David is joined by Jim Greenberg, Co-President of Union Confectionery Machinery to discuss the demand for confections and comfort food in the Covid-19 pandemic, and beyond.
About this segment of Blackbird TV
Recorded: March 23, 2021
Published: April 13, 2021
Joining me this morning for this segment of Blackbird TV is Jim Greenberg. Jim is the Co-President of Union Confectionery Machinery, they’re out of Connecticut. Hi Jim, good morning David, how are you? I’m great. I really appreciate you joining me for this segment of Blackbird TV. You’re in a really specialty niche in confectionery machinery and equipment and serve the candy industry. I’d like to ask you this morning, what have you seen through Covid and how has it impacted the various customers that you have an equipment dealer? Well we have a range of customers, from Hershey, Nestle, Mars and Cadbury down to the smallest mom and pop, and we’re seeing tremendous activity in the industry from perspective of consumerism, there’s been a huge shift in consumerism. As we all know, going more so to the E-Commerce platform than would-be traditional brick and mortar stores. But there is going to a vast change in the way in which confectionery has marketed and consumed over the last year for sure. Is it the stay at home orders? What’s driven that change, do you think? Yes, consumption has changed from a preference model to a habitual model and we’re seeing there at-home dining is taking over as the primary form which people are taking their meals, taking snacks, people staying home for breakfast, which before was a very unusual occurrence and now we’re seeing throughout the course of the day, consumption is at home more than ever. And that spills over into the confectionery market to the extent that it’s food, right? Correct. It’s a comfort food, it’s recession proof in many ways. It’s also an indulgence which means that it might be enjoyed on a daily basis. But then there’s also the concept of gifting as well as a variety of other, you know, methods of which confectionery is distributed throughout the country. So sales in their sector have been pretty stable through the pandemic. Have you seen them go up remarkably so and they actually have gone up? I would assume that for capita consumption is actually increased as well. In during the course of the last year, confections have had to fight very hard to maintain their production output just to keep up with demand, which has been no easy task throughout kovid, especially with social distancing. So I zoom back to. October when they cancelled or the Halloween fiasco and the chocolate companies for crying that it was going to ruin their annual sales and crush them if they couldn’t solve this chocolate. But the reality from your perspective looking at the industry very closely is that they’ve had a great increase and a steady inflow of business throughout the pandemic. So were they crying wolf for that? No, they were scared because they were accustomed to a traditional methodology of sales and distribution, and that model change dramatically for them. E-commerce became extremely important, but I believe parents really were the driver in the sales increase that we saw in Halloween this year. Only because parents really felt they wanted to give their children a normal Halloween and not deprive them of that in the midst of Covid. Fascinating, so from the dealer’s perspective, from an equipment perspective, how have your sales been at Union and have you seen things change through the pandemic? We have and of course we’re involved with multiple sides of the equipment marketplace, both new machinery and used machinery, we’re having difficulty maintaining inventory with chocolate equipment because the demand is tremendously high. A lot of that is driven by the small and mid cap players in the marketplace. We’re actually doing a fair amount of contract manufacturing for larger companies. Wow! Let’s talk about that for just a minute, you had indicated earlier when we started that you have these huge companies with names that everyone knows, and then there’s the small players and it makes me think about just the little chocolatiers that are here where I am in Western New York, and there’s gotta be those small chocolate shops in every city and every town in America. How did the pandemic hurt or help them at a real small level? Well, that’s really a meandering conversation at the beginning I had accepted that so many of our smaller customers will find themselves in bankruptcy or just voluntary shutdown because they weren’t able to maintain their sales with walkup business being almost impossible with Covid restrictions, however, they went through a period of time when they pivoted and decided that survival was going to require them to innovate, and many of them moved to a model where they actually did home deliveries or they built out an E-Commerce platform very quickly in order to accommodate their needs. We saw that in so many industries and it’s a great survival of the fitness test. Really, where where many many industries and so many people that I’ve talked to here on these types of interviews have had similar stories about just the change, and you know, you just change your direction, do things a little bit differently and you persevere and you get through it. And earlier you had said that you expected there to be a wave of bankruptcies and failures and you know the gloom and doom and we anticipated it here and just didn’t see it. And to the contrary, and you’re seeing it in the confectionery industry, there’s there’s a lack of equipment because supply chains are broken and people can’t get parts, and it’s just that’s the aftermath of this thing that I don’t think anybody really anticipated. How long do you think it’s going to take to work all those kinks out of the system? I think we’re going to probably see at least a year’s worth of difficulty, most of it from offshore shipping lines where the supply is way outstripping the demands, there’s clogging at the ports, the customs clearance process has been delayed dramatically. Construction material, manufacturing material, now we’re talking about chips in the automotive industry, all of these things are going to impact sales, distribution, you name it, from top to bottom throughout the supply chain. You think another year? I believe so. Yeah, that seems to be the consensus right now, but it’s nice because things are humming along and we’re getting used to the way we have to behave and maneuver throughout the business cycles, and I think that it’s going to be all uphill from this point, and I’m looking forward to those things. Where do you see the chocolate industry headed now? We see a tremendous amount of innovation at this point. It’s coming from the largest companies quite honestly, and they’re reaching out through, you know, digital touches to consumers because they want to reach their habits as well as their preferences. And there’s a big difference between preference and habit. Preference, of course, being what you want, and habit being what you actually purchase, and when you consume it, and right now at-home purchasing through Amazon and other e-commerce sites, is at an all time high and chocolate companies and confectionery companies are playing deeply into that game in order to increase their sales. Jim can’t thank you enough for your time this morning. Have a great day. Thank you.