Mexico tomato exports grow (APPH)
Mexico reached a new high for tomato exports in 2020 with a growth of 20.6% YOY. The export crop reached $2.6B while volumes decreased 1.6% to 1.82M tons. So far in Q1, the trend has continued with annual growth of 5.1%, reaching $830M. In volume, the crop grew 9.2% to 579,000 tons. Mexico specializes in greenhouse tomato production, primarily in Roma tomatoes. The growing area of greenhouse tomatoes in Mexico is greater than Canada's and the U.S. combined. Mexico has a 57% share of greenhouse vegetable sales in North America. Tomatoes are the most widely produced vegetable in Mexico.
The U.S. Department of Agriculture Foreign Agricultural Service projects a slight increase in Mexican tomato output for the 2021-2022 marketing season. The agency said reopening on-premise businesses, the certainty from the newly negotiated U.S. – Mexico Tomato Suspension Agreement, and good export prices had encouraged more tomato planting. It makes sense for AppHarvest to diversify crops away from tomatoes, but it also demonstrates the competitiveness of existing production.
A gradual return to the office (KR)
According to Kastle Systems, its 10 cities average occupancy rate for office buildings was 29.0% for the week ended June 2nd. That was flat to the prior week, as seen in the chart below. Kastle’s occupancy barometer reflects access swipes to the offices it provides control systems. Kastle has customers in more than 2,600 buildings in 138 cities. Since April 21, the 10 city average occupancy has only improved by 2.9% points. Of the ten largest cities Austin, Dallas, and Houston had the largest improvement in the past month, averaging a 3.6% point increase. The smallest improvements in the past month were in San Francisco, San Jose, and Los Angeles, which averaged less than a 1% point increase. According to the Labor Department data released on Friday, the percentage of people working from home decreased to a new post-COVID19 low of 16.6% in May from 18.3% in April. According to The Conference Board, nearly 40% of organizations expected 40% or more of their workforce would work remotely. Before the pandemic, about 75% of organizations had fewer than 10% of their workforce working from home.
The return to the office will determine how much of the food consumption shift from on-premise to off-premise is permanent. Many companies have begun announcing plans to return to the office. The return so far has been at a modest pace, which means the headwind for grocers will stretch into late 2022 at the earliest.
More grocery store traffic (ACI)
During most of the pandemic, foot traffic to grocery stores declined as consumers consolidated their shopping trips. With increasing vaccinations and easing of restrictions, grocery shopping behavior is returning to pre-pandemic ways. Foot traffic declines to grocery stores worsened in the first half of March, as seen in the following chart from Placer.ai. Traffic was made worse by winter storms in the Central U.S. Then, when we anniversary the stockpiling period early in the pandemic, foot traffic recovered against easy comparisons. More frequent shopping trips should lead to an improvement in departments like prepared foods. Fewer online orders would make it difficult to stem e-commerce margin dilution.
