The COVID-19 pandemic is far from over, with new cases in the United States steady and unemployment still high. While some sectors, such as food and supplements manufacturing, have thrived during the crisis, other industries continue to struggle. At this point, we’ve entered what appears to be a “new normal.”
Restaurants Risk Default
According to S&P Global Market Intelligence, the probability that many U.S. restaurants will default has soared.
The median one-year market signal probability of default rose above 30% for U.S. restaurants in April before falling to 24% by May 18, the market data firm said in a recent report. That figure was less than 5% at the beginning of 2020.
The FDA Lightens up on Labels
After hitting pause on routine domestic and foreign inspections, the U.S. Food and Drug Administration (FDA) announced it’s temporarily easing food labeling rules on certain packaged foods. This change allows restaurants and other foodservice operations facing slowdowns to reroute excess food to retailers and wholesalers.
“Similar to the situation in restaurants, food manufacturers may have inventory on hand that is labeled for use in restaurants that is no longer being purchased by those operations,” the FDA explained in their published guidance. “In addition, because many manufacturers practice ‘just in time’ manufacturing, they may have sufficient ingredients on hand to produce additional product but not enough packaging materials to label the product for retail sale.”
The FDA is also allowing restaurants to sell food and ingredients to manufacturers and consumers, even though those products are labeled differently.
The FDA adds in the guidance that any sold items must:
Make no nutrition claims.
Include a statement of identity.
Have an ingredient statement.
List the name and place of business of the food manufacturer, packer, or distributor, and the net quantity.
Include allergen information as mandated by the Food Allergen Labeling and Consumer Protection Act.
The agency is letting restaurants make labels or use labels provided by manufacturers.
Manufacturing Decline Slows
Gardner Research, a Cincinnati market research firm, has been polling manufacturers since March to gauge the ongoing fallout from COVID-19’s global spread.
May’s reading moved significantly higher from April’s all-time low. The latest reading implies that overall manufacturing business conditions worsened further in May, but at a much slower rate than in April.
For the first time since the beginning of the COVID-19 crisis in the United States, the reading for supplier deliveries fell. As previously reported, slowing deliveries result in higher readings for this component of the index. The four-point decline in the May reading might be an early indicator that the upstream production disruptions experienced in recent months are finally falling.
TraceGains can help automate the complicated process of finding, onboarding, and managing suppliers with Supplier Management for food, beverage, and supplements manufacturers facing supply chain disruption. And if you’re a supplier, there’s never been a better time to get your items in front of new customers on TraceGains Network.