You know the supply chain crisis is getting real when you write a $310,000 check for a truckload of whey protein this week, that same truckload cost $231,000 a couple weeks ago, and just $119,000 for the same product earlier this year. I've heard of supersizing French fries, but we're about to experience supersized inflation.
Whey protein concentrate (WPC) seems to be leveling off at its all-time high, but it’s hard to tell because dairy factories aren’t giving commitments into 2022 yet. WPC reached a peak about 5 weeks ago, and seems to have stabilized at a ridiculously high price, although there is no sign yet of it dropping. WPI has hit a peak, and hasn’t moved too much in the last few weeks. Once again, this doesn’t mean very much, because forecasting into 2022 is not yet possible. Internationally, whey protein is still spiking and exports are causing supply issues, which can still drive the cost up higher. At least it has been stable for a few weeks. These record high costs are not good news for consumers. As brands sell out of their older stock and reorder at the higher COGS, you can expect to feel the hit on store shelves. A 5-pound isolate could hit as high as $120 retail. Will the consumer pay it? I doubt it, but as an industry we’ll soon be finding out.
FedEx has announced its largest annual rate increase since 2013. Increasing FedEx Express, Ground, home delivery shipping rates by an average of 5.9%. In addition, the carrier is implementing a $1.00 surcharge on all Ground Economy deliveries and returns, and is upping the fuel surcharge by 1.75 points. Domestic freight is still at a high, and where we were making up some of the cost on rail, but that has ended. It seems they caught on that they were the cheap guys in town, so they raised their prices.
I talk a lot about the supply chain crisis in the dietary supplement industry, but it’s really no different than any other industry. The crisis is affecting everyone, and what amazes me is that we really don’t hear much about it in the news. General Motors shut down most of its factories temporarily, and even that didn’t make the news. Our politicians are not getting involved. I’m not sure if there is anything they can do about it, but ignoring it definitely won’t help.
I stopped by the men’s department at Bloomingdale’s last week. I walked the floor: Canali, All Saints, Theory, Boss, Varvatos… the shelves were bare. Nothing but leftovers from previous seasons. Look at the pic of the shoe department: nothing on display. They told me the stockroom has been empty all year. They removed 80% of their clothing racks because they have no inventory. The salesman, who usually has everything set aside for me, had nothing. He was practically crying. It was sad.
It’s the same story everywhere I look. I have a new facility waiting to be built out, but we haven’t gotten far because nothing is available. I’ve been waiting 22 weeks for lights, the electric panels and transformers have been on backorder, forklifts are 50 plus weeks out, and on and on. Trying to find another 26-foot box truck to purchase is harder than winning the lottery; it’s not happening. Every restaurant I go into is missing staff and using only a percentage of its capacity. Every business owner I speak with, no matter where in the country they are or what industry they’re in, is down 10–30% of their workforce, and can’t get in machine parts, electronics and raw materials.
Yet, I read the economic numbers released by our government and all is well. I just don’t get it. It’s all smoke and mirrors. Every month I get a census from the federal government, asking for my retail sales figures and inventory. It bases its projections on these phone calls. What a joke. Prices are rising on everything, and it doesn’t take some windbag Harvard economist to realize that serious inflation will follow.