As we gather again with family and friends after COVID-19 lockdowns have been lifted, we are still somewhat constrained, according to Charlie Arnot, CEO of The Center for Food Integrity and president of Look East.

“There’s an enormous pent-up demand out there to get together and go out to eat at restaurants and celebrate, but there’s a lack of labor to supply kitchen and wait staff,” Arnot explained. “As we ramp up again, we are noticing a lack of labor across the entire food system, whether it’s a shortage of staff at restaurants or workers at meatpacking plants.”

“We are seeing a new trend where ‘dark’ convenience stores are giving consumers a chance to buy quickly and online,” he said. “This is happening in urban America and in college towns where young people want food delivered quickly at a relatively affordable cost [about $3].”

What this means for the dairy industry, according to Arnot, is young people are seeking smaller sizes — not a gallon of milk, but likely flavored milk and other dairy products in small containers.

“The takeaway is innovation is going to be key,” he said.

Buying decisions

“Whether it’s millennials or Generation Z shoppers, we are continuing to see people shopping their values, not price. That’s an important image. Historically, we’ve looked at the marketplace as the arbiter of who is going to set these standards,” Arnot explained. “How are products being produced and what is the impact on me, my family and the environment?”

Arnot said there are more millennials than baby boomers. And many millennials shop based on their values.

“We need to be able to communicate to them, [make] them understand, that we will operate in a way that is consistent with their expectations. It will continue to give us access to that market,” he said. “That’s true for all of us in agriculture. I think there is a greater emphasis on things like sustainability, social justice, social responsibility, animal welfare, etc. While we’ve often viewed those things as less relevant to us, they will continue to become increasingly relevant to us.”

Arnot said consumers are divided into two groups: “We have consumers who have resources and are more concerned about values, and consumers who lack resources who don’t have the same ability,” he said. “You still have your value-based shopper.”

Rising food prices

Big companies like Walmart, Target, Kroger and Costco are sensitive about protecting their brands and making sure their brand is aligned with broader social values while providing good economic value for those shoppers feeling increased economic pressure.

Arnot said that is important because for at least the next year, food prices are going to continue to rise.

“The FAO [Foreign Agriculture Organization] Food Price Index is up over 30% from April 2020 to April 2021,” Arnot explained. “Those increases in commodity prices are just now finding their way into the retail marketplace. That’s not going to change anytime in the near future. We’re going to continue to see high commodity prices, so we’ll see higher consumer prices over time.”

In agriculture, we are proud of the fact that we make healthy food affordable, Arnot said.

“On a global scale, U.S. food is still incredibly affordable, but if I start to see my food budget go up 10%, 15%, 20%, I no longer view it as being as affordable,” he explained. “Companies and consumers are expecting food to be socially responsible and affordable.”

Arnot believes more companies will begin offering a variety of products to consumers with different values in a range of prices. “Some products will be at the baseline, and some will be premium, and some will be in the middle,” he said.

Arnot believes the way consumers shop for food will continue to evolve and change over time. He also thinks some shopping trends will be generational.

“Some older shoppers who grew up picking their own produce will go back to shopping at the stores, while younger shoppers who don’t care about selecting their produce will let someone else do that — they just want it to be delivered,” he said.