The marketing year that ended in June 2021 was unlike any year the potato industry has ever experienced. Starting in July 2020, pandemic restrictions were in full force, which led to greatly reduced sales at foodservice and, in turn, reductions in contract acreage by the frozen processors. Retail purchases remained extremely strong, though after the initial wave of panic buying was over, shelves were once again relatively full.
As the year progressed, restrictions started to lift, particularly in the spring of 2021 as vaccinations became fully available. At this time, foodservice demand began to return, especially at quick-service restaurants and other takeout and delivery formats. Retail sales remained well above 2019’s totals but were not at the extremes of the March to June 2020 timeframe.
To help the industry understand the demand for domestically produced potatoes and better understand the sales in the domestic market, Potatoes USA conducts an annual sales and utilization study. This study utilizes retail data from IRI, estimated foodservice sales from Technomics, and import and export data to provide additional clarity of domestically produced potatoes.
The results showed an overall decline of U.S. potato use for the July 2020 to June 2021 marketing year. To be more specific, there was a 6 percent decrease in the fresh weight equivalent volume. This decrease was due to an 8 percent decline in sales to foodservice and the leveling of retail sales from the peak panic buying at the end of the previous marketing year. This year’s tight supplies of U.S. potatoes, particularly frozen products, were made up for with a 12 percent increase in total imports.
While markets are settling into a new normal, it is important to remember that demand for potatoes remains strong.
Despite the uncertainties in the international markets and the extreme problems with international shipping, U.S. potato exports increased by 4 percent for the marketing year. The rebound in exports was led by a 9 percent increase in fresh potatoes, a 10 percent increase in potato chips, and a 2 percent increase in frozen exports, which accounted for 51 percent of the total. The only product to decline was dehydrated potatoes (down by 4 percent.)
Forty percent of U.S.-grown potatoes were utilized for frozen processing, followed by fresh processing at 25 percent, chip processing at 23 percent, and dehydrated processing at 7 percent. Production of dehydrated potatoes suffered from tight raw product supplies and serious labor issues at the plants.
Looking at sales of potatoes in the domestic market, comprised of domestically produced potatoes as well as imports, retail sales are up compared to three and five years ago, but the declines at foodservice were too great to overcome. For the past 20 years, the trend has been for more and more sales to go through foodservice compared to retail. This trend has been reversed the past two years, but it is expected that foodservice will begin to account for an ever greater share, though not right away.
Total sales at retail were down less than 1 percent, primarily caused by a 2 percent drop in fresh potatoes and chips, as sales in the spring of 2021 did not meet the extreme sales during the panic buying in the spring of 2020. Positively impacting this were sales of frozen products (up by 5 percent) and sales of refrigerated products (up by 5 percent).
Foodservice had an 8 percent decline in total sales, but frozen potato sales were only down by 4 percent, because the quick-service restaurant sector was able to recover the fastest as consumers continued to order fries as a takeout item. Fresh potato sales were down by 11 percent as full-service restaurants have suffered greatly from restrictions and now labor shortages. Chip sales were down by 19 percent as the beyond-restaurant sector had the largest decline overall and loose chips from large bags were replaced by the single-serving bags, which contain less volume.
While markets are settling into a new normal, it is very important to remember that demand for potatoes remains strong, and potatoes are the No. 1 vegetable at retail, the top side dish at restaurants, and America’s favorite vegetable.