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    ghajjar
    SFA’s Spill & Dish: A Specialty Food Association podcast features the stories of SFA members: the entrepreneurs, makers, and buyers behind specialty foods and beverages. Listeners can discover the inspiration, recipe, craft, culture, ingredients, and production methods that make specialty food special and get a deeper understanding of the people and motivation behind the products.
    During the podcast, the SFA asks its guests how the SFA helps benefit their business. Following are some replies.
    “The ability to connect with other brands, with suppliers, with customers. We were really struggling during COVID…[the SFA] facilitates those connections and its invaluable for growing our brand.”—Henry Kasindorf, co-founder, Remedy Organics
    “My favorite thing has to be the food shows…We have met some really great retailers and other founders here. I am super excited to continue doing Fancy Food Shows.”—Lin Jiang, founder, Yishi Foods
    “There are so many benefits. Even just displaying products at the Fancy Food Show, you get so much exposure, and we get a lot of support from Specialty Food [Association] as well. Specialty Food [Association] has built this community, basically, so we are very thankful to be a part of it.”—Chitra Agrawal, founder, Brooklyn Delhi
    “Making connections. We made a connection at the Winter Fancy Food Show that ended up [leading to] a wonderful connection with a retailer that is now starting to bring in our products. It’s an opportunity to meet with other like-minded businesses and help each other out.”—Kristie Middleton, founder, Rebellyous
    “The resources that the SFA provides. There is a lot more than there used to be, which we really appreciate as manufacturers.”—Alexandra Groezinger, president, Alexian Pate
    “I like the opportunity to network. It seems like an endless opportunity.”—Ray Dukes, co-founder, Rosella Bakes Goods
    “The SFA provided a platform for minority-owned businesses at their show, and we had a center platform. It was the opportunity of a lifetime because I got to meet hundreds and thousands of buyers. That’s not just something you get on a regular day."—Thereasa Black, founder, Bon Appésweet
    “The Specialty Food Association allows companies to post press releases. It’s been a really great way for us to get our brand out there and raise awareness about what we’re doing on a limited budget.”—Caroline Cotto, co-founder and COO, Renewal Mill

    Andrew Lynch
    Another dynamic quarter in the freight market has come and gone. In Q3, CPG brands and their supply chains have been impacted by an extremely inflated economy, newly implemented bills and freight regulations, and shifts in retailer requirements.
    Here’s a recap of the quarter broken down by these factors and what shippers should expect in the final quarter of 2022.
    Economic Factors
    Inflation
    The U.S. inflation rate is ever-so-slowly starting to fall after it reached a record high of 9.1 percent at the end of Q2. Now closing out Q3, the rate is sitting at 8.3 percent. The OECD predicts inflation may fall to as low as 4.4 percent by 2023.
    Fuel Prices
    The average price of diesel in the U.S. peaked in June 2022 at $5.750 per gallon. At the time of writing, it is sitting around $4.889/gal.
    COVID-19
    Experts estimate that nearly the entire U.S. population now has at least some immunity through vaccination, previous infection, or both. In turn, the CDC has ended social distancing and quarantine recommendations.
    Although we’ve said goodbye to these precautions (hopefully) for good, there are still lasting effects on the global supply chain. While there has certainly been improvement in each area, neither labor force shortages, nor port backlogs, nor inflation have returned to pre-pandemic levels.
    Russian-Ukrainian War
    As the war continues to rage on nearly 7 months in, the latest update is that Russia is losing heavily and unexpectedly. Ukrainian forces have recaptured 6,000 square kilometers in the country’s south and east. The big concern is that Russia recently threatened to use nuclear weapons in the fight.
    At the beginning of the war, the global economy suffered a knee-jerk reaction that impeded the flow of goods, fueling dramatic cost increases and product shortages. Today, those initial effects are subsiding greatly in the U.S.
    Freight Market
    California’s AB5  
    AB5 has the potential to destabilize the trucking market in California, which can create a variety of issues for shippers moving freight in and out of the state. Capacity could suffer a blow if a significant number of truckers decide to leave California. Rates could also rise if carrier expenses increase to compensate drivers as full-time employees.
    There were owner-operator protests against AB5 in early July, which halted operations at the ports of Los Angeles and Long Beach. There is a strong likelihood that protests of this nature will continue and cause additional supply chain disruptions in the future. 
    Some experts predict that the major, lasting effects of AB5 will become more apparent in early 2023.
    Learn more.
    NMFC Changes
    The NMFTA has issued several NMFC changes that went into effect on August 13, 2022. It’s super important to communicate NMFC updates with your organization and prepare accordingly, as these changes affect your shipping class and therefore, your less-than-truckload (LTL) rates.
    Learn more.
    Railroad Strike
    Large railroad labor unions were poised to go on strike in order to be granted better quality of life conditions, mainly more time off. Some railroads use a points-based attendance system that puts workers on call for 12 hours a day and penalizes them for sick or vacation days.
    A strike would have shut down 7,000 daily trains and cause shortages, shutdowns, and price hikes across sectors. This would ultimately cost the economy about $2 billion per day.
    At the time of writing, the strike has been held at bay after a five-year deal was announced. Under these terms, which is retroactive to 2020, workers will receive a 24 percent pay increase and $5,000 in bonuses. Railroads also promised to ease scheduling policies, but have not offered paid sick leave or more time off.
    Ports
    Ocean shipping rates on major trade routes have fallen by more than half since the beginning of 2022. This is a potential sign of easing inflation pressures and alleviated supply chain backlogs.
    Hurricane Season
    Hurricanes are another thing that can affect your supply chain this quarter, especially now as we enter peak months of the Atlantic Hurricane Season. 
    Although the season was originally off to a slow start, major hurricanes are now beginning to roll in. Hurricane Fiona recently wreaked havoc in the Caribbean, namely in Puerto Rico and the Dominican Republic. Not long after, Hurricane Ian hit Cuba and mandatory evacuations took place in Florida.
     
    Regardless of what happens next, it’s critical to explore how you can prepare your supply chain to brace for incoming hurricanes.
    Learn more.
    Volumes, Rejections, and Rates

     
    Volumes and rejections are both down year over year. Dry van spot rates are flat month over month but down 22 percent year over year. Volumes are near 2018 levels, which is the lowest they have been since they shot up in 2020 due to the pandemic. Due to strong inventories and a lack of demand, volume is predicted to fall another 5-10 percent in Q4.

    The average rate per mile (RPM) peaked in early 2022 and has been steadily declining since. Heading into Q4, the dry van RPM is sitting around $2.62 and the reefer RPM is about $3.06.
    Hot markets include SoCal, the Northeast, and Central Ohio. As Christmas tree season approaches, inbound rates in Washington and Oregon will likely go down as outbound rates go up.
    Retailers
    Out-of-Stocks
    Based on IRI data, the beverage industry was out of stock an average of 12 percent in August 2022. In just one category– we’ll use carbonated beverages as an example–that equates to $340.41 Million in revenue opportunity cost left on the shelf in just ONE week. 
    Similarly, the packaged food industry was out of stock an average of 10 percent in August. In just one category–we’ll use candy as an example–that equates to $343.65 Million in revenue opportunity cost left on the shelf in just ONE week. 
    Learn more.
    New Walmart Customer Pick-Up (CPU) Fees
    Walmart recently began charging some suppliers new pickup and fuel fees, starting August 1, 2022.
    Some shippers who already have product order agreements in place with Walmart are frustrated by this change. However, the good news is that CPU is not the only (nor the best) option for shippers anyway. Switching to delivered pricing will be the lowest effort and highest return adjustment you make in 2022.
    Learn more.
    Retail Buyers & Holiday Shopping
    Especially as the holiday season is approaching, retailers are being picky with the brands they choose to work with. In a survey of retail buyers, 90 percent said a supplier’s ability to deliver on time impacts their purchasing behavior of that brand and 66 percent have ended relationships with suppliers over delivery issues.
    Learn more.
    Navigate the Freight Market with the Best in the Biz
    Regardless of an always changing freight market, CPG suppliers focused on logistics partnerships rather than freight transactions will be the real winners in 2022. Believe it or not, there are still many aspects of your supply chain that you can control with industry experts on your side.  
    At Zipline Logistics, we care about each CPG brand’s unique business needs and tailor strategies to reduce overall logistics spend, optimize retail performance, and beat out the competition for shelf space. Zipline processes were built specifically to resolve the most critical logistics challenges faced by consumer goods brands shipping into retail. 
    We tailor strategies to reduce overall transportation spend, optimize retail performance, and beat out the competition for shelf space. 97 percent of our orders end up on retailer’s shelves such as Walmart, Costco, Bath & Body Works, Whole Foods, and Best Buy. 
    Don’t Miss the Next Freight Market Update 
    Want the inside scoop on breaking news and trends? Sign up for Zipline’s monthly e-newsletter so you don’t miss the next freight market update! 
    SIGN UP NOW
    Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics. 

    ghajjar
    The most popular articles with SFA News Daily readers in October focused on consumer trends, inflation, and the Kroger-Albertsons merger. In case you missed it, the following were the top five most read stories in October:
    1. Slideshow: Whole Foods Forecasts 2023 Trends
    Whole Foods Market unveiled anticipated food trends for 2023. The company is also making a Trends Discovery Box available, featuring 10 items that allow consumers to sample the trends.
    2. SFA Trendspotters Name 2023 Specialty Food Trends
    Alternative seafood, nuanced heat, and naturally occurring sweeteners are among next year’s specialty food trends, according to the Specialty Food Association’s Trendspotter Panel.
    3. Perceived Food Inflation Rate Outpaces Reality
    Americans believe inflation for food-at-home has hit 22.8 percent, 9.7 points higher than the U.S. Bureau of Labor Statistics annual rate of 13.1 percent.
    4. Regulators Seen Studying Kroger-Albertsons Merger
    Cincinnati-based Kroger Co. will likely face market-by-market scrutiny from federal regulators in its proposed merger with Boise-based Albertsons Cos., as the two companies have significant overlap and would gain considerable clout in the market.
    5. Vongerichten Brings Global Influences to NYC Food Hall
    Chef Jean-Georges Vongerichten has opened a multi-restaurant culinary marketplace/food hall at the Seaport on Pier 17 in Manhattan, the former home of the Fulton Fish Market.

    ghajjar
    Attorney, naval officer, and founder of Bon Appésweet Thereasa Black created the brand for her toddler daughter who fell in love with dessert while Black was deployed. Since many sweets contain allergens that Black’s daughter needed to avoid, she set out to create a better-for-you chocolate bar and brand. In this episode, George Hajjar, associate editor at SFA, talks with Black about her journey as a Black, veteran, specialty food business owner and her recent successes.

    ghajjar
    Specialty food makers and buyers are uniquely positioned to notice and understand shifting consumer behavior elicited by the COVID pandemic. We interviewed several industry professionals as part of the recently released annual research, State of the Specialty Food Industry + 10-Year Category Tracking and Forecasts. You can find full video interviews when purchasing this year’s report.
    Following is a list of responses from makers and buyers regarding the effects that the pandemic has had on consumer behavior and purchasing patterns.
    “People have definitely started looking at food as medicine more.”—Tonia Farman, co-founder/CEO, Queen of Hearts
    “It has opened the door for natural organic specialty products…we’re seeing much more educated shoppers from that perspective. Beyond health, they’re looking for more personalized choices. If you think about taste, lifestyle convenience, there are so many things going on since COVID that are driving some of that consumer behavior.”—Jeremy Adams, senior center store category manager, KeHE
    “What we’re seeing is a high comfort level with experimentation [in the kitchen], whether it comes to techniques, flavors, and even maybe types of food they may have not had. We are seeing that theme of experimentation as a big trend in consumer behavior.”—Patti Doyle, CEO, Rumi Spice
    “I look at center store as wanting to create a destination that brings people back to the table, so…we build our curated offering around that. There are certain impulse categories—snacks, beverages, bars, yogurt—that tie into that shopping experience. Those areas are all starting to come back up.”—Dwight Richard, director of center store, Town & Country
    “Indulgence is king. It’s one of those things that’s pandemic-proof and inflation-proof. People are always going to want to be surprised and delighted…So I think meeting that need is very important for us. There’s just a lot more curiosity coming from consumers when it comes to food or ingredients.”—Pierre Jamet, chief sales officer, Petit Pot
    “Charcuterie and entertaining will come back on the scene pretty strong because it obviously took a little bit of a dip as people weren’t entertaining as much….We’re also seeing a lot of spices and worldly kind of recipes where people are trying and tapping into different ethnic types of foods.”—Cassy Kehoe, senior fresh category manager, KeHE
    “We want what we want and we want it now, and we don’t want to have to go out and get it, so services like DoorDash and grocery delivery we find to be very convenient and we want to continue doing those things.”—Alexandra Groezinger, president, Alexian Pate

    Julie Gallagher
    Learn more about the people and products in these Q&As with Specialty Food Association member companies.
    What does your company produce? 
    We manufacture Mediterranean condiments with a focus on savory, zesty, and ethnic flavors. We offer savory olive relish, spicy olive medley, lemon & herbs dried black olives, savory berry compote, plant-based Italianaise (a mayonnaise), Taste of Tuscany (dried herbs), puttanesca, and more under development. 
    Did you have a food background before launching your company? 
    No preparation other than learning from my mother and taking various hobby classes. I spent 30 years in public and private K-12 and university education, was a governor's appointee to the State Board of Education, and have a doctorate in leadership. That knowledge will now be used to help me in my business. 
    How did the idea for your product/company come about? 
    It evolved after my retirement from education. 
    Why did you get involved in specialty foods? 
    I’m passionate about food, preparation, entertaining, and the creativity of developing recipes. 
    What is your favorite thing about the specialty food industry? 
    Like-minded people striving hard to create their dreams, sharing similar problems, and having people who walked the walk at my fingertips through the Specialty Food Association. 
    What’s the one piece of advice you’d give a new specialty food business? 
    Never give up! Have perseverance, determination, go beyond expectations, and surround yourself with positive people. Be kind to yourself in your words and actions. Celebrate even the smaller accomplishment. 
    If you weren’t running a food business, what would you be doing? 
    Creating artistic textile quilts ... that I still do in the wee hours of the night. 
    What does specialty mean to you? 
    I see specialty food as dreams of entrepreneurs who created unique foods and beverages that will bring unusual flavors, textures, combinations, immersions, and these products make life deliciously entertaining, just like Calizo. 
     

    Andrew Lynch
    Scored a purchased order from Aldi? Congratulations!
    You must be super excited. But you may also be wondering how you’ll get the shipment there, what you can expect along the way, or how to maximize your success at this retailer.
    Don’t worry. We’ve outlined everything you need to know about shipping to Aldi below.
    Aldi is Not Your Traditional Retailer
    You might be enticed to shop at Aldi if you don’t mind cheaper prices, non-name brand products, and a smaller selection of goods. In order to offer savings to its customers, Aldi uses strategy and innovation to control costs. This approach also applies to its  transportation and supply chain network.
    Whereas most retailers leave it up to suppliers to coordinate transportation with carriers, Aldi is completely different. It actually owns the relationship with third-party logistics (3PL) companies entirely and use the 3PLs in a customer pick-up (CPU) model to collect its suppliers’ shipments for them.
    Aldi has found this to be a cost-effective set up that ultimately gives it the most control of its supply chain. Whereas we would normally discourage a CPU arrangement with a retailer, Aldi suppliers really aren’t given a choice. 
    Purchase Orders
    If Aldi decides it wants your product in its stores, they will send both you and their 3PL of choice a PO. While you’re preparing the order, the 3PL will reach out to your transportation manager (or whoever coordinates shipping) to schedule all the details of a pick-up.
    Aldi will usually send the PO three to five days before its preferred delivery date. We say “preferred” because it really is just a preferred date and is not set in stone. Aldi is super lenient when it comes to meeting due dates and is willing to reschedule if shippers simply cannot meet the date requested.
    This is extremely different from most big-box retailers who will penalize shippers for not meeting on-time in-full requirements and even cut off the relationship when suppliers can’t meet expectations.
    Communication With Aldi
    On the logistics side of things, Aldi’s 3PL partners will handle most communication with the receiver before, during, and after pickup. During transit, any issues or delays will be communicated between the 3PL and Aldi Distribution Center Coordinator.
    On the Aldi side of things, your brand will be given a DC Retail Buyer contact. This will be the person you can direct your non-logistics Aldi questions to. 
    Incorrect Packaging
    Your Aldi contact should go over packaging expectations for your specific product when you first get an order.
    Whereas other retailers may not even accept freight that is damaged, late, or incorrectly packaged, Aldi will. This is not to say shippers won’t be charged for incorrectly packaged freight or pallets that need to be restacked. We’ve seen fines such as $40 per restacked pallet, but charges will vary depending on the offence. 
    Aldi heavily relies on its 3PL partners and their carriers to make sure freight is packaged correctly upon pick-up. If it is not, the 3PL has the right to refuse pick-up or delay transit until the problem has been rectified. 
    If it continues to be an issue and you can’t follow packaging requirements, the 3PL will inform Aldi what’s going on so they don’t take the fall for your errors. After a certain point it won’t be worth it for Aldi to work with you anymore and you will mess up your chances of getting another PO.
    Packaging is arguably the one thing shippers have control over when shipping to Aldi, so make sure you get this step down.
    All in all, Aldi has it set up so that most logistics coordination is totally not your responsibility. That’s a pretty sweet set up if you ask us. It also sounds familiar…
    Why Choose Zipline as Your 3PL?
    Most retailers do not function like Aldi does in any way, especially when it comes to logistics. If you enjoy the hands-off approach they offer shippers, you’re going to love using a 3PL for all your retail shipments.
    If you expand to other retailers after your start at Aldi, consider choosing Zipline Logistics as your transportation partner.
    You might be wondering how we know so much about retailers and how they operate. It’s because we pride ourselves in being a retail-specialized 3PL. While most logistics brokers move everything from scrap metal to machinery, we exclusively ship finished retail goods that need to meet strict delivery requirements. 
    Like we said, other retailers aren’t as forgiving as Aldi. But don’t worry, partnering with a retail-specialized 3PL makes everything easier, way less stressful, and positions you brand to succeed. 
    It’s like the difference between a flashlight and a laser beam. Our specialization allows us to strategically elevate and empower CPG brands to dominate their categories.
    Interested?
    LEARN MORE
     
    Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics. 
     

    Denise Purcell
    The specialty food industry remains resilient despite three years of upheaval, according to the SFA’s just-released research, Today’s Specialty Food Consumer. Consumers reporting specialty food purchase likelihood hit a record-breaking 76 percent. People continue to care more about what they eat, how it is made, where it comes from, who is making it, and how it impacts local and global communities and the environment. 
    Here, we outline the highlights of the report—the who, what, where, when, and why you need to know about specialty food consumers, their drivers, and motivations.
    Who are they? Millennials and Gen-Xs are the core generations, in part because they have the largest family households. Millennials have seen the biggest gains in specialty food purchase likelihood since 2018. Gen-Z is a rising generation and with most now ages 18+, is equal to Gen-X in specialty food purchase likelihood, at 78 percent. Baby boomers are still engaged but show the least purchase likelihood as they ease out of the workforce.
    What do they buy? Last year’s report noted that the supply chain has growth opportunities with specialty beverages, and the sector could be a gateway for consumers, especially Gen-Zs, to broader usage of specialty products. In 2022, we see this happening in beverages and now in the rise of fresh foods (sandwiches, salads, meals) also. The 10 beverage categories saw an increase in in-store purchase likelihood of 4.2 percent during 2020-2022. That’s compared to 0 percent in the 28 food categories. Gen-Zs and Millennials led the charge here. Fresh foods sold in grocery outlets continue to see big gains. People buying these products in-store rose 10 percent during 2020-2022 to 33 percent of SFCs, while the number of online purchasers doubled to 21 percent of SFCs.
    Where do they shop? We know from SFA’s The State of the Specialty Food Industry report, released in June, that about 86 percent of specialty foods are sold in mainstream outlets, such as grocery stores, mass, club, and discounters. The main change in 2022 is that more of the business has shifted away from grocery stores and natural food stores and towards mass, club, and convenience stores. Online shopping continues to soar. Shopping for groceries online flipped from 33 percent of all consumers in January 2020 to 66 percent in July 2022.
    When do they use specialty foods? Use of specialty foods for dinner peaked in 2019 and fell each year to 2022. Breakfast and lunch usage rebounded in 2022 to equal or exceed the 2019 highs. The fact that there is a net decline in usage at the three major mealtimes while purchases overall have grown substantially is evidence that snacks and treats or “non meals” are picking up the slack. Lifestyle changes are driving the shift and innovations in fresh and convenience products are spurring it on.
    Why do they purchase? The top-five purchase motivators remain consistent over the years: superior quality, superior flavor, interesting/unusual flavors, simple ingredients, and authentic global flavors. An additional one—better for the environment—gained the most ground in recent years and is now bumping up against the top five. SFCs care about attributes like organic, sustainable, and upcycled.
    For more highlights, takeaways, and insights from this year’s report, see the Fall issue of Specialty Food magazine. You can also purchase the full report in the Learning Center on specialtyfood.com.


    ghajjar
    The most popular articles with SFA News Daily readers in September focused on grocery and consumer trends, private label strategies, and breakout talent that is blazing a trail in the specialty food industry. Following are the top five most read stories in September: 
    1. Kroger Debuts Low-Priced Private Label Line
    The Kroger Co. has launched Smart Way, a new opening price point store brand line that the retailer says brings together 16 legacy brands into a single, easy-to-find identity.
    2. SFA's 12 Under 35: Breakout Talent to Watch
    The list includes young food professionals dedicated to social justice and philanthropic endeavors, food makers who are reducing waste, providing fair wages, and even reinventing a mature category, and specialty grocers who are bringing foods with which they closely identify, to the masses.
    3. Online Grocery Sales Decline, Use Remains High
    Total sales in online grocery have decreased by 1 percent compared to last year, to $8.5 billion in August. Despite the dip, digital grocery sales have remained elevated following the increase elicited by the pandemic.
    4. Study: Consumers Will Pay Premium For Healthy Food
    Although prices have a considerable effect when grocery shoppers are choosing what to put into their basket, 55 percent of consumers are willing to pay a premium for food that contributes to their health and wellness. 
    5. Marketers Weigh in on Plant-Based vs. Vegan
    The recent Plant Based Food Expo 2022, which took place in New York, featured both emerging and mature brands marketed under plant-based and vegan designations.

    Andrew Lynch
    Zipline Logistics' trophy shelf is getting heavy. Most recently, the retail-specialized North American 3PL was honored by Inc. magazine, Food Logistics, and Inbound Logistics as a rapidly growing, top 3PL.
    This is Zipline’s 11th time making the Inc. 5000 list of fastest-growing private companies in America in its 15-year history. The list represents a unique look at the most successful independent small businesses in the American economy.
    “It is an honor to be ranked by the Inc. 5000 for the 11th time,” said Walter Lynch, CEO and co-founder of Zipline Logistics, “The rapid growth we continue to see year over year is a testament to our outstanding team members and their dedication to Zipline’s mission: improving the lives of our clients. It’s exciting to reap the great success Zipline has found in turn.”
    Zipline has also been named a 2022 Top 3PL & Cold Storage Provider by Food Logistics for the seventh time and a 2022 Top 100 3PL by Inbound Logistics for the first time! These awards recognize leading and top third-party logistics providers in the industry.
    “These honors recognize Zipline’s leadership in cultivating true supply chain excellence in 2022,” said Lynch, “We’ve always delivered so much more than a rate and a truck to our clients. As these prestigious awards have recognized, that value will only increase as we climb higher.”
    Still waiting for several other industry award winners to be announced, Zipline’s impressive accomplishments thus far in 2022 may only just be the beginning.
    About Zipline Logistics
    Headquartered in Columbus, Ohio, Zipline Logistics has a 15-year history of being a consistently recognized, rapidly growing, and reliable 3PL that exclusively services the consumer-packaged goods sector. Their uniquely qualified carrier network, world-class team of retail transportation experts, and state-of-the-art shipper intelligence tools maximizes client revenue and gross margin by eliminating out-of-stocks through optimized, on-time in-full performance.
    Zipline’s processes were built specifically to resolve the most critical logistics challenges faced by consumer goods brands shipping into retail. Ninety-seven percent of Zipline orders are destined to land on a retail shelf in stores like Walmart, Costco, Bath & Body Works, Whole Foods, and Best Buy.
    Learn More
    Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics. 
     

    ghajjar
    Specialty food makers and buyers surmounted the challenges presented by the COVID-19 pandemic, including those related to stock management, supply chain, staffing, and more. This unprecedented period of time also provided an opening for many within the industry to triumph. SFA interviewed industry professionals as part of its State of the Specialty Food Industry Report, 2022-2023 edition. You can find full video interviews when purchasing this year’s report.
    Following is a list of responses from makers and buyers regarding the opportunities that have precipitated from the pandemic:
    “We actually saw such increased sales when COVID first started, we didn’t even know what to do with ourselves because we were seeing Christmas volumes on steroids.”—Alexandra Groezinger, President, Alexian Pate
    “Fresh really saw the boom when everyone was cooking at home. Specifically in categories like cheese, proteins, and alternative meat because people were seeking out different center-of-the-plate options. Alternative meats have been through the roof in terms of year-over-year growth and just month-over-month growth...It’s going to be interesting to see what happens now that people are going back out to eat.”—Cassy Kehoe, Senior Fresh Category Manager, KeHE
    “Consumers have really formed new behaviors, attitudes, values, what they are looking for out of their foods…it’s really opened the door for natural, organic, and specialty products.”—Jeremy Adams, Senior Center Store Category Manager, KeHE
    “We’ve seen a tremendous amount of innovation in distribution. And we’re seeing this across food service and retail. With the COVID pressures, a lot of smaller guys got squeezed in terms of supply chain and it continues to happen. So, we are seeing disruptive distribution methods…that are filling in those gaps and making sure that the independents and the small guys get reliable ongoing service when it comes to demand, and these players are being very smart with how they leverage technology.”—Julia Stamberger, Co-founder/CEO, Planting Hope Company
    “As a brand, we benefited from COVID by providing a dessert, something that’s indulgent. I think that definitely served us well, especially the online grocery channel.”—Pierre Jamet, Chief Sales Officer, Petit Pot

    Julie Gallagher
    Sandra Archer joined the Specialty Food Association in 1997 as a temp working in the membership department where she showcased new applicants’ products to the admission committee and processed membership applications. Shortly after, she became full time staff working in the finance department as an accounts receivable specialist and now serves as manager of accounts receivable.
    What is your favorite memory, experience, or story from your time with SFA?
    I can say that my favorite experience from my time with the SFA has been fulfilling my obligation volunteering during “Embrace Hunger Relief Months”. I recall volunteering in October 2019 at a Mobile Market in Washington Heights, where we distributed fresh produce to market-goers. The line was so long and as we started to distribute the food, the rain came pouring down on us. We did not allow the rain to stop us from doing what we do best as an association—-helping.
    Where were you born?
    I was born in Jamaica, West Indies.
    What is your fondest food memory?
    My fondest food memory happened to be here at SFA. It was my first time trying stuffed grape leaves at a Lebanese restaurant with my co-workers.
    Do you prefer to eat in or go out?
    Although I am seen as an extrovert by family and friends, the introverted half gets the better of me at times and I prefer eating in.
    Best piece of advice that you’ve been given that serves you well?
    Laughter is the best medicine.
    What is one of the strangest things you’ve ever eaten?
    I’m not known to be a picky eater, however I did find eating cow brain to be interesting.
    What is your favorite food city?
    My favorite city to enjoy food in is the Big Apple! With so much to choose from and the inclusion of so many dishes from different countries, I could never be bored.
     

    Andrew Lynch
    On June 30, 2022, the Supreme Court denied the California Trucking Association’s appeal of California’s AB5. Therefore, the two-year-long injunction will be lifted and AB5 will be law in California retroactive to January 1, 2020.
    What is AB5?
    California’s AB5 requires companies using independent contractors in California to reclassify those workers as employees. 
    This bill was originally designed to regulate companies that hire “gig workers” in large numbers, such as Uber, Lyft, and DoorDash. The bill aims to ensure these types of workers are offered protections and benefits such as workers comp, unemployment insurance, paid sick and family leave, and health insurance.
    In order to be considered a true independent contractor, a worker must satisfy all three requirements of AB5’s “ABC” test:
    A.      The person is free from the control and direction of the hiring entity, both in contract and in fact.
    B.      The person performs work that is outside the usual course of the hiring entity’s business.
    C.       The person is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
    With few exceptions, the relationship between independent truckers and their carriers, brokers, and shippers will be governed by the “ABC” test.
    What Does AB5 Mean for Truckers?
    An estimated 70,000 owner-operators will fail this test and be reclassified as employees instead of independent contractors. This means trucking companies may have to begin paying a base salary and benefits to employees who fail the test, rather than compensating drivers on a per load or contract basis.
    Keep in mind, most truck drivers are independent owner-operators who contract with trucking companies to make deliveries. They individually own their trucks, have flexibility in setting their own schedules, and function as small-business owners rather than large-business employees.
    Paying base salaries, benefits, and payroll tax in order to employ owner-operators is a huge cost that many businesses simply cannot afford. As for owner-operators, this set-up takes away their decision-making power over when and how often they work and the rates they will accept. 
    Alternatives include moving their operations from California to another state or opening their own company.  As most business owners know, the latter comes with much more responsibility and time dedication, which some drivers will not be willing or able to take on.
    A recent FreightWaves survey of carriers found some respondents view the bill as an existential threat to the way American supply chains currently function, while others feel it is a necessary legislative step to prevent companies from taking advantage of workers.
    Although AB5 is currently in effect, not all companies are taking necessary steps to comply with the law. Until the state begins enforcing it or misclassified employees take legal action, not much will change.
    How Will AB5 Affect the Freight Market?
    The timing of this law going into effect is not fantastic.  
    “Gasoline has been poured on the fire that is our ongoing supply chain crisis,” said the California Trucking Association in a statement on June 30, 2022, “The impact of taking tens of thousands of truck drivers off the road will have devastating repercussions on an already fragile supply chain, increasing costs and worsening inflation.”
    Only a few months into AB5 going into effect, we are seeing a driver shortage in California. Long term, the effects may be much greater.
    AB5 may destabilize the trucking market in California, which can create a variety of issues for shippers moving freight in and out of the state. Capacity could suffer a blow if a significant number of truckers decide to leave California. Rates could also rise if carrier expenses increase to compensate drivers as full-time employees.
    California’s giant portion of the logistics industry means the entire country will likely feel its effects.
    There have also been owner-operator protests against AB5 in early July, which halted operations at the ports of Los Angeles and Long Beach. There is a strong likelihood that protests of this nature will continue and cause additional supply chain disruptions in the future.
    Some experts predict that the major, lasting effects of AB5 will become more apparent in early 2023.
    Keep Tabs on AB5 With Zipline
    While it’s currently unclear just how deeply AB5 will affect truckers, shippers, and the supply chain as we know it, Zipline Logistics experts will continue to monitor the market for real time updates and insights.
    We will also continue to put our best foot forward to help shippers navigate the ever-evolving supply chain. Partnering with Zipline means you’ll receive:
    ·       Consistent market updates and insights
    ·       Creative retail logistics solutions
    ·       A dedicated account team available to answer your questions 24/7
    KEEP UP WITH MARKET CHANGES
     
    Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics. 

     

    ghajjar
    SFA News Daily readers enjoyed content focused on supermarket industry leaders: Trader Joe’s, Walmart, Wegmans, and Whole Foods over the past month. Following are the top five most read stories in August:
    1. Trader Joe’s Workers Vote to Unionize
    Trader Joe’s workers in Hadley, Massachusetts, voted 45-31 to unionize, making it the first group at the company to successfully form a union, according to the National Labor Relations Board.
    2. Wegmans Staffs Manhattan Store
    Full-time hiring and training ramped up at the market’s second NYC location; most of the 500+ positions will be hired locally.
    3. Whole Foods Announces Inaugural Accelerator Cohort
    The five brands boast a diverse selection of products and will undergo a program providing mentorship, education, and financial support opportunities.
    4. Cold-Brew Coffee, Functional Tea Highlight RTD Category
    The popularity of cold-brew coffee, functional ingredients, and new flavor formulations have driven growth in the specialty ready-to-drink coffee and tea category, according to the SFA’s State of the Specialty Food Industry report, 2022-2023 edition.
    5. Walmart Consolidation Center to Help Smaller Suppliers
    “The Lebanon facility will provide even more opportunities for small to medium sized suppliers who do not ship nationwide [including] the ability to provide product to all 4,700 Walmart stores,” said Mike Gray, senior vice president, supply chain operations at Walmart, in a statement.

    Janet DeCarlo
    Please join the Specialty Food Association’s Membership Team in welcoming the new members listed below who have joined our community in the month of August. We thank these members for their innovation and commitment to the specialty food industry and look forward to getting to know them. 
    Prima Pavé
    Blue Moon Bakery
    Comvita USA
    RENNA SRL
    Caspian Caviar LLC
    Mantis BBQ
    NONGSHIM AMERICA INC.
    T-West Inc.
    Smokin' Bettie's BBQ
    Tea People Ltd.
    NDC Exports (Pvt)Ltd.
    Aiello Italian Specialties
    Davis Mountains Nut Co.
    Fire in the Kitchen Spice Company
    Hampton Farms
    Japan Federation of Soy Sauce Manufacturers Cooperatives
    Lieng Tong Rice Vermicelli Co., Ltd.
    Diamond Bakery Co., Ltd.
    Henriott
    Tianyi International Trade Inc.
    Jindilli
    RCP Foods LLC
    Empty Bowl Queso
    NAIA Natural Products
    Meycov Food USA Ltd
    Sweet Jubilee
    The Denman Island Tea Co.
    Carolina Pickle Company
     
     
     
                                                                                                       

    ghajjar
    Specialty food makers and buyers share many of the same challenges in today’s business environment, especially issues around staffing, supply chain, production, and inflation. We interviewed several industry professionals as part of the recently released annual research, State of the Specialty Food Industry + 10-Year Category Tracking and Forecasts. You can find full video interviews when purchasing this year’s report. 
    Following is a sampling of responses from makers and buyers regarding the challenges and bottlenecks that are causing the largest headaches. 
    “[With regards to supply chain] we’ve managed okay, but it just seems like at every corner we’re dealing with playing whack-a-mole with something not being available.”—Jon Pruden, CEO, Taste 
    “The high costs of everything are a challenge for us. We’re a small manufacturer, we’re not the Krafts and the Mondelez of the world, we’re Alexian Paté. The challenges of higher costs are tough, the command for higher wages, higher prices of raw materials and packaging, the availability and lead times … the biggest [issue] is lead times and being able to put through price increases. We are looking at 60- to 90-day windows where our customers will allow us to do a price increase. For a small company that’s very scary.”—Alexandra Groezinger, president, Alexian Paté 
    “We’re not going to increase price but we’re seeing our margin eroding right now. Our packaging cost is +30 percent, raw materials, on average is +10 percent, and in total that’s an increase of the cost of goods sold around 15 percent. Right now, that’s not being offset by anything.”—Pierre Jamet, chief sales officer, Petit Pot 
    “All the supply chain stuff that’s troubling for brands is absolutely hitting us on the buy side. And we work with a logistics partner for our warehousing, and they are certainly experiencing the labor crunch that the rest of our industry has.”—Kate Harper, chief brand curator, Hive Brands 
    “Our biggest challenge right now is understanding the next phase of product availability and how macro things will impact that. So, we are still seeing bottlenecks in the supply chain both from imported product and some domestic delays … a lot of our cheese suppliers are having to short product, and I think a lot of that is due to the war and the aftermath of COVID.”—Cassy Kehoe, senior fresh category manager, KeHE 

    Andrew Lynch
    Shipping to Amazon? You’ve come to the right place.
    We’ve broken down what working with Amazon looks like for both first-party and third-party sellers (more info below) and how sellers can most effectively optimize their Amazon supply chain, and in turn, profitability with Amazon overall.
    Are You a 1P or 3P Amazon Seller?
    It is almost a “must” for any business to sell on Amazon these days. In a world where consumers log on to Amazon to buy items that were out-of-stock at the store, selling on Amazon helps companies stay competitive and win market share.
    Firstly, shipping into Amazon looks a little bit different depending on if you are a first party (1P) or third-party (3P) seller.
    1P Sellers
    To be a 1P Seller, you need to be invited by Amazon directly. In this set up, Amazon acts as the retailer and the seller operates as a wholesale supplier. Sellers receive bulk purchase orders and pay a flat fee for Amazon to entirely take over the selling process. After the seller ships their product to Amazon, Amazon gains complete control of the product’s pricing and promotion. Overall, it’s a hands-off set up for the seller.
    1P sellers typically ship full truckload to an Amazon distribution center. Amazon also offers customer pick-up (CPU) for 1P sellers – but more on that later.
    3P Sellers
    3P sellers act as the retailer and have more control of their operation overall. The seller lists and sells products directly to consumers via the Amazon marketplace, with full control over pricing and promotion. 3P sellers have a few options for how they can ship to customers, but most often use Fulfillment By Amazon (FBA). FBA is an Amazon service that provides storage, packaging, and shipping assistance to sellers. 
    Technically, companies can act as both a 1P and 3P seller. We’ve had clients receive Amazon purchase orders (POs) for certain products while simultaneously acting as a 3P seller of their remaining inventory.
    Shipping to Amazon
    Amazon is notorious for being a challenging receiver to work with. Delivery appointments book up very quickly and can be cancelled within 24 hours of your designated delivery window, sometimes when trucks are already enroute. 
    For information on pallet requirements or how to prep Amazon shipments for delivery in general, Amazon has detailed shipment guidelines listed on Seller Central for both Amazon Distribution Centers and FBA centers. 
    Otherwise, here’s what you need to know about shipping to Amazon:
    1. Amazon appointments book up fast.
    Usually, you won’t be able to get an appointment closer than five days after the booking date. This means maximizing lead time is crucial.
    2. Amazon requires shippers to meet at least a 90 percent OTIF.
    Amazon keeps tabs on missed or late appointments. If sellers do not meet or exceed a 90 percent on-time in-full average (OTIF) rate, this gives Amazon grounds to give up their appointment to someone else or boot the seller off the portal altogether. 
    If a carrier misses their scheduled appointment by 30 minutes or more, the freight will be refused at no cost to Amazon. In most situations, the seller will be held responsible to eat that cost.
    3. Amazon charges a fine for shipments that don’t meet OTIF.
    For example, Amazon orders 20,000 cases of a 1P seller’s product but the seller only ships 18,000 cases. The seller will then be charged a fine for not arriving in-full. If the order shows up late or not at all, the seller will be charged an additional fine for not being on time.
    4. Amazon is known to cancel appointments less than 24 hours in advance.
    Amazon has cancelled appointments while our carriers is already enroute to their DC. If this happens, there are two possible routes of action.
    First, the carrier could hold the freight for a layover fee, which is usually between $150-$500 per day. The other option is that the carrier could drop the load at their hub and another carrier would be sourced to recover it. This means the seller would then be charged the cost of two separate carriers.
    Neither are fantastic options, especially if you need a shipment to arrive ASAP.
    5. Amazon is extremely difficult to contact.
    Amazon has grown into the giant that it is in a very short time. Somewhere along the way it’s become incredibly difficult to contact anyone working inside the distribution or fulfillment centers. This makes problem-solving very difficult when issues arise, which can lead to further delays and charges. 
    6. Amazon shipment numbers are important.
    When booking freight and making an appointment, sellers will receive an ASN (or PRO) number from their carrier and a confirmation number from Amazon. These numbers are what Amazon uses to track the shipment. Without them, Amazon can apply chargebacks to the shipment or even refuse to accept it once it arrives. Sellers must ensure they receive this number with each order so they can fight back against any unwarranted chargebacks.
    Sellers will also need to confirm this number ahead of time with Amazon. If this step is missed, it can cause inbound, processing, or stock issues, possibly resulting in extra fees sellers must pay or fight.
    Amazon CPU
    Amazon offers customer pick-up (CPU) for 1P sellers. A CPU arrangement means Amazon will pick up the seller’s freight instead of the seller outsourcing a third party.
    Sellers can book an Amazon-partnered carrier using Amazon’s seller portal, which will either be a truck from Amazon’s own fleet or another carrier depending on availability and pickup location. This all sounds well and good, except for one issue: Amazon-partnered carriers have been known to frequently miss pickups without any communication or warning.
    So, the seller’s freight is staged and ready to go, but nobody shows to pick it up. Since warehouses are already tight on space, they can’t afford to have the freight sit staged and untouched for very long. This means the shipment will have to be restacked and put back into storage – and the seller will get charged a penalty for all the extra fuss, not Amazon.
    This is a common theme with retailers who use CPU delivery models. At Zipline, we normally suggest avoiding these set-ups altogether for this reason.
    CPU arrangements sacrifice all control of shipments but still hold the seller responsible for anything that goes wrong. The outcome is usually extra fees, delays, and headaches in getting the freight moved. 
    Make Shipping to Amazon Seamless
    Since Amazon isn’t exactly easy to work with when it comes to transportation, it’s important to control the controllables of your supply chain wherever you can. The good news is, with a retail-specialized third-party like Zipline Logistics, that part is made easy.
    Our uniquely qualified carrier network, world-class team of retail transportation experts, and state-of-the-art shipper intelligence tools maximize client revenue by capturing market share through optimized, on-time in-full performance.
    Zipline processes were built specifically to resolve the most critical logistics challenges faced by consumer goods brands. We tailor strategies to reduce overall transportation spend, optimize logistics performance, and beat out the competition for market share.
    Shipping to Amazon?
    LET US TAKE YOU THERE
    Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics. 


    Julie Gallagher
    Learn more about the people and products in these Q&As with Specialty Food Association member companies.
    What does your company produce?
    Handcrafted chutneys designed for hot and cold meats and cheeses.
    Did you have a food background before launching your company?
    I grew up in the 70s in an international home learning to cook dishes from all over the world. It was there that I was inspired to learn and share our deeper connection to culinary culture. After raising four children, I jumped into the food industry, learning from local chefs and entrepreneurs. In 2017, Locally Seasoned was launched, teaching cooking classes and providing personal chef services.
    How did the idea for your product/company come about?
    In March 2020, every business hit a brick wall and faced some of the biggest challenges of our time. We were catering at the time and all of our bookings were cancelled indefinitely. Locally Seasoned would have to pivot to succeed. It became clear that we needed to offer products for sale in local stores, markets and online to sustain our future. We focused in on those unique pantry items we always created for our clients, like chutneys, pickles, spice mixes, vinaigrettes, and marinades.
    Why did you get involved in specialty foods?
    It can be difficult in a rural area to find like-minded foodies. In searching online for gourmet pantry products and specialty foods, I found the SFA.
    What is your favorite thing about the specialty food industry?
    The textures. The flavors. The ingredients. The stories and cultures behind each dish. The energy of the food community.
    What’s the one piece of advice you’d give a new specialty food business?
    Breathe. Give yourself some grace. The entrepreneurial journey to success looks more like a preschooler’s angry scribble than an architectural drawing.
    If you weren’t running a food business, what would you be doing?
    Puttering in the garden, foraging, hiking, and cooking for friends and neighbors. I would be listening to loud music, personal development podcasts, and audiobooks.
    What does specialty mean to you?
    Specialty foods provide the recipe to help us discover our history, stir joy into the present, and finish with hope for the future. They remind us of just how strong and resilient we can be because life is worth tasting!

    Janet DeCarlo
    Please join the Specialty Food Association’s Membership Team in welcoming the new members listed below who have joined our community in the month of July. We thank these members for their innovation and commitment to the specialty food industry and look forward to getting to know them. 
    Kirlioglu Tarimsal Urun. Gida Ins. AS
    Knipschildt Chocolatier
    The Boneless Butcher, LLC
    True Natural Taste
    Ytc Studios
    Nettle Creek Foods, Inc.
    RL Food Testing Laboratory, Inc.
    Freeze Nums
    Chakalaka Brands
    Que 42
    Acetaia Malpighi
    African Bronze Honey Company
    Catalina Snacks Inc.
    Truffle Dog Company
    EHO FOOD
    Kobayashi Noodle Co., Ltd.
    MAGIC BITES- TASTE OF MEDITERRANEAN
    Veronica's Health Crunch, LLC
    CrimsonCup Coffee & Tea
    Gutsy Inc
    Brightland
    El Patio CPG, LLC
    Renegade Foods
    Simply Spanish
    Hanuman Chai,LLC
    Jinka
    Rooted Food Sales
    Sidari Artisan Brands
    The Southern Art Company, LLC
    Olyda
    KIN DEE TRADING Co., Ltd.
     

    Denise Purcell
    In collaboration with the Food Institute, the Specialty Food Association held a live broadcast from the Summer Fancy Food Show to highlight activity during the event. Interviews included buyers, exhibitors, SFA staff, award honorees, education program speakers, SFA Trendspotter Panel members, and others.
    Veteran TV journalist Susan Choi, Food Institute’s director of digital media, served as anchor. Choi has previous experience working at ABC News and NBC News.  A team of reporters conducted live interviews from different Show locations including special pavilions.
    Here are some highlights from the interviews. You can go to the SFA Feed to watch these interviews plus the full livestreams.
    “Those fundamentals—strong margin, good team, cash for runway—were true in 2018 and are even more true now.”
    -Alison Cayne, Haven’s Kitchen, on advice for building a company during a crisis
    “I never went into it for an honor. It was really about giving back and helping a lot of young companies who didn’t know how to enter the market.”
    -Lou Foah, SFA Hall of Fame honoree, on industry service
    “Passion and a great amount of stamina—you’ll be working at your business 24 hours a day sometimes.”
    -Kathrine Gregory, SFA Leadership Award winner, on what it takes to succeed
    “Consumers don’t exist in a vacuum. They are dynamic, so it’s going to be a little but of everything. You may start the day with something healthy but you leave room for indulgence later.”
    -Melanie Bartelme, SFA Trendspotter, on the balance of health and functional food trends
    “The specialty food industry is still robust and exciting and everything it takes to be a thriving business has gotten more complex, harder, and more expensive.”
    -David Lockwood, co-principal of SFA’s State of the Specialty Food Industry research, on this year’s biggest takeaway
     

    Andrew Lynch
    A Recipe for Shelf Space Competition
    Mix two years of the global pandemic with constant supply chain disruptions. Then add a dash of one thriving ecommerce marketplace and a sprinkle of skyrocketing demand for consumer-packaged goods. Lastly, stir in retail buyers and compliance programs until fully combined. The result? The greatest opportunity to capture and expand retail shelf space in CPG history.
    Not only does this complicated concoction make it difficult for brands to get their product in stores on time, but it’s also costing retailers big money. Recent data from the National Bureau of Economic Research reported stockouts reached up to 20 percent last year, compared to an average rate of 8 percent pre-pandemic. That totaled to $82 billion in missed CPG sales during 2021. Sheesh.
    Brace yourself for more bad news: customer loyalty can no longer be relied upon as a fallback here. Believe it or not, 79 percent of consumers reported they have tried new brands because their preferred brand was out of stock. At Zipline, we call this involuntary sampling: a phenomenon that can be extremely detrimental to CPG brands.
    For retailers, losing both loyal customers and their dollars calls for drastic measures.
    Retailers have increased their expectations of brands’ delivery performance to combat stockouts, slamming late arrivals with fines to improve on-time and in-full delivery. Fees piling up aren’t the only problem brands face when they can’t meet expectations. One retail buyer told us, “If a supplier is out of product, it will be replaced with a competing brand.” 
    For more takeaways revealed by our buyer survey for which Zipline Logistics worked with 900+ retail buyers, read on. 

    2022 Retail Buyer Insights
    To better understand why certain products get on shelves over others and how CPG brands can stand out in the competitive market, we asked the people who make that decision daily: retail buyers. Our connections belong to some of the biggest retailers and distributors in the game: UNFI, Costco, KeHe, Giant Eagle, and Target, to name a few.
    Importance of Communication and Meeting On-Time Delivery
    Communication and reliable fulfillment: without these two things, most buyers are saying “see ya.” In fact, 90 percent say a supplier’s ability to deliver product on time impacts their purchasing behavior of that brand and 66 percent have ended relationships with suppliers over delivery issues.
    Delays are inevitable in logistics, but how you communicate and work through them is make or break. Retailers want to work with the brands who give them the most visibility and transparency.  Ninety three percent of buyers report having anywhere from 4 to 20 product choices within a given category – so there’s nothing keeping them from booting a brand that doesn’t offer this.
    Impact of COVID-19
    We asked our buyer network about any changes in their category out-of-stock rates, which already account for stocking alternative brands to fill empty shelf space. Seventy-six percent of buyers reported that out-of-stocks in their category increased because of the pandemic. Historically, most retail buyers were seeing average out-of-stock rates below 6 percent, but more than half of our network saw this rate jump up to 11 percent or higher throughout the pandemic.
    Over half also said it impacted the number of competing brands in a category. “Out-of-stocks have pushed more variety per category which forces more competition and more congestion,” one buyer said.
    The big themes reported in this year’s survey remain consistent with what we’ve seen in years past, but the aforementioned challenges brewing in the market have only made on-time delivery and communication that much more essential to win shelf space.
    Secure Shelf Space with a Trusted Logistics Partner
    Although the market is whipping up severe competition, it smells of opportunity. That is, if you understand how optimized supply chains create value. Successful CPG brands are those that invest in logistics and find partners that can execute against strict retail compliance requirements. Zipline Logistics has all the ingredients to help your brand meet on-time delivery, stay on retail buyers’ good side, and get your product on the shelf.
    Zipline Logistics is the Official Shipping Partner of the SFA. Our uniquely qualified carrier network, world-class team of retail transportation experts, and state-of-the-art shipper intelligence tools maximize revenue and gross margin for consumer brands by eliminating out-of-stocks through optimized, on-time in-full performance.
    We tailor strategies to reduce overall transportation spend, optimize retail performance, and beat out the competition for shelf space. Ninety-seven percent of our orders end up on the shelves of retailers and distributors such as Walmart, Costco, UNFI, KeHE, and Kroger.
    LEARN MORE
    Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics. 

    ghajjar
    Stories that resonated with SFA News Daily readers last month ran the gamut of topics, from social and political conflicts and resolutions to cybercrime. Following, in order of popularity are the five most read articles in July: 
    1. Canada Mandates New Nutrition Symbol
    To give Canadians clear and easy access to information on foods found in grocery stores, the government of Canada debuted a new front of label nutrition symbol that will help Canadians identify foods high in saturated fat, sugars, and/or sodium.
    2. Russia, Ukraine Sign Grain Export Agreement
    Russia and Ukraine signed an agreement on Friday, June 22 to begin shipments of grain that Russia has blockaded in the Black Sea, easing a global food crisis that has especially impacted countries in Africa and the Middle East, which rely heavily on the Ukrainian export.
    3. Walmart to Purchase 4,500 Electric Vehicles for Last-Mile Deliveries
    Walmart agreed to purchase 4,500 all-electric delivery vehicles from Canoo, beginning with its Lifestyle Delivery Vehicle, with the option to purchase up to 10,000 units.
    4. H-E-B, Butt Family Commit $10M to Build Elementary Campus in Uvalde
    H-E-B and the Butt family, which founded the chain, have announced a $10 million commitment to help build a new elementary campus in Uvalde, Texas following the Robb Elementary School tragedy.
    5. Cybercrime Wreaks Havoc on Restaurants
    Fake one-star Google restaurant reviews have terrorized dozens of locations across the U.S., ranging from humble shops to Michelin star venues. These reviews are often followed up by emails asking for payment to have the post taken down.

    Denise Purcell
    Each year as part of the State of the Specialty Food Industry research, we track and forecast sales performance of key categories over 10 years. As part of this work, our research team, David Lockwood and David Browne, analyzes what’s happening innovation-wise at the shelf-, brand-, and item-level through a combination of trend research online, as well as in-person experiences at Winter and Summer Fancy Food Shows, and store visits at specialty retailers. 
    Several of the most prominent innovation trends in 2022 include: 
    Diverse-owned brands in the spotlight. Much as specialty consumers have gained affinity for local/regional brands where they shop for food and beverages, many now have an ethical/moral interest in another subset of products; women-, BIPOC-, and/or LGBTQ+- owned brands. Some retailers identify relevant brands in featured sets or with shelf signage and build promotions around key months in the year that celebrate these groups. Brands can obtain certifications, which may help to entice label-reading shoppers. It’s too early to tell if there are certain food and beverage categories where these brands compete more commonly. Instead, it’s apparent that an attentive shopper will often have a choice at the shelf. It’s also unclear if a consumer will prioritize brand ownership over other characteristics such as organic, non-GMO, etc, if given limited options.
    Convenience after COVID. As we come out of COVID, or at least have migrated into later phases of the virus, it’s apparent that consumers are tired of all the at-home meal preparation. While they honed their cooking and baking skills in 2020, and branched out and experimented in 2021, they entered 2022 fatigued and craving convenience. This takes many forms:
    Ready-to-eat (RTE), heat-and-eat, ready-to-drink (RTD) innovations have helped grow categories including Beans, grains, rice, dry (Shelf stable); Entrées (Refrigerated); Entrées, lunch, dinner (Frozen); and Tea and coffee, RTD (Refrigerated). Even as boxed mac-and-cheese slowed in 2021, Pasta (Shel stable) and Sauces,  pasta, pizza (Shelf stable) both continued to perform well into early 2022, not only due to rising food prices that make these categories stay appealing, but also simple convenience. Kitchen shortcuts in the Baking mixes, ingredients, flours category that only require water or oil, readily available with any diet or allergy in mind. At the same time, growth in mature specialty categories like Cheese and plant-based cheese came from shredded/sliced subcategories. Deli meat correspondingly did well, too. Improved home-brewed tea and coffee via Creams and creamers (Refrigerated). An ever-increasing array of flavors, functional additives (e.g., mushrooms, healthy fats, vitamins), and bases (dairy or plant-based) give consumers many options to enhance their tea/coffee. The return of indulgence. It never really went away, except perhaps when it took a back seat during the earliest phases of COVID panic buying, but consumers are increasingly enjoying sweet and savory snack categories, even as inflation drives food prices higher. A quick look at some of the best performing categories in early 2022 includes Chips, pretzels, snacks; Chocolate and other confectionery; Cookies and snack bars; and Desserts (Frozen), and we’re seeing indulgence run through many categories both in ingredient profile and marketing messaging.
    Upcycling and food waste solutions. Brands like Renewal Mill, Fabalish, and The Spare Co. are just the tip of the iceberg. They’re partnering in some cases with widely-known brands, too, which should help more consumers get exposed to this segment. Retailers including Misfits Market focus their entire business model on food waste solutions, too, and “upcycled” shopping is fairly easy on a site such as HiveBrands.com.  
    You can view innovation and flavor trends in each of the 37 categories forecasted by purchasing the full State of the Specialty Food Industry report, 2022-2023 Edition. SFA members receive discounted pricing.
     

    ghajjar
    The SFA’s Maker Prep webinar series is designed to educate new startups, providing them with the building blocks and knowledge base needed to do business in the specialty food industry. The topics in this series vary, covering every aspect of the industry.
    Here is a sampling of information shared at some recent webinars. You can click through to find the full recordings, which are free to SFA members.
    “Certifications open up your marketplace in many ways…and tell your consumer and your buyer why your specialty food may be even more special."—Kantha Shelke, Understanding Regulations, Certifications and Licenses
    "No one wants to spend a lot of energy and take a lot of risk setting up a new product and have it fail."—Scott Zoeller, Selling to Supermarkets
    "It’s important to evaluate how you look at various aspects of the food chain to get a maximum competitive advantage. Because at the end of it all it’s actually the advantage that sets you apart from your competitors."—Kantha Shelke, New Product Development: Optimizing the Food Value Chain to Maximize Your Competitive Edge
    "80% of consumers purchased something after having seen it recommended by an influencer. That is a huge number, and a reason why influencer marketing should be a part of your toolbox."—Rachel Kay, Igniting an Integrated Paid and Earned Online Media Program to Support Your E-Commerce Business
    "[Working with a co-packer] is truly a marriage between two companies. I think that’s an accurate description of how you can approach a partnership with co-packing: you’re not tied to it for life necessarily, but this is something that if you are going to approach it, it needs to be a strong relationship."—Ashley Sutterfield, Understand your Production Options and Choose your Path
    Maker Prep webinars can be viewed live or recordings can be downloaded any time. Here is the webinar schedule for the month. And to ask questions or continue the conversation, you can go to this forum.
     

    Andrew Lynch
    Coming off an extremely oscillating previous quarter, there were many predictions floating around on how Q2 of 2022 would shake out for the shipping services market. Some experts predicted a huge market downturn and trucking bankruptcies galore. Although that hasn’t necessarily been the case, the possibility still looms.
    Freight Market Update
    Graph Source: FreightWaves SONAR
    Heading into Q3, carriers without dedicated contracts are struggling to find freight. Volumes and tender rejections are trending down and rates have decreased 20-25 percent since last quarter. Some small carriers have had to close up shop temporarily because they are only breaking even on loads.
    The less-than-truckload transportation market is also softening into Q3. Volumes and capacity are seemingly balanced right now, thanks to major labor shortages finally resolving. Zipline Logistics’ LTL experts believe current rates should remain consistent, but LTL is never perfect. Shippers should anticipate and prepare for delays regardless.
    These are the ripple effects of consumer mindsets shifting, combined with global events.
    For many Americans, disposable income is being redirected to travel and entertainment once more rather than home goods. Not only that, but everything under the sun is more expensive to buy than usual. In May 2022, U.S. inflation rates hit 8.6 percent – the highest since 1981. The price of diesel in the U.S. hit a record high average of $5.718/gallon as of June 13, 2022. It’s sitting at $6.887/gallon on the West Coast.
    Russia’s invasion of Ukraine has dealt an additional blow to the global economy—weakening post pandemic recovery and aggravating already-high inflation.
    New subvariants of COVID-19 continue to emerge. Some experts are saying these variants have the strongest transmissibility yet and are escaping immunity from past infection and the vaccine. Although major U.S. economic shutdowns seem to be a thing of the past as the virus has become our “new normal,” these variants can take out groups of people on the job at one time and create major supply chain inefficiencies.
    Retailers are dealing with insane amounts of overstock right now, as consumer mindsets shift away from purchasing consumer goods. But even in a soft freight market, retailers are still being picky with the brands they choose to work with. In a survey of retail buyers, 90 percent said a supplier’s ability to deliver on time impacts their purchasing behavior of that brand and 66 percent have ended relationships with suppliers over delivery issues. Brands who give retailers the most communication, visibility, and transparency will get priority on the shelf.
    Q3 Outlook

    Graph Source: FreightWaves SONAR
    As of July 2022, Zipline experts predict volumes and rates will continue trending down in most parts of the U.S. until October 2022 when holiday shopping begins.
    For the foreseeable future, experts also predict inflation rates and diesel prices will continue to climb. The good news is, the government is stepping in to help as of June 22, 2022. President Biden called on Congress to suspend the federal gas tax for three months to provide direct relief to American consumers. He is also calling on states to take similar action, whether by suspending their own gas taxes or helping consumers in other ways.
    Regardless of all this, produce season is in full swing. There are two separate trucking markets we will discuss below: dry van and reefer. The dry van market refers to trucks transporting dry goods, like chips or canned foods. The reefer market refers to trucks transporting goods that must be temperature controlled, like milk or meat.
    Congested dry van markets currently include Southern California, Texas, Louisiana, Mississippi, South Carolina, and Georgia. Congested reefer markets include the Southern border of the U.S. is super-hot as well as the majority of the Southeastern U.S.
    Rates picked up a bit at the beginning of the produce season but have otherwise consistently declined. At the end of Q1, the rate per mile was sitting around $3.30 and is now hovering around $2.82 at the end of Q2. Also important to note: contract rates are higher than spot rates in both the dry and reefer markets.
    Lean on Logistics Partners to Navigate the Freight Market
    Regardless of an always changing freight market, CPG suppliers focused on logistics partnerships rather than freight transactions will be the real winners in 2022. Believe it or not, there are still many aspects of your supply chain that you can control with industry experts on your side. 
    Zipline Logistics is the Official Shipping Partner of the SFA. Our uniquely qualified carrier network, world-class team of retail transportation experts, and state-of-the-art shipper intelligence tools maximize revenue and gross margin for consumer brands by eliminating out-of-stocks through optimized, on-time in-full performance.
    We tailor strategies to reduce overall transportation spend, optimize retail performance, and beat out the competition for shelf space. 97 percent of our orders end up on retailer’s shelves such as Walmart, Costco, UNFI, KeHE, and Kroger.
    LEARN MORE
    Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics. 
      

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