Industry Voices: The Impact of COVID on the Supply Chain 

COVID continues to impact the specialty food trade. Members of the supply chain spoke out in the SFA’s newly released State of the Specialty Food Industry report, 2021-2022 edition, to elaborate on what ways the is affecting their businesses. Here is some of what they had to say about channel evolution, price/value shifts, food and beverage trends, and a return to normalcy for buyer-maker relations:
 
“One of the things that came up repeatedly was ‘how deep are your relationships?’, and those suppliers who had longstanding relationships with their co-packers, their distributors, and their retail partners were in a better situation. With COVID, everything went out the window. From the co-packer level, small brands were being pushed aside as bigger brands were doing larger production runs and needed all that time in the production facility. 
     At distributors, a lot of smaller brands got overlooked, and wouldn’t get picked for the pallet. It was frustrating because [small] brands would find out that they were out-of-stock from either their consumers or from the store level [buyers], who’d say ‘Hey, we’re reordering every Tuesday and Thursday from [the distributor] and we’re not getting [your] product.’ These small brands [knew] the products were in the warehouse but not on the truck. 
     Some brands who had a great relationship with a store and store buyer would pick up the phone or email them and [look into options to] ship direct, self-deliver, or circumvent distribution, but obviously you can only do that where you have the logistics to do it regionally.”
-owner, founder of a specialty brand consultancy 

“In some ways, the execution of the supply chain is more important than the quality of the product right now … In an old environment, a brand manager would probably be expected to know that manufacturer X has a big promotion running at [a specific retailer]. Now, this is less of a priority than knowing whether or not manufacturer X has a long term out-of-stock on an imported item because the container is stuck at the port, or they can't get a container to ship it over [to the US].” 
-senior vice president, business development at a specialty food and beverage broker 
 
“We have strong relationships with our farmers, co-packers, and everyone right up to our website, and those relationships worked well. It was the ripple effect from seemingly random elements of product production, like bottle caps or plastic film being out.” 
-chief merchandising officer of a specialty e-commerce retailer 

“We saw a lot fewer retailers bring on new items, and that’s probably a long-term impact of this; retailers looking to do more sales with fewer SKUs.” 
-regional sales manager at a specialty dairy brand 

“Some retailers preemptively planned for a recession, and they went really commodity, really private label, high velocity, less margin. Other retailers leaned in [to specialty, knowing consumers] aren’t going to restaurants, and eating at home, which was great for business. It was just interesting to see the retailers’ reactions over time. But it's too early to tell, because consumption's been so high, who made the right decision.” 
-specialty food broker 
 
“One of the worst things that’s happened is [the loss of] those discovery moments when you walk into a store and those opportunities to meet a vendor or a producer or maker to hear their stories directly. Some companies are experimenting with pre-packaged samples, but COVID is going to have massive long-term effects on how new products launch, how people discover new products, how they take chances with new products.” 
-founder, owner of a multi-store specialty food retailer and foodservice operator 
 
“In some cases, we had to turn away new business, which is heartbreaking, but [we did so] to do right by the customers that we already have. We were able to work proactively … and had direct forward-looking conversations with distributors and retailers where we could say ‘we can’t ship you this, but we have this instead.’”
-regional sales manager at a specialty dairy brand

“As an e-commerce business, we were trying to balance out a surge in new consumers with making sure that the people who have been loyal customers for several years were getting served. We had to have site hours that we allowed people to shop during the early months, as well as maximum order quantities to help manage that impact. In the end, the pandemic accelerated our business pretty dramatically.”
-chief merchandising officer of a specialty e-commerce retailer

“Because we manufacture everything in house, we do have a little bit more flexibility. We’re not [challenged] because of a co-packer who is at their limits. That would have been a nightmare.”
-head of sales at a specialty dessert brand

You can learn more about market growth, fluctuations, and drivers, as well 10-year category tracking and forecasts by purchasing the State of the Specialty Food Industry, 2021-2022 Edition. 

And weigh in on what you think the new post-pandemic industry norms will be in our discussion in the Community Hub.