Down to Business: Grocery shortages will continue into 2022

PHOTOGRAPHER:

I’m unsure how to break it to my two cats that 2022 will deliver to their food bowls what 2021 has of late: unfamiliar fare because supermarket shelves still aren’t deep with inventory.

Like people, they tend to gravitate to a particular brand and turn their noses up at substitutes – and keep doing that until the alternative becomes the norm or the old favorite returns.

That’s been the pattern at food retail during our nearly two years with COVID, and the folks at IRI say the first half of next year will offer more of the same.

“We’re not anywhere near the empty shelves that we saw in the spring of 2020, but we can really anticipate a lot of shortages continuing into the first half of 2022,” says Joan Driggs, a vice president at Chicago-based IRI, an analytics firm that has tracked consumer behavior since its 1979 founding as Information Resources Inc.

Labor is part of the “challenge” of getting products to shelves, she said earlier this month on a webinar hosted by The Food Institute that looked ahead to next year. But also contributing are raw material shortages, high commodity prices, and consumer demand itself, which remains volatile, according to a Food Institute report last week.

Driggs noted that in normal times, supermarkets rarely are 100% in stock on all items, but nowadays levels are “hovering at 90%” with “much bigger dips” lately in so-called edibles such as energy drinks, frozen entrees, candy and ready-to-drink teas and coffees.

Also continuing in 2022 will be inflation, which IRI expects to accelerate then peak in the first half next year, according to a webinar slide on the food and beverage outlook offered by Driggs.

Whereas 2021 saw government stimulus add to consumers’ disposable income, that won’t be the case next year, so shoppers will be more sensitive to price and may trade down in brands due to inflation, IRI says.

An odd result of the COVID-sparked grocery shortages was the growth in premium brands – sometimes the only choice available, Driggs said – but price sensitivity may curtail that trend.

“If you’re a manufacturer raising prices, you have to be sure that consumers are going to be willing to pay,” she said.

Driggs indicated that “a lot of large companies are telling us they’re not done hiking prices.” 

Indeed, General Mills, whose product mix ranges from cereal to pet food, said this week that “incremental pricing actions” will continue in the new year due to “an unprecedented combination of input cost inflation and supply chain disruption.”

Driggs said “mobility” – consumers going back to school and the office, as well as out for shopping and entertainment – was returning, shifting consumption from solely at-home to somewhat on-the-go.

“But,” she said, “it’s going to be probably another year before we achieve the level of activity that we experienced pre-pandemic.”

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]

Categories: Business, News

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