Global Food Prices Hit Six-Year High
Global food prices are the highest they've been in six
years, with the price of agricultural commodities traded on the global stage
rising 50% since the middle of 2020, according to economists at Rabobank.
Additionally, global food demand is projected to rise
anywhere between 59% to 98% by 2050 and food prices are soaring faster than
inflation and incomes.
With food prices surging, here's a look at the factors at
Import Demand is Up
As countries seek to build up their domestic stocks of
commodities such as wheat, corn, and soybeans, import demand is rising,
reported Australian Broadcasting Corporation (March 10). Full
The highest among that group is China, whose economy is
Major exporters are also holding stocks back. For example,
Russia introduced export taxes on wheat and Argentina placed quotas on corn
exports. Some publicly listed food companies are also increasing the amount of
stock they hold in warehouses to avoid COVID-related disruptions.
In wealthier countries, governments are focusing more on
self-sufficiency than price controls, reported Bloomberg (Feb. 28). Full
France is planning to boost output of high-protein crops to
cut reliance on soybean imports, while Singapore became the first country to
approve sales of lab-grown meat as it pushes to boost domestic food capacity.
Pressure from Market Speculators
According to Rabobank senior commodity analyst Charles
Clack, market speculators are playing a role in the upward trend.
"While more fundamental things like weather and demand are
the trigger for prices rising, it's without doubt speculation by non-commercial
players in the market that exaggerate the move," he said in the Australian
Broadcasting Company report.
Other factors playing a role in rising food prices include:
weakening U.S. currency
shortage of truck drivers and shipping containers
rising price of oil
Additionally, low interest rates are drawing money away
from government bonds and into commodity markets as they look for higher
Plant-based Meat Trend Continues to Grow Among
Major Industry Players
Plant-based companies are finding a home in fast food, as
demand for meat-free options grows among consumers.
About one-third of consumers said their consumption of
various meat alternatives has increased over the past year, according to a
Datassential survey conducted in January. The figures are similar for those who
say they plan to increase their consumption of plant-based meat alternatives in
the coming year, reported SmartBrief (Feb. 4). Full
Beyond Meat Strikes Deals with Fast Food
Beyond Meat recently signed
partnerships with fast-food giants McDonald's and Yum
Brands, as noted in a report by CNBC (Feb. 25). Full
Under the agreements Beyond will be the preferred patty
supplier for the McPlant burger and work with McDonald's to develop new
substitutes for pork, chicken, and egg.
The company will also work with Yum to make exclusive menu
items for KFC, Taco Bell and Pizza
Financial terms for both partnerships were not disclosed. However, Beyond Meat
CEO Ethan Brown told analysts that the impact of the deals in 2021 is expected
to be "fairly modest."
"These deals are enormous," Brown told CNBC. "They
are the biggest deals you could possibly put together in food in our sector.
And we don't want people to get ahead of themselves."
Brown also noted the company will release two updated
versions of its meatless patties this spring, claiming them to be its "juiciest
burgers yet." One will have 55% less saturated fat than a traditional 80/20
beef patty, while the other will contain 35% less, which is consistent with its
Meanwhile, the company said fiscal fourth-quarter net sales
rose 3.5% to $101.9 million, missing average analyst forecasts of $103.2
Good Catch Bring Plant-based Fish to Bareburger
makers of Good Catch plant-based seafood,
announced a foodservice partnership with Bareburger, an organic and
clean-comfort food restaurant. For a limited time, Bareburger will
add two new fish-free burgers to the menu featuring Good Catch's Plant-Based
Classic Fish Burger. Full
The partnership marks Good Catch's first foodservice
partnership for its produce, which is part of its existing line of frozen
appetizers and entrees. The partnership comes at a time when consumers are
becoming more open to plant-based seafood.
A majority, 59%, of frequent seafood consumers say they are
likely to try plant-based seafood analogs, according to the Power of Seafood
2021 report from FMI. The report also noted a high
correlation of interest in plant-based fish and nutritious eating, while
sustainability also has a major impact with 62% of consumers naming it the top
factor in their decision to try plant-based foods. Food Institute Focus
Viability of Virtual Restaurant Brands
On February 18, DMA, in
conjunction with the Food Institute, hosted a webinar that examined the recent
explosion of ghost kitchens and virtual brands. The event, which featured
executives from Denny's, Kitchen United, and Lettuce Entertain
You, also reviewed the prospects for virtual brands and tips for restaurant
operators interested in launching such programs.
After all, delivery-centric
concepts are popping up with minimal initial capital investment, such as Mr.
Beast Burger, which launched in December with over 300 locations. According to Chowly,
as of August 2020 there were approximately 100,000 virtual concepts on third-party
"I think what [operators]
like about virtual brands is it's cheap to test," noted Joy Lai, the COO of
Kitchen United, which aids restaurant brands in off-premises dining. "So, they
can turn something on, see if the consumers like it, get the feedback, and
tweak where needed."
A Closer Look at
Virtual restaurant brands –
brands that have a full menu, but don't exist in their own space and typically
share kitchens with other businesses – have been well-received by customers due
to third-party delivery options and the variety of food available from ghost
kitchens. Denny's CEO John Miller said younger generations are especially
receptive of delivery-centric virtual brands like his company's new Burger
Virtual brands aren't without
logistical hurdles, though. They require a thorough understanding of a
restaurant's trade area and demand, panelists said.
"Another very important
element is: can you achieve that level of consistency frequently, as you get
busier and busier," said Scott Barton, partner with Lettuce Entertain You, a
company behind dozens of restaurant brands. "It takes a little time to work
through, especially when you're rolling out a new concept."
Keys to Virtual
Panelists offered the
following tips to help ensure the successful launch of a virtual restaurant
- Be straightforward with your brand name by
including your main product in it (example: Mr. Beast Burger)
- Be clear and descriptive with menu items
- Use social media for marketing
The speakers also addressed
skepticism about the long-term prospects for virtual restaurant brands,
acknowledging that some industry peers feel the concept's popularity will
dissipate as the pandemic fades. Lai acknowledged that many consumers will
eagerly return to brick-and-mortar restaurants once indoor dining restrictions
"I think some of those
brands may go away. You would expect that with the brand-development cycle,"
That said, she still sees
growth opportunities for many virtual brands.
"For a lot of our existing
brands, when they have a primary brand where they have a brick-and-mortar store
as well, when they launch a secondary, virtual brand, we've seen it bump their
revenues anywhere from 30 to 50 percent," Lai noted. "For smaller operators...maybe a good [virtual] brand is doing $5,000 a week. And, when you compound
that with three or four brands, you get meaningful revenue." Food Institute Focus