Specialty Food Magazine is the leading publication for retailers, manufacturers and foodservice professionals in the specialty food trade. It provides news, trends and business-building insights that help readers keep their businesses competitive.
Issue link: https://www.e-digitaleditions.com/i/1194330
The recent tariffs the U.S. Trade Representative has placed on approximately $1.75 billion of European goods, including cheese, yogurt, butter, olives, pork products, and other tariff lines from members of the EU is high on the industry's list of concerns as 2020 begins. In addition to suppliers and importers, retailers are worrying about the impact of the tariffs because of the importance of cheese in their sales mix. "There is absolutely no question we are going to have to raise prices eventually," says Richard Sutton, a partner with his wife, Danielle, in specialty food retailer and importer St. James Cheese Company, New Orleans. In a recent interview with Specialty Food, Sutton shared concerns that increased retail prices could alienate some consumers who already have a negative impression about the cost of cheese. In addition, he pointed out, restaurants will be challenged to set pricing on cheese plates as prices increase. Chefs often look to specialty retailers for their cheeses, and those retailers depend on that business to move their inventory. "We have lots of chefs who buy cheese from us," says Sutton. "When their costs go up by $1, $2, or $2.50, that adds up to a lot when you are trying to price these things on a menu, because of their margin structure." "The bottom line is that no one has the kind of margin that they can just absorb it," says Matt Caputo, CEO of Caputo's Market & Deli in Salt Lake City. "The consumer is the one who pays." He estimates that about half of the 200 or so varieties of cheese he offers will be hit by the tariffs. Caputo doesn't anticipate that many of his customers will switch away from their favorite imported products in favor of American alternatives. In addition, he says, price increases on imported cheeses could open a window for American producers to raise their prices as well. The tariffs will also impact several other products at Caputo's, including olives and tinned seafood items—the latter of which have been among the company's fastest-growing categories, he says. Another issue that operators throughout the specialty food industry will be paying close attention to in 2020 is legislative and regulatory activity around the use of cannabis and cannabidiol in food products, following the increasing legalization of marijuana and the reduced restrictions on the use of hemp. "With the emergence of both hemp and cannabis and related opportunities, there is a lot of regulatory activity we're following at the moment," says Ryan Meczyk, president at Norman Distribution, which supplies better-for-you grocery products to a range of venues in the Chicagoland and Las Vegas markets. He notes that while cannabis is strictly regulated, the laws around CBD have been much looser. "We strongly believe there should be strict regulatory laws implemented for CBD-based products, as there are many products currently on the market that are not third-party tested or verified," he says. Retailers that are already selling CBD-based products should confirm that the products they carry are safe and verified, Meczyk says. Additional regulatory activity that the industry is keeping an eye on includes restrictions on the use of plastic, Styrofoam, and other materials that retailers often use in their prepared foods operations, says Scott Zoeller, an industry consultant and former food retailing executive. "There's a lot of work that has to be done on this, but for foods that are taken out, the packaging will have to be something that is biodegradable or compostable, and has a low impact on the environment," he says. "The bottom line is that no one has the kind of margin that they can just absorb it. The consumer is the one who pays." European foods including cheeses, pork products, olives, and others are subject to tari s that top industry concerns. Tariffs CBD Plastic packaging OUTLOOK LEGISLATIVE & REGULATORY CONCERNS WINTER