movie and buy a tub of popcorn why not pop corn in the microwave. As this trend began producers of microwave popcorn such as ourselves not only saw a huge rise in demand, we also saw a firm tightening of both ingredients and packaging. Corn supply tightened. Palm oil supply was already tight and became even tighter (specifically as many other snacks require Palm Oil and other vegetable oils – such as chips, crackers, and more). Stating the obvious and mentioned is the same has happened with ingredients to other snacks (potato supply tightened / nut supply tightened / etc.).
Note: summary of raw ingredients and packaging price increases as experienced by Southern Food & Snacks, per Kermit Highfield.
This brings us to packaging. As the demand for not only snacks grows so does the demand for basically all foods in a grocery store. Well, all foods come in some type of packaging. So, as demand for ingredients such as corn, potatoes, and vegetable has spiked so has the demand for the printed plastic, paper, and cardboard packaging they come in. You can even add in the demand for transport to get these materials to manufacturing facilities and then onto grocery stores. Basically, all pieces to the puzzle have faced nearly a year of unprecedented demand coupled with supreme internal supply pressures.
In conclusion, this pandemic has created a need for people to stay at home for both work and recreation. That quickly results in the need for people to buy more groceries including snacks. Supply of all materials and also line time to produce snacks has faced record demand. As people stay at home these demands and hence supply pressures will continue.
A main question for now is for how long?
-Submitted January 2021 by Kermit Highfield of Southern Food & Snacks.