Tag Archives: Food and drink

Food companies to lose $3 billion in monthly sales

A sign alerting customers about SNAP food stamps benefits is displayed at a Brooklyn grocery store on December 5, 2019 in New York City.

Scott Heins | Getty Images

Shoppers who get federal food assistance have fueled double-digit growth for retailers and food manufacturers over the past year, but are now under growing pressure to stretch those dollars, according to market research firm IRI.

Some people who qualify for the Supplemental Nutrition Assistance Program, commonly known as food stamps, are unemployed. Others are working minimum wage jobs or juggling part-time hours along with child care. With clogged ports and truck driver shortages, transportation and raw material costs are rising, causing sticker shock at the grocery store.

Stimulus checks have largely been spent — and no additional ones appear on the way.

As that pandemic-fueled funding ends, consumer packaged goods companies will feel the pain, too, according to IRI research shared on Tuesday. The companies will lose out on about $3 billion of spending from SNAP shoppers each month. Those shoppers’ spending power is declining, even as the Biden administration increased food assistance earlier this month and families received child tax credits.

Sally Lyons Wyatt, an executive vice president and practice leader for food and beverage at IRI, said economic headwinds, such as inflation, are “going to hit these houses more than anyone.”

SNAP is a sales driver for major grocers like Kroger, big-box players like Walmart and discount chains like Dollar General and Aldi. About 16% of households across the U.S. — 42 million people in total — participate in the SNAP program. SNAP shoppers drive 12% of food and beverage sales online and in stores, according to IRI’s research.

Over the pandemic, the impact of that group has only intensified. SNAP shoppers drove 19% of dollar growth for food and beverage retailers the 52-week period ended Sept. 5 versus the prior year, according to IRI. That’s compared with non-SNAP shoppers who drove just 1% of dollar growth during that same time.

Lyons Wyatt said food and beverage companies and retailers must come up with new approaches to serve shoppers who need budget-friendly ways to feed their families — or risk losing a significant chunk of business. She said they should consider small pack sizes and affordable bundles of food, such as a lower-priced spin on a meal kit. Retailers may want to carry different tiers of the same item, such as soups or canned beans of a value tier along with a standard and premium one, she said.

She pointed to creative efforts by grocers to help families eat healthy on a limited budget, such as offering nutritious recipes with simple ingredients or sponsoring a community garden for kids.

And she said companies will lose sales now and in the future if they dismiss this group of shoppers. She said SNAP shoppers tend to be more loyal to retailers and brands. Plus, she said, catering to families who participate in SNAP can be a way to introduce themselves to future consumers, since many households have young children or teens.

“You will set yourself up for a lifetime consumer value proposition that might not be there if you just don’t take an interest,” she said.

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North Korea Doesn’t See the Irony in Praising ‘Squid Game’

Photo: Giuseppe Cacace/AFP (Getty Images)

It feels like everyone on the internet is watching Netflix’s runaway hit Squid Game, and that includes a North Korean propaganda site, which praises the series for “exposing the reality of South Korean society, where weak meat and corruption has been on the rise and scoundrels are commonplace.”

The commentary comes from Arirang Meari (via Insider), and it’s exactly what you’d expect from a totalitarian state mouthpiece. The piece slams the inequality wrought by South Korean capitalism and a society where “people are treated like chess pieces.”

This is not the first time that North Korean propaganda sites have done something like this. According to Reuters, a North Korean daily also praised Bong Joon-Ho’s Parasite for doing the same thing when it won the Oscar for Best Picture in 2020. It’s just, who exactly is all this grandstanding for?

As you might imagine, North Korea doesn’t have Netflix. (Though, it did create a Netflix-like app called My Companion 4.0 in 2017.) And though North Koreans do have access to smartphones, they’re limited to something called kwangmyong, or a state-controlled intranet that doesn’t have access to the outside world. Internet access as we know it in the U.S. is limited to those with special permission. Basically, the average North Korean citizen isn’t likely to have access to Squid Game. So either the propaganda is aimed at citizens, or it’s poking South Korea and the outside world… which doesn’t give a hoot what North Korea thinks about capitalism.

It is possible that Squid Game might make it across the 48th parallel. Activists have been known to send balloons with leaflets or USB drives containing K-dramas as a means of exposing North Korea’s bullshit. It’s a dangerous past-time, however. Those caught watching South Korean dramas face getting imprisoned, sent to labor camps, or executed. In 2014, at least 50 people were reportedly publicly executed for doing just that—including 10 officials from leader Kim Jong-Un’s own party. Kim Jong-un also recently called K-pop a “vicious cancer, a move that was spurred by the fact that South Korean pop culture—of which Squid Game is a part—is becoming increasingly popular with younger North Koreans.

Even if a person was brave enough to watch contraband content, it’s still a bad look for the regime. One of Squid Game’s fan-favorite characters, Kang Sae-byeok, is a North Korean defector whose main reason for entering the dystopian tournament is to earn money to bring her family to South Korea. Sae-byeok also hides her North Korean accent when speaking to South Korean characters, and is derided as a “commie” or “spy” when other characters notice. That’s in addition to the fact the whole series negatively portrays arbitrary violence and executions over rule-breaking.

The irony of all this is truly next-level self-ownage. Then again, perhaps no one writing the propaganda has watched the actual show.

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Squid Game Has Inspired Fall Guys To Revisit Unused Minigame

Image: Mediatonic / Netflix / Kotaku

During a recent TechRadar interview, Fall Guys lead game designer Joe Walsh said the dev team at Mediatonic is currently toying with the idea of retrieving an unused minigame from the cutting-room floor. And it’s all thanks to Netflix’s latest original series, Squid Game.

Squid Game, written and directed by South Korean filmmaker Hwang Dong-hyuk, concerns a deadly, 456-player competition that promises to pay a single winner enough money to escape their crushing debts. Intended to be an allegory on modern-day inequality, Squid Game’s similarities with properties like Battle Royale and The Hunger Games (not to mention the entire video game genre those properties ultimately inspired) has made it a hit among viewers.

While Fall Guys’ world and themes aren’t half as sinister as Squid Game’s, its premise allows for a lot of overlap. Take Red Light, Green Light for example, the well-known children’s game which takes up much of the show’s first episode. While developing Fall Guys, Mediatonic also considered its own version of Red Light, Green Light that ultimately never saw the light of day. With Squid Game now dominating the cultural zeitgeist, Walsh feels the time is right for revisiting the unused concept.

“Within a video game, there’s something about movement,” Walsh told TechRadar. “[I]n real life it’s very hard to stay still, but in a video game, you just put your controller down. And so, at the time, I think we were like, ‘We’ll never do Red Light, Green Light, it doesn’t make sense.’ But now, seeing how popular Squid Game is, I’d love for us to have another crack at something like that and see if we could do it in Fall Guys.”

Fall Guys has enjoyed several seasons of new content since launching in August 2020, some of which was even branded with crossover appearances from franchises like Among Us, Nier: Automata, and Godzilla. A collaboration with Squid Game, whether officially or just via homage, wouldn’t be the wildest thing to happen to the bouncy battle royale. In any case, it’s cool to see Mediatonic recognize the non-gaming media to which the genre owes so much.

 

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Taco Bell Chicken Sandwich Taco

Photo: Kotaku

Taco Bell has a new chicken sandwich that’s also a taco, but is also not a taco or even really a sandwich. It’s weird. Yet, even weirder than all that is that I.. like it?

In the world of fast food, the chicken sandwich wars rage on. It all started in 2019, when Popeyes introduced a new fried chicken sandwich to its menu. People lost their collective shit over it. Where I live, the local Popeyes was packed in the weeks and months following the new menu items rollout. I remember passing by the joint as a line of 40 cars in the drive-thru stretched out past the parking lot and into the road. In response, other places like McDonald’s and Burger King have added new and (supposedly) improved chicken sandwiches.

And now, surprisingly, Taco Bell has decided to join the ongoing war with its new chicken taco sandwich. And folks, I hate myself for typing this next sentence but: I love it.

So what is the chicken taco sandwich? Well, it’s essentially a crispy and fried large chicken tender placed inside a soft pita bread “taco shell” with some Taco Bell chipotle sauce. You can also get a spicy variant which is the same thing, but with some jalapenos tossed into the mix. Is this actually a sandwich? I don’t think so. Is it a taco? That’s probably a better way to describe it, but I’m still not so sure. I get why Taco Bell decided to just go with the name Chicken sandwich taco, because while that name really doesn’t make sense, it would end up being what most folks called this thing anyway. Most likely, saying the name with a high-pitch voice and in a questioning tone.

Thing is, crispy chicken and pita bread plus some decent sauce is not a hugely unique concept, but still a tasty creation. I ordered two as I wasn’t sure how big they would be and I ended up eating both of them and not hating a minute of it. The chicken is very crunchy and contains just enough spice so as not to be bland, but not too much so your boring uncle or whatever can still enjoy it. The spicy variant is spicier, but anything is spicier if you add jalapenos to the recipe.

Photo: Kotaku

The pita bread-like shell is soft, but not as soft as a standard tortilla you would find at Taco Bell. However, it’s also not as messy or crunchy as a hard shell taco either. It sits somewhere in the middle.

Taco Bell has said it’s a temporary item only, which is sad. I’d be happy to have it on the menu for the foreseeable future. Unlike some past Taco Bell experiments (the waffle taco…*shivers*) this crunchy chicken sandwich taco is a winner in my book. And after trying all the other fast-food chicken sandwich contenders, it’s by far the most unique spin on an item that is quickly becoming overdone and dull.

I guess you could say, Taco Bell really did think outside the bun on this one.

No. Wait. Stop. I can’t end this blog like that. Oh, I’m out of time.

Shit…

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Nabisco Strike Makes Pokémon Oreos A Much Less Exciting Snack

Image: Oreo

This morning, Oreo announced a new variation of its popular sandwich cookies decorated with Pokémon characters. But while I love me some cross-brand synergy, I’m also a little wary of scarfing down on a crunchy, chocolate recreation of Pikachu’s face when striking Nabisco workers have asked the public to refrain from buying the company’s various snack products.

Oreo’s Pokémon cookies were revealed with an impressive trailer for a collection of 16 unique designs featuring pocket monsters like Pikachu, Squirtle, Jigglypuff, and more. Of course, it wouldn’t be a Pokémon product without some sort of obsessive hunt to go along with it, which means a handful of patterns (I’m looking at you, Mew) will apparently be harder to “discover” than others.

You can even pre-order packages of these Pokémon treats now ahead of their September 13 launch, a mystifying sentence to write about baked goods.

Before today, however, Oreo manufacturer Nabisco and parent company Mondelez International were in the news for less whimsical reasons.

Nabisco employees belonging to the Bakery, Confectionery, Tobacco Workers and Grain Millers’ International Union (BCTGM) have been on strike since August 10 over disagreements with the company while negotiating a new labor contract. The main points of contention include Nabisco’s pushing for mandatory weekend work, longer shifts with no overtime pay, and a new health insurance plan that increases costs for workers.

“Basically, the main thing we’re trying to get is a fair contract,” Nathan Williams, a Nabisco oiler from Virginia, told Motherboard last month. “During the pandemic, we came in seven days a week. Some people worked every day—16 hours a day—for three months. For [Nabisco leadership], it’s all about finding the cheapest way to make cookies.”

The walkouts began in Portland, but quickly spread to Nabisco factories in Addison, Aurora, Chicago, Norcross, and Richmond. Since then, workers have called upon consumers to avoid Nabisco products like Oreos, Chips Ahoy, and Ritz.

“It was just constant. Never had time to spend with the kids. Never had time to spend with the family,” machine operator Steven James said during a recent interview with Yahoo! Finance. “We had some management working from home. So, of course they were good, they were safe. We risk our lives coming out every day working all those hours. We try to tell everyone, do not buy any Nabisco products at this time, because we are on strike.”

It’s a sad fact that, on some level, there’s no ethical consumption under capitalism. But that doesn’t mean we should just ignore these problems, especially when the workers themselves are begging us to make the small sacrifice of going without our favorite snacks for a bit. Pokémon or no, I can do without Oreos until the countless people who make them are finally treated with a modicum of respect for their labor.

 

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Why your smartphone will be the next must-have grill accessory

Weber Grill accessories are offered for sale at a home improvement store on July 23, 2021 in Palatine, Ill.

Scott Olson | Getty Images News | Getty Images

Forget a spatula or tongs: the most-needed accessory for your next barbecue grill could be your phone.

Some of the biggest manufacturers of grills and outdoor cooking appliances like Weber and Traeger are making large investments into technology, emphasizing connected devices that try to make grilling easier and more enjoyable to cooks of all skill levels.

The digital push aims to take advantage of multiple trendlines hitting the grilling industry at the same time.

At-home barbecuing and grilling saw a massive uptick amid the pandemic as more people stayed home and cooked as opposed to dining out. More than $1.8 billion worth of grills, smokers, grill accessories, fuel, and stoves and accessories were sold between March and May in the U.S., a 5% increase compared to 2020, according to NPD.

Grilling more is leading some consumers to look beyond basic charcoal or propane grills towards more advanced products, such as smokers, pizza ovens, and flat-top griddles. There has also been an influx of new at-home grillers as people have looked to spend more time outside or moved away from cities where grilling space may have been limited.

Companies like Weber and Traeger have subsequently looked to push grill innovations to hit both the top and bottom of the market.

One of Weber’s most recent technological developments has been its Weber Connect Grilling Hub, which was selected as the best connected-home product at the 2020 Consumer Electronics Show. The wireless hub has temperature probes that you push into whatever you’re cooking on the grill, connecting that data to an app on your phone that provides step-by-step directions and notifications for things like when meat needs to be flipped or is done.

“Think of it as Waze for navigating your grill cook,” Weber CEO Chris Scherzinger said on CNBC’s “Squawk on the Street” earlier this month. “It’s a cloud-based technology platform with cooking algorithms built on Weber’s 70 years of grilling experience — it goes down to your phone, guides your cook on your grill, controls your grill, gets you perfect results every time. It’s basically a transformed, game-changing type of grill experience.”

Scherzinger also hinted at other ways technology could be integrated into Weber’s grills, such as monitoring the propane tank. A new line of grills expected to be unveiled later this year will actively gauge how much fuel is left in the tank, sending an alert when it is getting low and even potentially ordering a refill automatically.

“You can have a whole new business model now for Weber driving subscriptions, consumer engagement in between grilling experiences, all kinds of new ways that we can take this category,” he said.

The Weber Connect hub retails at $130 and is also included in the company’s line of smart grills, which retail between $849 and $1,349. Weber said it plans to add Connect capabilities to its charcoal grills and smokers in the future.

Introducing new grilling tools will also help Weber further diversify its revenue streams. The company reported $963.3 million in revenue for the six months ending March 31, a 62% year-over-year growth. However, sales of its grills, which range from $40 to over $1,000 and include gas, charcoal, electric, pellet, and smokers, made up 74% of its revenue in 2020.

Acquisitions fueling technology expansion

Weber’s technology push saw a boost with its Jan. 2021 acquisition of smart appliance and technology company June, after previously leading the start-up’s Series C funding round and partnering on products. Weber had also acquired iGrill in 2016, a company that made connected thermometers.

“We believe that the connected capabilities offered by our technology-enabled products will enable a closer relationship with our consumers and usher in a new generation of enthusiasts who will join our global community of Weber loyalists,” the company wrote in its S-1 filing.

While Traeger cites the “2-million-year-old connection to fire” as inspiration for the creation of its wood pellet grill, the company is leaning heavily into new technology.

“Our investment in innovation around the digital experience and content is as great, if not greater, than our investment in innovation in the durable market,” said Traeger chief executive officer Jeremy Andrus. “The grill is the vehicle, but the real difference is the digital experience – the digital experience is what inspires someone to cook.”

Traeger has a proprietary technology it calls WiFIRE that lets grillers control and monitor their grill through the company’s app, an Apple Watch, or with voice control via Amazon Alexa or Google Home. You can also choose recipes through the Traeger app and use the “Make Now” feature, which will run the recipe’s cook cycle on the connected grill.

“This semi-automated cooking experience takes the uncertainty out of making a new dish and delights Traeger owners,” the company said in its S-1 filing.

Driving deeper into its audience has been key for Traeger, as Andrus said data suggests 80% of Traeger owners have recommended the brand on average to six other people. In 2020, Traeger reported revenue of $545.8 million, up from $363.3 million in 2019. Over the first three months of 2021, it had revenue of $235.6 million, up 107% year-over-year. In total, the company says it sold 2 million grills in the U.S. between 2016 and 2020.

Traeger has also made acquisitions to further its tech push. In July, the company acquired Apption Labs for $100 million, which designs and manufacturers hardware and software for small kitchen appliances, such as wireless smart thermometer MEATER, which lets users both monitor the temperature of whatever they are cooking as well as guide them through the cook cycle via an app.

“Cooking is a hobby that the more you create, the more positive feedback you get, the more you’re motivated to cook more,” Andrus said. “We’ve always had cookbooks, but we’re making it digital.”

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Cake Mix Linked to E. Coli Outbreak That’s Hospitalized 7 People So Far

Raw cookie dough clings to the beaters of a standing mixer
Photo: Larry Crowe

The CDC is investigating an ongoing multistate outbreak of E. coli that’s sickened more than a dozen people and left several hospitalized. Though no source has been identified for certain yet, the cases appear to be traced back to contaminated cake mix batter.

People naturally carry some E. coli bacteria in their guts. But certain strains (usually transmitted through eating food) are more likely to cause illness than others, particularly in very young people or those with already weakened immune systems. Like many foodborne infections, E. coli tends to cause symptoms like stomach cramps, diarrhea, and vomiting. In more serious cases, people can have bloody diarrhea and develop a life-threatening form of kidney failure called hemolytic uremic syndrome.

According to the CDC, as of July 28, at least 16 people in 12 states have contracted the same outbreak strain of E. coli bacteria, dating back to early March. Of these, seven were hospitalized and one developed hemolytic uremic syndrome, but none have died. It’s likely that the outbreak is larger, but milder cases tend to go unreported, since many might never even go to the doctor.

Of the eight people the CDC has interviewed so far, six reported recently eating or tasting raw cake batter, but they all reported buying different varieties and brands of cake mix. The Food and Drug Administration, according to the CDC, is currently conducting a trackback investigation to see if they can identify a common brand or production facility linked to these cases.

Uncooked cake batter is a common source of foodborne illness—one that the CDC routinely tries to dissuade people from eating, seemingly to no avail. This risk can come from the raw eggs mixed into the batter, but even raw flour by itself or in cake mix can carry disease-causing germs like E. coli.

For those still eager to nosh on cookie dough, cookie dough flavored ice creams remain perfectly safe to eat. And companies like Pillsbury have recently started releasing their own line of cookie doughs that have been made with pasteurized eggs and heat-treated flour, which should make them safe to eat even raw. But for everyone else who use other brands or makes their own raw cookie dough, just please stay from the delish but potentially dangerous kitchen treat, especially right now.

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Shanghai lab’s fake pork dumplings help China go beyond meat

A visitor tries a Beyond Meat plant-based protein substitute at the Restaurant & Bar and Gourmet Asia expo at the Hong Kong Convention and Exhibition Centre in Hong Kong on November 11, 2020.

Peter Parks | AFP | Getty Images

If a Chinese-based business owner has wanted to create and sell a meat-free pork dumpling over the past decade, they might well have visited a three-story restaurant-laboratory in a commercial district of Shanghai to seek the help of Dr. Dong-Fang Chen. 

He earned his PhD from Cambridge by focusing on plant molecular genetics, then worked at AstraZeneca, and now as vice-president for R&D in Asia-Pacific, he manages a group of several dozen scientists in Shanghai. They’re part of a global research workforce of roughly 1,000 at a Swiss firm called Firmenich, the world’s largest private business focused on developing flavors and aromas. 

Chen’s team is tasked primarily with helping global and Chinese food businesses improve the taste and texture of their products, and these days, particularly those made using meat and dairy alternatives. Firmenich, doesn’t reveal its client list, but it includes some of the world’s largest food, fabric, beauty and household care businesses.

Beyond Meat increasing China focus

The plant-based protein market in China is attracting more attention. Just this month, Beyond Meat announced it was launching an online store for the Chinese market, in partnership with the e-commerce platform JD.com, and plans to expand beyond its current retail partners in China, including Starbucks and Yum China Holdings, to around 300 Chinese cities at a time when local consumers are more frequently buying fresh food online. 

Both Beyond Meat and its main U.S. rival Impossible Foods see big opportunity in China and are aware success requires more than importing successful ideas from Western cuisine. “I will work very hard to make sure that we’re not exporting American taste,” Beyond Meat CEO Ethan Brown told CNBC last September.

Late last year, Nestle launched a brand called Harvest Gourmet, offering non-meat burgers and nuggets, but also pork belly and kung pao chicken, among others, through Alibaba Group’s internet Tmall site and its Hema grocery store chain. 

Both Nestle and Beyond Meat have built faux-meat manufacturing facilities in Tianjin and Jiaxing respectively, in competition with local giants Zhenmeat and Starfield. 

Plant-based meat dishes are seen offered at a Starbucks store on April 22, 2020 in Shanghai, China.

VCG | Visual China Group | Getty Images

This explosion of interest in plant-based consumables is reflected across Asia. West Coast start-up Eat Just received approval from Singapore regulators to sell its chicken replacement, developed from animal cells in a laboratory, around the same time as NR Instant Produce of Thailand went public after the success of its jackfruit-derived faux-pork product. Then in June, Philippine food giant Monde Nissin went public on the Philippine Stock Exchange, the largest public offering in the country’s history, as it sought to expand its own successful line of plant-based meat products. 

Recreating a local favorite like the pork dumpling

While many of the plant-based products are based on Western cuisine, Beyond Meat has said it is adding new lines on JD.com to appeal to the Chinese market, including Beyond Pork and other locally-targeted cooking ingredients, such as lion’s head meatballs and pork dumplings. The latter are a hugely popular dish in China, but as a research subject Firmenich’s Chen says dumplings are challenging to reverse engineer, since the “pork flavor is very, very subtle, very sophisticated.”

His team has delivered a large variety of client briefs focused on meaty favorites — some local, like pork dumplings, some more universal, like chicken nuggets. They do this by figuring out why the original product tastes and feels and smells the way it does, then they replace the meat-derived building blocks — proteins, carbohydrates, fats — with their plant-derived counterparts, before combining them microscopically to mirror the flavors and smells of the original. 

(From left) Chef Nicolas Maire and flavorists Liliana Favaron and Mark Rubin taste vegetal steak at the headquarters of Swiss group Firmenich, one of the world’s leading flavor manufacturers, near Geneva. Firmenich is advising and supplying a host of start-ups and food giants with technical expertise in recreating meat taste and texture.

Fabrice Coffrini | AFP | Getty Images

Sometimes the process can take just days, if they already have an off-the-shelf solution prepared, but occasionally it requires months of intensive research by a team of twelve with varying forms of expertise — formulators, chemists, flavorists among them. “This sounds easy to do, but actually it takes lots of science,” Chen says, referring excitedly to advanced techniques like gas chromatography or mass spectrometry. “This is not trivial.” 

The markets these scientific breakthroughs are servicing are large. Chen’s group of Shanghai-based research scientists and chefs has tripled in size over the past decade, a process partially driven by the fact that successful start-up businesses in the United States, like Beyond Meat and Impossible Foods, have “triggered a revolution of using modern science,” Chen says. 

Future food for the Chinese population

For Firmenich, the growing demand for meat alternatives in China and the broader Asian market led them to launch a Singapore innovation hub focused on developing new plant-based protein products. Jun Saplad, based in Singapore as the head of the company’s savory division in Asia, had his own epiphany about the sector at a Beijing conference in 2019. 

“The government was the key driver for that forum,” he said, describing panel after panel in which Chinese officials, academics and business leaders promoted plant-based proteins, for a country that currently consume more than one-quarter of all global meat supplies, according to the USDA. “They’re effectively promoting future food for the Chinese population,” Saplad said.  

Thanks to accelerating urbanization and a growing middle class with rising income and consumption levels, Asia is also the fastest-growing region in the world for packaged food, not to mention its sheer scale. “Asia has 4.7 billion mouths to feed,” Saplad said. “That’s 60% of the global population, and in China and India alone it’s almost 3 billion.” 

The Asian portion of the meat-alternative market is currently worth only around $1 billion, Saplad estimates, but courtesy of its younger demographic, with rising awareness about the climate impacts of their culinary choices, he projects that could expand five-fold within the next decade.

And Saplad reckons Chinese firms have the potential to become major suppliers of plant-based meat alternatives too, for the rest of the world, including the U.S. and Europe. “You’re actually seeing companies, big global companies investing into China for China domestic consumption — as well as for exports,” he said.

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Four takeaways as child tax credit kicks off this month

A woman wears a face mask while shopping for a baby shower gift during the Covid-19 pandemic, at Madison’s Niche boutique in Huntington, New York on April 21, 2021.

Alejandra Villa Loarca | Newsday | Getty Images

Child tax credit payments are an “underappreciated stimulus” that could lift sales across the retail, restaurant and travel industries — especially as shoppers emerge from the pandemic and get ready for back-to-school season, according to a research note published Tuesday by Cowen analysts.

The monthly payments, which begin Thursday, could benefit a wide range of companies, from grocers including Walmart to fast food chains such as Jack in the Box, according to the note.

Families have gotten child tax credits for years, but the American Rescue Plan made several key changes. It increased the amount per child from $2,000 to $3,000 for those between the ages of 6 and 17, and to $3,600 for each child under age 6. It qualified low-income families who have little or no taxable income. And it changed the way it is paid out, so that families receive half the money through direct deposits that run from July to December. Families will receive the other half after filing taxes.

That will translate to $250 or $300 per child each month. Families who make up to $150,000 for a couple or $112,500 for a family with a single parent, called a head of household; or $75,000 as an individual taxpayer will get the full amount. The payments will be phased out above that amount — but even those who get less money will receive advance payments.

Parents and caretakers of nearly 90% of children in the U.S. will receive the payments, according to the Internal Revenue Service.

Here are four major takeaways from the analysts:

More dollars mean more spending

The child tax credit will amount to an estimated $150 billion in stimulus over the next year, according to Cowen. Analysts at the equity research firm say the extra dollars may surprise both Americans and the economy at large, calling it “an underappreciated catalyst for discretionary consumer spend.”

As families get the money, Cowen predicts, they will spend it on food for the home, dining out and shopping online. The analysts named retailers and restaurants that are best-positioned to attract those dollars. On the grocery side, they pointed to Walmart, Target and Grocery Outlet. Among fast-food chains, they named Jack in the Box, Wingstop, Papa John’s and Darden, based on a survey of consumers that looked at their incomes and what places they frequent. And among e-commerce companies, they named Amazon.

Coinciding with ‘pent up demand’

Many families have already ramped up spending on new shoes and clothes as they emerge from their homes after getting Covid-19 vaccinations. Analysts from Cowen said that child tax credit dollars will likely feed into that spending spree.

Already, some retail industry watchers have predicted an usually hot back-to-school season as families crave a new start and a sense of more normalcy — and potentially channel that toward fresh notebooks and first-day-of-school outfits.

Cowen analysts expect that retailers that cater to back-to-school or team sports are positioned well to attract child tax credit dollars, including Walmart, Kohl’s, Foot Locker, Dick’s Sporting Goods and Nike. They also said retailers that focus on value, such as off-price retailers Burlington, Ross and T.J. Maxx, could get a boost since they cater to low-income families that are receiving child tax credit payments. They also said American Eagle Outfitters is in a good spot to attract the payments, as it caters to styles that teens crave, such as looser-fitting denim and casualwear.

Spilling over into adult categories

Parents, grandparents and other caretakers may spend some of the child tax credit dollars on themselves in the form of beer, cigarettes and plane tickets, according to Cowen.

Analysts estimated that the tobacco industry could pick up about $1.2 billion and alcoholic beverages could pick up roughly $2.7 billion of the estimated $150 billion impact of the child tax credit. That could mean good news for tobacco company Turning Point Brands and beer industry players, Constellation Brands and Boston Beer.

Cowen estimated air travel will get an approximately $1.15 billion bump from child tax credits, as the July payments arrive just in time for vacation season. That will be most noticeable for airlines that cater to leisure travel and lower prices, such as Allegiant, Frontier and Spirit, the analysts predicted.

A renewal looks likely

The monthly payments will end in December — but Cowen analysts are betting that they will be renewed. In the note, they said they expect the one-year program will be extended through 2025 through a reconciliation bill.

In the note, the analysts cited the size and scope of the government program, which is intended to fight childhood poverty. They called it a “huge policy change” that acts as “universal basic income for low-middle income parents.”

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PepsiCo and Conagra plan to battle rising costs with higher prices

A shopper reaching for a bottle of Diet Pepsi soda in a grocery store in Atlanta, Georgia.

Chris Rank | Bloomberg | Getty Images

PepsiCo and Conagra Brands said Tuesday they plan to pass along higher input costs to customers as inflation accelerates.

Earlier in the day, the Department of Labor reported that the consumer price index jumped 5.4% in June compared with a year ago. It’s the biggest monthly gain since August 2008. Food prices rose 0.8%.

The Federal Reserve’s current position is that these inflationary pressures are “transitory,” although the central bank’s New York district found that consumers have different expectations. Maybe that’s because they’ll soon see higher prices on products like Slim Jim jerky and Orville Redenbacher popcorn, which are owned by Conagra.

Conagra CEO Sean Connolly said in a statement that the company has upgraded its existing plans to respond to higher input costs. He explained that inflation accelerated during the fiscal fourth quarter ended May 30, leading the company to expect materially higher costs than it did at the end of its fiscal third quarter in late February.

“While we are pleased with the initial results, there will be a lag between the time we are hit with higher costs and when we realize the benefits of our actions,” Connolly said.

The delay is expected to hit Conagra’s results over the next six months, leading the company to cut its fiscal 2022 forecast. The news hit Conagra’s stock, dragging shares down by more than 4% despite the company reporting better-than-expected quarterly earnings and revenue. The stock has fallen 5% this year, lowering its market value to $16.5 billion.

Pepsi is also seeing higher costs for some ingredients, freight and labor. During a conference call Tuesday, CEO Ramon Laguarta told analysts that the company thinks it can manage the higher costs through a combination of higher prices and increased productivity. CFO Hugh Johnston said Pepsi expects to keep hiking prices after Labor Day.

Pepsi executives made similar comments on the prior quarter’s conference call, although inflation has accelerated since then. Luckily for Pepsi, its ingredient basket is diverse, and no single commodity accounts for more than a tenth of the basket.

Shares of the beverage and snack maker rose more than 2% to reach an all-time high after the company’s second-quarter earnings crushed Wall Street’s estimates. The company also raised its forecast as consumers returned to restaurants and movie theaters. The stock is up 3% this year, giving it a market value of $212 billion. That’s nearly 13 times the valuation of Conagra.

Inflation is also trickling down to another kind of food buyer: restaurants. Chipotle Mexican Grill CEO Brian Niccol said Tuesday on CNBC’s “Squawk Box” that the burrito chain is seeing some cost pressure.

“Whether or not that is permanent in some of the key inputs for our business is to be determined, but I think the positive is that the supply chain is starting to break through some of the bottlenecks that we were battling throughout Covid,” he said.

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