With less than two months to go until the end of 2021, grocery distributors and supermarkets are gearing up for a hectic year-end season. They will have to overcome many challenges due to the impact of Covid on the supply chain, and uncertainty prevails. How far will the crisis go? Will the grocery and supermarket industry soon see the light at the end of the tunnel? Abasto interviewed Gus Lebiak, president and COO of Krasdale Foods, one of the largest grocery distributors in Metro New York. This seasoned executive offers an analysis of what lies ahead for this sector of the economy.
Lebiak assumed leadership of Krasdale Foods on January 1 of this year. He is a food industry veteran with over 40 years of experience, and his educational background includes an MBA in Corporate Finance.
He began his career working in-store at Mayfair Supermarkets before moving to the wholesale side of the business as a category manager at Twin County Grocers. Lebiak helped launch Allegiance Retail Services, a grocery cooperative, serving as grocery manager and then as vice president of central store. Eight years ago, he joined Krasdale Foods. In 2019 he had taken over as COO of Alpha 1 Marketing, a subsidiary of Krasdale, and was later named president.
Abasto Magazine: How has Krasdale fared during this past year, primarily due to the pandemic?
Gus Lebiak: I think we supplied our customers better than our major competitors because we concentrated on our independent supermarkets, we focused on our ethnic supermarkets. We have accomplished a lot this year. With the City of New York, we extended our lease and started the largest solar energy project in the Bronx. Although it has been difficult, we have done a good job during the pandemic.
The industry as a whole is suffering, and there are two important things right now. There are supply issues because initially, during Covid, it was a demand issue. There was unprecedented demand. Now you see supply problems; vendors can’t supply because they are running out of materials like cans, caps, or concentrates from China. Also, there is a severe labor shortage in factories and stores, and, of course, there is a shortage of drivers as far as trucking is concerned.
AM: The year-end holiday season is approaching, and families are desperately looking for a bit of normalcy. Do you think supermarkets will see a lot more traffic this season with customers eager to shop for family celebrations?
GB: I think we’re going to have a tough holiday season. I think we will get through it, and I don’t think people will starve, but I think people will maybe switch brands or get what they can. The other problem is that we don’t know how Covid is going to affect the holiday season. What will the demand be like this year? Also, what the demand will be like in the face of supply shortages across the country. We’re doing everything we can to increase our stocks, but obviously, it’s unprecedented times from what we’ve talked to everybody.
AM: Do you think the ongoing supply chain disruptions and rising food prices will be a long-term problem, or will there be light at the end of the tunnel soon?
GB: This is the reality of the business right now, and we adapt as fast as we can, but it’s not uncommon for a truck that’s supposed to arrive today to show up a day late. It’s not unusual for a supplier to show up a week late. It’s not uncommon for a truck that’s supposed to have 2,000 cases to show up with 300 or 400 cases.
This happens throughout the industry and to all wholesalers. And I think it’s something we’re going to have to ride out until things get better, and I anticipate that it’s probably going to get a little bit worse before it gets better.
I think inflation is going to get worse. I think inflation is here to stay and will probably continue, and it’s undoubtedly causing price increases throughout the industry. And, of course, we would love to lower prices for consumers, but there is no way that you can absorb all these increases with the same margins that a supermarket operates with.
That’s why ultimately, those increases are going to be passed on to the consumer, that’s the unpleasant reality of inflation, and the industry has no choice.
AM: What recommendations can you offer to independent grocery store owners facing restocking issues, rising food prices, and labor shortages?
GB: A lot has to do with who they partner with. At Krasdale, we spend a lot of time helping them deal with government regulation, helping them solve problems in their stores, being the second set of eyes by being there, and focusing our business just on them, not the big chains. And I think you really have to be with a partner who can help you navigate this because it’s pretty hard for an independent to do this alone. But the best recommendation I can offer you is that you have to adapt to the circumstances because they’re constantly changing.
AM: Krasdale Foods serves many Hispanic supermarkets and supplies them with many Hispanic products. How do you see the growth of this sector of the industry?
GB: In my opinion, Hispanic products will continue to gain ground, and I think the interesting thing is that not only within the Hispanic community, but other communities are curious about those foods. I think we’re going to see that more and more.
As far as specializing in Hispanic food, I think there is no other way but to grow.
AM: We are on the verge of 2022; what does Krasdale foresee for the new year?
GB: Trends are really hard to predict at this point if you’re thinking tactically or strategically; tactically, you’re looking at short-term conditions, and in short-term situations, whether it’s labor, product supply, the general state of the country, they’re very unstable right now. Also, we’re always working strategically on what we want to get involved in or change. In the long term, whether we’re looking to buy other businesses or get involved in other parts of the sector, those are things that Krasdale will be looking at in the future so that we have more ways to serve our retail customers better.