The Lempert Report LIVE

The Battle of GMOs and the Millennial Food Revolution: Uncovering Mexico's Strides & Industry Shifts

June 19, 2023 Phil Lempert Episode 83
The Lempert Report LIVE
The Battle of GMOs and the Millennial Food Revolution: Uncovering Mexico's Strides & Industry Shifts
Show Notes Transcript Chapter Markers

Are you ready to uncover the battle between Mexico and the US over GMOs and how Mexico is making strides in addressing food-related issues? Join us in this fascinating discussion, where we also delve into the preferences of Millennials and Gen Z - and how their love for Mexican cuisine is reshaping the food industry! We'll also discuss the recent spike in grocery prices and expose some food companies and brands who might be taking advantage of shoppers.

In this thought-provoking episode, we also come up with inspiring ideas for supermarkets and restaurants to better cater to their customers' needs and how younger generations are influencing the food industry. Discover the secrets behind thriving independent grocers, the potential end of supersizing, and why quality trumps quantity when it comes to food offerings. Don't miss out on this captivating installment of the Lempert Report LIVE!

Phil:

Welcome to the Lempert Report LIVE. On today's broadcast. It's a fight! Mexico vs the US over GMOs. Millennials choose their favorite cuisine. Just when we thought food prices were falling, guess what Super-sized moveover, and independent grocers hold their own. On the bulls eye, Netflix gets into the food business. Let's get started. So Sally, US vs Mexico as it relates to GMOs. It's a fight that probably no one ever expected, least of all the GMO companies here in the US, but it looks like this is really going to take hold, similar to what we've seen over in Europe.

Sally:

Yes, this is the closest to home. I believe that this GMO debate has landed. The US, backed by Canada, will be in discussions with Mexico about their ban of consumption of human consumption of GMO corn. Now they are allowing it for use in feed for cattle and used in some non-food products. GMO corn has been banned from human consumption. And their argument for this is that they believe in the studies that they have examined that there is a probable chance for carcinogens And also they are talking about protecting the bees, specifically these important pollinators that are a big part of how the agricultural system survives in Mexico.

Phil:

So I'm confused about the fact that they're allowing it for feed in cattle, because when you really talk to a lot of the anti-GMO folks, they're very concerned that the GMO corn gets eaten by the cows and the cows then, either for beef or milk, basically have GMO in them. So that one just doesn't make sense to me. but I think that what's going to be really interesting about this fight is that Mexico if you take a look at what Mexico has done with nutritional labels, what they've done now with this GMO ban they're moving faster than we are on this and kudos to them for doing it. Let's talk about Generation Z and Millennials. They don't seem to like Italian food as much as, you know, our generations did.

Sally:

Yes, it seems that for the first time in many, many years, the top choice for ethnic food now is Mexican. When it comes to our Millennials and our Gen Z, and even with our Gen Z crowd fill, italian has moved to third place below Mexican and Asian food.

Phil:

Well, and I think one of the reasons and you know it's stated in this report from VOA News is that now you know, there's 23% population growth in the Latino population. So I mean part of it is heritage for that as well. But I don't want any Italian restaurants to close just yet. You know we got to keep them open. But what's interesting also about this report is that pizza, which was, you know, one of the favorites pizza, lasagna and so on, they've been declining on menus over the last ten years. And we're seeing more tacos and and Ramen and other you know Asian inspired dishes growing on these menus. And to be honest with you, I think you know what came first the chicken or the egg. If, in fact, we take it off the menus and there's not the availability, of course they're not going to be as favorite as tacos are. So interesting to watch to see how those demographics are going to change. What are foods you know being sold, whether it be in a grocery store or in a food service operation? Also, what we found from CNN this past week US grocery prices are up again. They were down in March and April And the reality is that margarine was up 22.5%, flour up 17.1%. Bread spiked 2.5%. Sugar up 11.1%. Juice and non-alcoholic drinks up almost 10%. Let us up 9.5%. Ham up 8.2%. And ice cream in the beginning of summer was up 8%. So you know, before everybody got, you know, really, really psyched that food prices were coming down. But, as we've talked about here on the LEMP report any number of times, prices are not going to go down. We still have our climate situation, we still have labor shortages, we have labor pricing going up, the hourly wages going up, we have a trucking shortage, so prices are not going to go down. So what do you think we should be doing about this, sally?

Sally:

Well, one good piece of good news is that we have seen eggs In a historical decline. They have come way down and we have talked about the price of eggs a lot. You know and remember how, how you know, some people around the country were buying a carton of eggs for eight dollars. So that is not happening anymore. But what I believe is that shoppers are getting a little exhausted with the messaging of it's the war in Ukraine, its supply chain issues, its labor costs. You know whether all of these things that you were just talking about And the feeling out there may be that maybe some of these food companies and retailers are just taking advantage of shoppers. That may be what consumers are feeling.

Phil:

Yeah, and I think consumers are right, not necessarily on the retailer side nearly as much as on the brand side. Again, listening to a lot of these investment calls that these brands have with Wall Street, i mean a lot of them are saying, you know, we need to raise our prices and we're able to do that. I mean look at Coca-Cola, which has raised their prices I think it's five times since the pandemic. And you know their price of 10 obviously went up for the aluminum cans. But also, you know, you think about a product like Coke or Pepsi that has huge profit margins. I mean the product cost is negligible. And the fact that they feel that they can take these price increases really puts, you know, consumers on the short end of this whole thing. So let's talk a little bit about supersizing. It looks like supersizing is over.

Sally:

Well, let's hope so for the health of Americans that have become very accustomed to these very, very large portions on menus. You know I was thinking about when I was a child and I went to a restaurant on vacation. My parents would let me order so that I could get a soda, and it was never an option to just have, you know, refills coming and coming and coming at one, you know, no charge. So it was one soda and you were done, and then you were drinking water. So it is interesting hearing now that some you know, after looking at the eating habits and the way that food has been marketing, that some companies are thinking about on supersizing and maybe presenting, you know, foods that are in more reasonable portions but also of a higher quality.

Phil:

You know it's an example that we give all the time that you could have a Snickers bar and be hungry, but if you have a one inch square piece of dark chocolate, you know that's satisfying to you. And the movement is to move away from food as fuel, as the business model meaning that you know, selling more calories to more people more often and for more money to the Epicurean model where the growth comes from selling fewer calories but with more pleasure. And what they point out with this, with this report, is the servings of fries and pizzas. Serving sizes are now 50% larger than they were 30 years ago. So you know, a slice of pizza when I was growing up was probably like that big, and now you know it's that big. So we really need to pay attention to that And to your point. You know, just give us smaller portions, but better quality food, better tasting food. And then there was a report that came from the Frozen and refrigerated buyer magazine which was really interesting to me. That talked about how independent grocers are beating chain store arrivals, especially since the pandemic, that these small, locally owned independence are really getting more love from consumers as a result of the pandemic. They want to be able to go in there and talk to somebody on a human connection basis, and also it's just much more pleasant to go into a store that's maybe 30,000 square foot versus one that's 100,000 square foot.

Sally:

Yes, and this is a change that we are seeing in shopping behaviors, a change in what people want, particularly since the pandemic. They do want more of an in-store shopping experience. We all had to sit at home for a while and order our groceries, So maybe we came back after the shutdown really wanting to enjoy our grocery shopping. And with a smaller, independent grocer that is more possible. There's more interaction sometimes with the store managers and employees. They're not as technology-reliant. It's harder for them to be more technologically-reliant. And they also are able to respond a little bit quicker to customers' needs because there is not a big chain of bureaucracy that a big-box retailer has to go through to make something change in their store. So there are a lot of wonderful benefits to customers looking for that type of experience And I think, in order to compete, a lot of these chains that have had to. You know we've seen a lot of closings in the big chain stores, but a lot of them are going to start trying to up their in-store experience.

Phil:

Dave Ball from Kansas City based Ball's food store. He's the third-generation supermarket owner here. One of his biggest hurdles, he says and this is something that you know we mentioned a little bit ago but also continues is his biggest hurdle is developing the next generation of leaders. He doesn't have a human resource department. It falls on the store manager to hire people And it's really a situation that, until we can figure out this labor problem, we're going to have problems, whether it be an independent or a franchise or you know any other kind of retail environment. It's a major problem that we really need to face. So thanks, sally, appreciate it. In this clip from a recent CMA webinar Chase designed details to current size and scope of dollar stores and an outlook for the major chain expansion that's going forward. Members can view the entire presentation on demand in CMA's resource library, and here's what they had to say.

Chase:

As a channel, dollar stores have more retail locations than every one of the top major mainstream retailers combined all of them. In fact, at the current growth rates, dollar stores will outnumber every Dunkin' Donuts, every Starbucks and every McDonald's combined in the next several years. Just last year, dollar stores accounted for about 40% of all store openings. That's a lot, but that was also in a year of record brick and mortar expansion. Looking over the past five years, as shoppers returned to stores following the pandemic and all of the large retailers were opening up a whole lot of stores, so it's all the more remarkable. Based on recent earnings reports from the big $3 stores, they're on track to open another 1,600 stores this year And that's just a few hundred shy of the total store count of Target right now. So it's pretty incredible And here's the important point. All this growth in locations is paying off. Traffic to dollar stores is outpacing all other retail formats. Now it's hard to see back at the beginning of this chart, back to 2020, where this chart begins on the left, but with the exception of shopping centers, which is the red line, that's way down. Not a surprise to anybody here. Back to mainstream retail format was in a fairly tight range back to the far left of this slide. They're all kind of growing and sinking in tandem with one another, But dollar stores are really, as you go through time here, pulling away. that is to say, traffic to dollar stores is growing year on year faster than to other mainstream channels.

Phil:

On today's bulls eye, this could only happen in Los Angeles. Netflix is expanding beyond streaming and mobile gaming and into a completely new category restaurants. The company announced chefs from various Netflix cooking series, such as Chef's Table, nailed It and Iron Chef and Quest for an Iron Legend are coming together to create a new kind of restaurant. It's called Netflix Bites. Not sure I love the name, but according to TechCrunch, Netflix Bites patrons will be able to taste food from Iron Chef, quest for an Iron Legend from Curry Stone, Dominique Cren, Ming Sai and Andrew Zimmerman, as well as Rodney Scott and Ann Kim from Chef's Table and pastry chef Jacques Torres, the head judge from Nailed It. I was actually a model, if you can believe that, in the New York chocolate show, where Jacques dressed me in a chocolate suit, hat and cane, and I got my one-time opportunity to walk down the runway with high-fashion models called dressed in chocolate. Unfortunately, eileen Ford never called. After that, there's even more chefs that are participating Nadia Hussein from Nadia Bakes and mixologists from Netflix Drinkmasters Frankie Slar and Julie Renner O'Brien and Kate Gerwin. The restaurant will launch on June 30 and be open every day from 5 pm to 10 pm. There's also a brunch menu that's available on the weekends from 10 am to 2 pm. To book a reservation, people can visit netflixbitescom or go on Rezzy. Netflix Bites is located at Short Stories Hotel, which is on Fairfax Avenue in Los Angeles, conveniently down the road from the Grove shopping area. The Lempert Report is all about inspiring ideas, making our industry think and challenging each other. Let's think about being the shopper and how we can bring our supermarkets and restaurants closer to meet their needs. I hope you'll come back to join us on next week's installment of the Lempert Report LIVE while we focus on the biggest and best insights and the things that really matter. In the meantime, be sure to visit Supermarketguru. com for the latest marketing analysis issues and trends, and we'll see you back here next Monday at 2.30 pm Eastern for more.

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