Empty shelves and price hikes: Here are the shortages we saw this year and what got more expensive

2021-12-30 04:39:04 By : Ms. Coco Zhang

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From chicken wings to Christmas trees, it seems like there was a new shortage around every corner of 2021. Some of the shortages occurred due to supply chain issues that had barges of products stalling at ports across the world, while some things were harder to find because demand reached new highs.

Aside from shortages, supply chain issues, high demand and inflation created the perfect storm that sent prices up. Numerous items — from toiletries to comfort foods — got more expensive this year and several companies warned customers of higher prices in the future.

Here's a look at what was hard to find this year and what got more expensive:

The price of wings fluctuates during the year, like many other foods. But typically, wing prices hit their annual peak in the weeks leading up to the Super Bowl and then decline.

Not this year. Supply chain disruptions and consistently high demand for wings sent restaurants scrambling to get their usual inventory.

Wing prices hit their usual peak in February but then stayed there as some poultry plants closed or slowed due to COVID-19 outbreaks.

Some restaurant owners made the temporary switch to boneless wings made from breast meat, while others were forced to switch to smaller frozen wings. To serve fresh bone-in wings, restaurants either cut their profits, raised their prices or both.

In the face of shortages, the Quebec Maple Syrup Producers, a leading trade group, said it would release roughly 50 million pounds from its strategic maple syrup reserves, almost half of the stockpile, Bloomberg first reported in November.

The government-supported organization, which is often called the OPEC of maple syrup, uses its reserves to control syrup prices and supply. As of 2020, Quebec produced 73% of all maple syrup in the world, and its biggest customer by far is the United States, which accounts for around 60% of Canada's export volume.

The strategic reserve was created to keep maple syrup in stock during bad harvest seasons or when demand spikes. That is the case right now following a hot and short spring that led to a lower yield. Historically, 2021 was an average year for maple production in Quebec, with a harvest estimated at 133 million pounds, but sales rose 21% compared to last year, straining the available supply.

Demand for appearances by Santa Claus at parties, parades and other events skyrocketed during the holiday season while the number of trained and available Santas went down.

Companies that provide Santas for holiday events were scrambling to meet the demand, according to Mitch Allen, founder and head elf at Hire Santa, a company based in Fort Worth, Texas, which helps clients book Santas across the country. Allen said his company had 10% fewer Santa Clauses available this year while requests for Santas more than doubled when compared to pre-pandemic levels.

"There's a huge demand," Allen said. "We've been sold out on weekends for over a month, which is unusual. Usually, we get sold out after Thanksgiving."

Allen attributed the surge in demand to event planners who were weary of the lingering pandemic and wanted to brighten holiday festivities to make up for lost time.

The shortage might not have been apparent at shopping malls because a lot of malls booked Santas in the first quarter of the year, Allen said. But some retailers' crop of Santas were stretched thin, meaning they had to ask Santas to work longer shifts or limit the hours they were available to the public, he said.

Even the Christmas Tree Capital of the World faced a shortage this year, although it was not related to the pandemic.

In Indiana County, Pennsylvania, the number of farmers has dropped dramatically.

"In the early 1960s there were about 200 tree farms," Gregg Van Horn, president of the Indiana County Christmas Tree Growers Association said. "Now there are just five or six of us."

Van Horn said the shortage has been building for decades, starting with the recession in the late 2000s that lead to a shortage of seeds and a dramatic price increase.

Van Horn said the remaining farmers in the county aren't exporting as many trees to larger companies and instead choosing to only sell them on their own.

Because of that limited supply, Van Horn estimated the price for a live tree could go up close to 30%.

The limited supply is not expected to have a major impact on the availability of trees this year, but Van Horn expects next year to be a challenge before stabilizing once again.

"Five years from now there will probably be trees everywhere and it will be like it was 5 to 10 years ago when we were practically giving trees away," Van Horn said.

This year, hospitals scrambled to cover shifts as health care workers exhausted by the pandemic resigned.

School districts struggled to get students to class due to an ongoing bus driver shortage.

Truck driving shortages complicated an already-hectic supply chain.

Retailers and restaurants were forced to cut hours due to a lack of workers and got creative to serve customers.

Earlier this year, business leaders and politicians called for an end to a $300-a-week federal supplement for unemployed Americans. Many people, they argued, would then come off the sidelines and take the millions of jobs that employers were desperate to fill.

Labor shortages persisted longer than many economists expected, deepening a mystery at the heart of the job market.

Economists point to a range of factors that are likely keeping millions of former recipients of federal jobless aid from returning to the workforce. Many Americans in public-facing jobs still fear contracting COVID-19, for example. Some families lack child care.

Indeed, the pandemic appears to have caused a re-evaluation of priorities, with some people deciding to spend more time with family and others insistent on working remotely or gaining more flexible hours. Some workers decided to retire earlier than they had planned.

Although January is the golden month for markdowns and scoring some serious savings, don't count on it this year. Retailers are struggling with tighter inventory and plenty of out-of-stock products heading into the peak gift-buying period.

Black Friday shoppers noticed that their favorite stores were not as generous with holiday discounts this year as they typically have been. Plus, there was no need to incentivize shoppers with irresistible sales when consumers' appetite for shopping remains strong.

Now, retailers are signaling they might use tactics other than discounting for the products they couldn't sell before the New Year.

With nearly 50% of its holiday products delayed ahead of Black Friday because of supply chain problems, Victoria's Secret said during its recent earnings call that it is likely to have a lot of pajama sets, robes and slippers that didn't get to stores by Christmas.

But don't count on those items falling straight into the clearance bin in January.

"We do think that we will have higher carryover of merchandise like PJs and robes and other things into January than we've had in previous years. And we're kind of OK about that because we know that last year, we left money on the table in January," Victoria's Secret CEO Martin Waters said during the call.

Waters said the retailer would see how selling at full price performs during that period. "I don't feel overly stressed about markdowns," he said.

The owner of Jasper Winery in Iowa thought shutting down during the pandemic would be his biggest challenge.

In October, Mason Groben started having trouble finding wine bottles.

He said a glass shortage is expected to last into next year.

"And our glass supplier has told me about that, and the biggest thing is that for the first time in 20 years of making wine I've had to sign a contract for the entire next year to secure my glass,” Groben said.

Much of Groben's glass bottle stock comes from China and Mexico. Because 80% of his wine ends up in bottles, Groben got creative and offered more wine in cans and has used different sizes of glass bottles.

“It’s a whole new challenge. We just do our best to adapt and plan ahead,” Groben said.

This spring, climbing lumber costs sent home prices soaring.

Because the pandemic crushed the U.S. economy last year, sawmills shut down lumber production to brace for a housing slump. The slump never arrived and then, there isn't enough lumber to feed the red-hot housing market.

The shortage delayed construction of new homes, complicated renovations of existing ones and caused sticker shock for buyers in an already a scorching market.

"I've never seen anything quite like this," said Brant Chesson, the president and CEO of Homes By Dickerson, a Raleigh, North Carolina-based home builder.

Chesson said his company wanted to build more homes to meet surging demand but couldn't find the materials, or labor, to do so.

Petrochemical companies were also shaken by the pandemic and supply chain ripple effects. The industry saw disruptions in production and price hikes for things like the plastic pellets that go into a vast universe of products, cereal bags, medical devices, automotive interiors and bicycle helmets.

At one point this year, the price of polyvinyl chloride or PVC, used for pipes, medical devices, credit cards, vinyl records and more, rocketed 70%. The price of epoxy resins, used for coatings, adhesives and paints, soared 170%. Ethylene — arguably the world's most important chemical, used in everything from food packaging to antifreeze to polyester — surged 43%.

Companies were scrambling to acquire raw materials and parts to meet surging orders. Panic buying worsened the shortages as companies rushed to stock up while they could.

The shortages slowed production at two leading paint makers, Sherwin-Williams and PPG. Both raised prices as a result.

New car sales plunged in the United States despite strong demand, as the shortage of computer chips and other supply chain issues caused shutdowns at auto factories and choked off the supply of vehicles.

Automakers pointed to semiconductor supply chain disruptions and historically low inventories as a problem for sales.

The shortage of vehicles led to record-high prices for both new and used cars for much of this year and some buyers were priced out of the new car market.

The auto industry has been dealing with a shortage of computer chips needed to build cars for more than a year. GM said it expected the situation to improve in the final three months of 2021, but earlier this year automakers had hoped things would have improved by this point. Instead, GM was forced to temporarily shut production of most of its North American plants.

The computer chip shortage started when auto sales plunged in the early weeks of the pandemic, due to record job losses and the temporary closure of many factories and dealerships. Most automakers, expecting a prolonged downturn in sales, trimmed orders for computer chips and other parts. When sales rebounded much faster than anyone expected, the supply of chips had already gone to other customers.

While the automakers expected to be able to increase their supply of chips by the middle of this year, they were hit by outbreaks of COVID-19 cases in other regions, such as Southeast Asia, where many of the chip plants were shut. And other supply chain issues, including an imbalance of shipping containers and congestion at the nation's ports, a shortage of truck drivers and general labor shortages, started limiting supplies of other needed parts and raw materials.

Experts warned parents of shortages of back-to-school items this year, sending some scrambling for backpacks, stationary, laptops and sports equipment.

Shoppers appeared to have gotten the news about impending shortages, and hit stores earlier than usual, said Rod Sides, vice chairman and U.S. retail lead with Deloitte.

In response, many retailers and brands tried a variety of ways to mitigate the shortages, including trying to bring in inventory on airplanes instead of by ship.

If you were lucky enough to find a rental car in the midst of the pandemic, you had to be ready to pay.

Earlier this year, one Massachusetts couple said the rental car they booked for their honeymoon tripled in price despite having a reservation.

Ben Gerardi and Megan Landroche initially reserved a convertible rental car through their travel agent for $445.

Their agent eventually canceled the reserved car to look at new rental rates, which the couple did not authorize, and their trip hit a bump in the road: They couldn't find a replacement rental.

As the pandemic brought travel to a standstill last year, rental car companies sold off thousands of vehicles to raise cash. By some estimates, they sold as much as a third of the nation's rental car fleet, which won't be replenished until next year. That led to shortages in some markets and revved up prices big time.

The couple was told it would cost them $1,300 to reserve the same car that they had lined up before.

Their travel agency eventually resolved the problem and gave them a credit towards a rental.

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This year hackers unleashed cyberattacks against pipelines, ferry boats, meat packers, even police departments. And then, they came for the cream cheese.

In October, a cyberattack against the largest U.S. cheese manufacturer contributed to a nationwide cream cheese shortage shortly before the holidays, Bloomberg News reported, endangering holiday treats for millions.

Bloomberg reported the attack targeted plants and distribution centers. As a result, Wisconsin-based Schreiber Foods was unable to fully operate for several days — just as it was heading into its peak busy period before the Thanksgiving, Hanukkah and Christmas holidays.

The company is one of the country's largest marketers for dairy products, including cheese slices, yogurt and the all-important cream cheese, with annual sales of more than $5 billion.

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The brutally-timed attack compounded existing problems: Schreiber Foods said every cream cheese producer was already struggling to keep up adequate supply.

Even before the cyberattack and holiday demand peak, manufacturers were struggling because of labor shortages and supply chain disruptions for raw materials, packaging and trucking. Cream cheese isn't like some other goods that can be stockpiled. No one keeps huge globs of it on hand, and there's certainly no strategic reserve for cream cheese, as there is for oil in the United States and maple syrup in Canada.

"While that [cyberattack] event definitely didn't help matters, it's really world events that are the biggest driver of what's happening with cream cheese," said Andrew Tobisch, communications director for Schreiber Foods.

The company said it expects the shortage to be short-lived, Tobisch said. But it will take "a little more time" to resolve, he added, though he did not supply a time frame.

Last year, demand for cream cheese jumped 18% compared to 2019, as more people were baking at home during shutdowns. Kraft said it's stayed at that high level in 2021.

The cream cheese shortage has pushed restaurants and suppliers to get creative. For example Kraft, which owns Philadelphia cream cheese, recently said it would reimburse some customers who buy a different dessert because they can't find cream cheese in time to make holiday cheesecake.

And Junior's Cheesecake in New York, which typically goes through 4 million pounds of cream cheese a year to make its signature product, was forced to occasionally pause production of its famous cheesecakes due to the shortage. New York City bagel shops also reportedly struggled to get enough supply.

Aside from shortages, what got more expensive? Here are some of the things you'll have to make more room for in your budget.

Dollar Tree — one of America's last remaining true dollar stores — announced this year that it will raise prices from $1 to $1.25 on the majority of its products by the first quarter of 2022. The change is a sign of the pressures low-cost retailers face holding down prices during a period of rising inflation.

Dollar Tree said in a quarterly earnings release that its decision to raise prices to $1.25 permanently, however, was "not a reaction to short-term or transitory market conditions."

Selling stuff strictly for $1 hampered Dollar Tree, the company said, and forced it to stop selling some "customer favorites." Raising prices will give Dollar Tree more flexibility to reintroduce those items, expand its selection and bring new products and sizes to its stores.

Dollar Tree also said that hiking prices will help the company increase its profit margins by "mitigating historically high merchandise cost increases," including freight and distribution costs, as well as wage increases.

"This is the appropriate time to shift away from the constraints of the $1 price point," CEO Michael Witynski said in a statement.

Dollar Tree has sold products at $1 for 35 years and was the last of the major dollar store chains to actually be a dollar store.

Ball Corp., one of the world's largest suppliers of aluminum cans, sent shockwaves throughout the craft beer world after lifting the minimum number of cans certain producers must order and announcing price hikes.

Ball said it would require that non-contract customers — who include many smaller breweries — order no fewer than five truckloads (roughly 1.02 million cans) per each of their beverages starting on Jan. 1. The previous purchase minimum was one truckload per product.

Additionally, starting in 2022, Ball wrote that it will no longer be able to store excess cans from those non-contract customers in its warehouses and that the price-per-can would increase by nearly 50% for at least some non-contract customers, according to notices sent to breweries.

The news sent small and regional breweries scrambling to secure cans and spurred fears of heftier costs, reduced variety and higher prices for consumers.

"I do see this as an economic killer for some, and certainly most small brewers are going to have to raise prices significantly or rethink their entire models," said Garrett Marrero, chief executive officer and co-founder of Maui Brewing Co. in Hawaii.

The tight-knit craft beer industry was already reeling from pandemic-spurred restaurant and taproom closures, inflationary pressures, can shortages and other supply chain disruptions.

General Mills notified retail customers that it's raising prices in mid-January on hundreds of items across dozens of brands. They include Annie's, Progresso, Yoplait, Fruit Roll-Ups, Betty Crocker, Pillsbury, Cheerios, Cinnamon Toast Crunch, Lucky Charm's, Wheaties, Reese's Puffs, Trix and more, according to letters General Mills sent to at least one major regional wholesale supplier.

For some items, prices will go up by around 20% beginning next year.

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General Mills said in the letters that it was responding to higher materials and labor costs.

"The current operating environment is as dynamic as we've experienced in at least a decade, resulting in significant input cost inflation, labor shortages, and challenges servicing the business," General Mills said.

Tyson Foods, Conagra and Kraft Heinz notified their retail customers this year that they would raise prices in January for some frozen and refrigerated meats. Products that will see increases include Ball Park hot dogs and burgers, State Fair corn dogs, Jimmy Dean frozen breakfast, Hillshire Farm sausage and lunch meat, and Hebrew National and Oscar Mayer hot dogs, according to supplier letters to wholesale customers viewed by CNN Business.

Prices for higher-end meat cuts like steak, veal and pork chops surged over the past year. But prices for cheaper meats like ground beef and lunch meat went up more slowly, while hot dog prices were actually 1.2% lower in September than they were at the same time last year, according to the latest data from the Bureau of Labor Statistics.

Cotton prices jumped to fresh 10-year highs this year, climbing to their Cotton futures highest levels since September 2011.

The cotton spike could eventually be passed along to consumers in the form of higher prices on jeans, T-shirts and other clothing.

Consumer prices on apparel were already on the rise and the rally in cotton futures could drive prices even higher.

Apparel prices climbed 4.2% during the 12 months that ended in August, according to the government inflation report. Prices rose even more on men's shirts and sweaters (4.4%), men's pants and shorts (6.6%) and women's dresses (11.9%).

Analysts blamed the cotton rally on several different factors, including extreme weather. Droughts and heat waves wiped out cotton crops in the United States, the world's leading cotton exporter.

"It's a shortage situation. The planting season did not go that well," said Robert Yawger, director of energy futures at Mizuho Securities.

In early October, as fears of a European-style shortage swirled, natural gas hit $6.47 per million British thermal units, the highest level since February 2014.

The hike has since completely reversed. Natural gas eventually fell to $3.66 per million BTU in December, the lowest level since July 15.

Natural gas was driven lower in part by the fact that temperatures across the United States have been warmer than usual. That has eased demand for natural gas, the most common way to heat homes.

Rising prices at the pump eventually led President Joe Biden to announce the biggest-ever release from the Strategic Petroleum Reserve on Nov. 23. Gas prices started to drift lower soon after, but they're still at high levels. The national average is about $3.35 per gallon, compared to $2.16 a year ago.

The Associated Press, CNN and Hearst Television contributed to this report.

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