John Toaspern

Foodservice shutdowns during the coronavirus pandemic fueled a 5.2% drop in utilization of U.S.-grown potatoes for the marketing year that ended June 30, Potatoes USA reported.

The total utilization decline, to about 34.6 billion pounds, takes into account potatoes and potato products sold at retail and in foodservice as well as U.S. export and import volumes.

A 12.6% decrease in foodservice volume and a 2.4% drop in exports outweighed an 8.7% gain in retail sales, Potatoes USA said in a news release. A 6.7% increase in imports also hurt utilization of the U.S. crop.

The decline occurred at the end of the marketing year and was measured against strong sales in the second half of the previous year, the national marketing group said.

Sales of frozen potato products dropped 10% from July 2019 through June 2020. Potatoes USA said COVID-19 restrictions impacted quick-service restaurants less than full-service restaurants, as fresh-potato sales to foodservice fell 19%.

Foodservice sales have been accounting for a greater share of total potato sales in the U.S., peaking at 58% in marketing year 2019. The foodservice share of the marketing year 2020 total dropped to 53%.

Potatoes USA Chief Marketing Officer John Toaspern said foodservice sales recovered somewhat from July through September 2020.

Fry sales at quick-service restaurants increased since spring but remained about 10% below summer 2019. A lack of non-restaurant sales, such as at theme parks and event venues, continued to drag on total fry sales.

Fresh potato sales improved from spring to summer but remained well below year-earlier levels.

“Things have been a little more uncertain this fall,” Toaspern said. “The big question is how quickly the recovery is going to occur, and when restaurants are going to start reopening.”

Demand in the foodservice segment could start to improve in late winter and early spring as the weather warms and as more vaccine gets out to the public, he said.

Idaho Potato Commission Foodservice Vice President Alan Kahn said IPC is “thinking now about, longer term, when things return to a somewhat normal state, how to help our customers drive volume.”

Now, “a significant percentage of the population still does not feel comfortable dining in at a restaurant,” he said. Sit-down restaurants that typically order 40- and 50-count cartons of larger potatoes “are struggling because their business in large part depends on consumers dining inside the restaurant.”

Distributors tell IPC that their business is “completely dynamic” depending on the state they are in and the restrictions imposed on restaurants, Kahn said.

Potatoes USA said retail-sales changes for the marketing year ended June 30 included an increase of 15% for frozen and dehydrated products, a 9.5% gain for fresh — the industry has moved some foodservice-bound fresh potatoes into the retail channel — and a 5.5% increase for chips.

Toaspern said summer retail sales did not match the spring surge but remained 10-15% above year-earlier levels.