Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32M A R C H 2 0 1 7 4 POTATO GROWER 4 POTATO GROWER Foodservice is Now the Largest Sales Channel for Potatoes in the U.S. by Ted Kreis, NPPGA Marketing and Communications Director Do you think people are eating out more than ever before? If you do, you are correct, and it means a first for the potato industry in the United States. A report issued by Technomic (a research company dedicated to foodservice) revealed that over half of the U.S. food dollar is now spent at foodservice vs. retail, as more peo- ple go out to eat, rely on takeout or look for supermarket foodservice (convenient prepared food) options. Foodservice is now also the largest sales channel for potatoes in the U.S. The $845 billion-dollar foodservice industry grew 1.6% in 2016, with the sectors of fast food/quick serv- ice, fast casual, fine dining and con- venience stores seeing the most growth. All sectors are expected to grow in 2017 with overall sales pro- jected to be up 1.7%. The fastest growing segment should remain fast casual, with an expected sales increase of 6.1% in 2017, followed by an emerging sector, supermarket foodservice with projected 6% growth. Noncommercial Foodser- vice (e.g. Healthcare, Schools) is also a bright spot, and is expected to continue to grow at a steady pace. Fine dining, which has been down in recent years, is expected to grow 3.1% in 2017. While still growing, the sheer num- ber of chain restaurant concepts are trending down (unit saturation, overpricing, competitive pressures). Many chains are taking price increases to compensate for slowing traffic and rising hard costs (labor, rent, cost of goods). Direct-to-con- sumer (delivery) services are disrupt- ing the industry and are forecast to continue to grow in prominence. Technomic reported that the follow- ing factors and trends will impact the foodservice sector in 2017. Economic factors: Low inflation (2- 3%) on beef, poultry, cereal, health- care, rent, foodservice. There is flat inflation (0-1%) on produce, eggs, beverages (non-alcohol), gas. Wage increases finally approaching pre- recession levels (for first time since 2008). Unemployment is low and stable at 4.6%, and is now consid- ered near “full employment” status. Pro-business policies (e.g. no feder- ally mandated increase of minimum wage) could keep wages and other costs lower. Proposed trade tariffs could pose huge threats to interna- tional trade and impact the cost of goods Consumers and Consumer Behavior: Consumer confidence is very strong. Young women with children are the primary deal seekers (this aligns well with the Potatoes USA Food Enthusiast target). Less trading down but more couponing and sale-seeking. Revolving credit up 9% year over year. Millennial segment continues to spend on experiences over goods. Menu Trends: A number of the top menu trends identified for this year bode well for potatoes. The full list is as follows: Shrinking menus, Blurred dayparts (e.g. breakfast all day), Ethnic breakfast, Functional foods, Veg-centric dining, Sin is in (indulgent foods) and Umami (ultra- savory flavors) .