Grocery store shelves are not going back to normal this year

Many of the largest food companies in the country tell grocers that they will have a limited amount of their products, including things like Rice Krispies Treats, Sour Patch Kids, some Ben & Jerry’s Ice Creams, McCormick Gourmet Condiments, and Marie Callender’s Pot Pies due to labor -, raw material and transportation restrictions that throttle supply chains, according to emails viewed by CNN and interviews with grocers. Some suppliers are also asking grocers to cancel their promotions for these items and more over the holidays so that these items don’t fade off shelves anytime soon.
These latest restrictions mean stores won’t have all things for all customers heading into the holidays and shoppers may not be able to find some of their favorite products, flavors, or niche items. But buyers will still have many options, including core products from most of these companies, which they will choose over their lower-demand products. That said, if you’re a fan of Ben & Jerry’s popular phish food, for example, you shouldn’t be a problem, but the company’s lesser-known Cold Brew Caramel Latte might be harder to find.

Steve Howard, vice president of merchandising for Bristol Farms, a California grocery chain, said that supplying major food and consumer goods manufacturers with some items will be “a challenge for the food industry in the final months of the year.” Suppliers warn the company of “potential bottlenecks” in food, glasses and packaging containers. In response, Bristol Farms is working to bring in inventory “earlier than any other holiday ever,” said Howard.

Buying limits from manufacturers were rare before the pandemic, creating “less than full terms” for customers in Morton Williams stores, said Steve Schwartz, director of sales for the New York chain. Morton Williams tries to find secondary suppliers when his main food and housewares suppliers are unable to fulfill the orders.

“This is not your ideal situation,” said Schwartz. Some customers forgive when they can’t find what they’re looking for. But others “just want to know why they’re not getting their item”.

Bottlenecks in grocery stores are nowhere near as visible as they were at the start of the coronavirus outbreak, when shoppers flocked to stores to store groceries and staples. But supply in the aisles of grocery stores has not fully recovered to pre-pandemic levels, and companies like Costco and Sam’s Club recently reintroduced customer shopping restrictions for paper products and detergents.

Around 18% of beverages, 15% of frozen foods, 16% of snacks, 15% of sweets and 18% of baked goods were out of stock in stores for the week ending October 3, according to the latest data from IRI, which tracks inventory levels at leading US grocery chains, major retail stores, pharmacies, and wholesale clubs.

Before the pandemic, 7 to 10% of products were typically out of stock on store shelves, according to the IRI.

When supply is tight, manufacturers often eliminate some of their fringe items in order to focus on driving production of the best-selling products, said Krishnakumar Davey, president of IRI’s strategic analysis division. They also tend to cut products that are more expensive to manufacture, according to Davey.

“The new norm”

Some grocery brands impose allotments or purchase caps on grocery stores and retailers for certain products, while other vendors warn more generally of limited availability. Suppliers usually make products available for allocation when delivery bottlenecks occur.

Allocations are not limited to any region of the country or a single type of retailer, said a senior executive at a leading regional wholesaler. Instead, they take place at the national level, according to the executive, who spoke on condition of anonymity in order to protect the company’s relationships with suppliers and other wholesalers. However, the restrictions could pose particular challenges for independent grocers who have raised concerns over the past year that suppliers are giving priority to larger competitors over small stores.
Kellogg emailed at least four grocers last month that Pringles Snacks Stacks, Eggo Pancakes and MorningStar Farms Plant-based hot dogs and bacon will be allotted, and Rice Krispies Treats Snacks will “stay below service” through the end of the year. The company also requested that business to cancel their promotions for Rice Krispies and Corn Pops cereal “to make recovery possible”. Kellogg said in the email that there are “restrictions” on capacities and packaging materials, as well as work pressure. (This was before 1,400 Kellogg grain factory workers went on strike Tuesday.)

The four distributors shared the email with CNN Business on condition of anonymity so as not to jeopardize their relationships with the suppliers.

Kris Bahner, a spokesman for Kellogg, said in an email that the company has seen increased demand since the pandemic began as people eat more meals at home. Bahner said the company is working with retailers to make sure our groceries flow through their systems and restricting orders over time periods when capacity is tight. The company did not disclose how many retailers will receive allocation notifications.

Mondelez has a “limited availability” of items like Sour Patch Kids and Swedish fish candy, Toblerone chocolate and Hall’s cough drops “due to supply chain restrictions,” the company said in an email to a retailer on October 1st. Mondelez estimated in the email that the “recovery date” for these items would be February or March next year.

A spokesman for the multinational food and beverage company said in an email that the company was facing “high labor needs” and “logistical challenges”. Mondelez believes it is “relatively well positioned to meet the challenges of the marketplace and will continue to keep a close eye on things” to get products to retail customers and buyers on time. The company also didn’t say how many retailers were getting restrictions on such items, but said, “We are preparing communications that our sales team can use as needed when interacting with their customers.”

Unilever emailed a distributor on Sept. 14th that “labor shortages continue to create limited ability to meet demand” and that priority will be removed from production on certain products including Ben & Jerry’s Cold Brew Caramel Latte and Ice Cream Sammie Flavors, Breyer’s Vanilla Fudge Twirl Ice Cream and firecracker popsicles “until we are able to return to a steady state of supply.” The company said it would instead “focus time on our best-selling items”.

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“As in many industries, there are sometimes challenges getting all of our products into stores for various reasons related to delivery and distribution,” a Unilever spokesman told CNN in an email.

Packaging problems also continue to be a problem. For example, some spices are in short supply due to glass bottle sourcing challenges.

A McCormick representative said in an email to two distributors on the 20th “The bottle shortage has impacted our production and is undermining our safety inventory down the line,” the representative said. As a result, McCormick said it would deliver about 70% of previously forecast shipments, and the company encouraged customers to cancel their November and December promotions for the spice line.

Lori Robinson, a spokeswoman for McCormick, said in an email to CNN Business that “Gourmet is the only line of products affected by this packaging shortage,” and the company’s more recognizable red spices will be fully stocked over the holiday season for customers can use as a substitute for the gourmet condiments, she said. The company did not disclose how many retailers received allocation notifications for gourmet condiments.

And some sizes of Marie Callender’s frozen pot pies might be harder to find.

Conagra emailed a distributor on Sept. 27th that it was mandating an allotment for Marie Callender’s 10-ounce and 15-ounce pot pies through Nov. 29 because “there are packaging material problems with our bowls. and carton suppliers, which led to a production stoppage “.

Conagra did not respond to requests for comment.

Chieh Huang, CEO of online wholesale company Boxed, said “Allocations are the new norm” for food and packaged goods manufacturers and are affecting inventory levels at Boxed. Still, he said, “the industry is doing better than we were at this time last year.”

CNN Business’s Danielle Wiener-Bronner contributed to this article.

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