The French firm Ÿnsect in Dole grows mealworm larvae into beetles for use in oil, protein sources and fertilizer.Credit: Cyril Marcilhacy/Bloomberg via Getty
Walking into Ÿnsect’s flagship manufacturing site in Dole, eastern France, the first thing that visitors are met with is a hot, earthy, composting smell. With it comes the realization that this is not a typical factory. At 17 metres high, this is the world’s largest vertical insect farm — home to at least 3 trillion mealworm beetles (Tenebrio molitor).
The company’s chief executive and co-founder, Antoine Hubert, says that the beetles have a good life, as far as being an insect goes. Each of their stacked plastic trays is kept at an optimal 60{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} humidity and a balmy 25–27 °C. Nutrition, growth and moisture levels are all recorded for analysis, and human visitors are allowed to inspect the trays only from a distance — to prevent contamination of this prized ecosystem.
The beetles are raised in this way from larvae to adult, at which point they meet a quick death in steam before being harvested into oil, protein and fertilizer.
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Insects have come under the spotlight over the past few years, as scientists seek alternative sources of protein to feed the rapidly expanding global population. A direct nutritional comparison shows that edible insect species have greater protein potential than do conventional meat products — 100 grams of mealworm larvae produces 25 g of protein, whereas 100 g of beef contains 20 g of protein1. Insects also have a high food-conversion ratio when compared with livestock. To produce the same amount of protein, for example, crickets require around six times less feed than do cattle, four times less than sheep, and half that of pigs and chickens2. But various attempts by companies to market insects as a mainstream food source in Europe and North America have fallen flat and largely been dismissed as a fad. And some researchers have concerns about the effects on the environment, ranging from whether escaped insects might disrupt local ecosystems to the impact of insect ‘factories’.
So why farm insects at all? “The world is facing a huge food sustainability crisis,” explains Hubert, an environmental engineer. “Insect protein is one very realistic and obvious solution to mitigating some of those challenges,” he says.
A burger for your burger
With the global population expected to reach almost 10 billion by 2050, United Nations forecasters have warned that food production will also need to increase by as much as 70{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b}.
However, because mealworm burgers are, at the moment, unlikely to sell out in your local supermarket, Ÿnsect grows insects for animal feed. This is given to fish, pigs and poultry, taking the pressure off conventional agricultural land use.
Cattle farming is a target for emissions-reductions measures.Credit: Emmanuel Lattes/Alamy
The use of vertical farming has grown rapidly over the past few years, spurred on, in part, by advances in LED lighting, the cost of which fell by 94{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} between 2008 and 2015. Several start-ups (including Infarm in Berlin and Aerofarms in Newark, New Jersey) use the system to produce vegetables such as lettuce for human consumption. And the global market of the vertical-farming industry is expected to grow from US$3.7 billion in 2021 to $10.5 billion in 2026.
Meanwhile, sales of plant-based alternatives to meat that are designed to reduce the demand for cattle farming — an industry responsible for 65{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} of all livestock emissions — seem to be stalling. When meat-substitute company Beyond Meat in El Segundo, California, went public on the stock market in 2019, its share price rose by 163{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b}. But after the initial excitement, sales slowed, and they have remained about the same since 2020.
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Other companies also seem to be experiencing a slowing of sales. Marlow Foods in Stokesley, UK, which produces the plant-based brands Quorn and Cauldron, reported a 4.8{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} drop in revenues in 2021. Meanwhile, in the United States, plans to roll out plant-based burgers at the fast-food giant McDonalds were quietly shelved at the start of last year (the ‘McPlant’ is still available in the United Kingdom and some other countries).
For now, it seems the desire to reduce carbon footprints has been overtaken by a love of meat. So, could feeding insects to the animals that produce the meat be a solution? Ÿnsect thinks so and says its system is easily scalable.
Over the past decade, the company has grown to become a world leader in breeding mealworms, a practice that it calls molityculture. Ÿnsect’s Dole site has the capacity to produce more than 1,000 tonnes of insect product per year, while using 98{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} less land and 50{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} fewer resources than is currently the case for conventional livestock farming, according to the company. A 2022 study3 suggests that incorporating insects into European diets could reduce water and land use by more than 80{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b}.
The Dole site is the first and largest of its kind, but it will soon be dwarfed by the opening of a site in Amiens, around 100 kilometres north of Paris.
And in March, the company announced the acquisition of commercial mealworm farm Jord Producers in Lindsay, Nebraska — manufacturing the mealworms into Ÿnsect products is due to start at the end this year. Hubert aims to open 15 more plants by the end of the decade. By that time, he anticipates, the company will focus equally on protein for human consumption and for animal feed.
Competition is growing in the insect-farming field. Another French company, nextProtein in Paris, was founded in 2015. Like Ÿnsect, nextProtein wants to tackle the protein gap in animal feed, but it grows black soldier flies (Hermetia illucens) to produce its ground protein product.
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It chose these flies because of their fast-growing larvae — which can increase in size by 10,000 times in the space of 3 weeks — and their resilience to various conditions. Furthermore, the insects are also fed fruit and vegetables that would ordinarily end up in landfill. The nextProtein operation is small but efficient, producing as much protein in 100 square metres as a soya-bean farm does in 100 hectares.
But the huge growth rates of black soldier flies and mealworms might come with risks. “I’ve seen so many problems around the world with invasive species,” says Åsa Berggren, an ecologist at the Swedish University of Agricultural Sciences in Uppsala. “Today, there’s not much regulation on what insects you’re allowed to import. You can bring in insects that threaten local livelihoods and ecosystems if they escape from where they’re being farmed — and they do escape.”
Insect problems
It’s no coincidence that both Ÿnsect and nextProtein are based in France — as Hubert explains, there are clear advantages to doing this kind of work there. Notably, INRAE, France’s National Research Institute for Agriculture, Food and Environment, is the largest agricultural research institute in Europe, with an annual budget of €1 billion (US$1.1 billion) in 2021. “We are well supported here by public investment from funds like [French public investment bank] BPI, also in terms of government and administration,” Hubert says. “We also benefit from top-level French research with public and private institutes.”
But if the companies want to crack the French food market, they might find it difficult. In a country where just 2.2{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} of people say they are vegan, vegetarian or pescatarian, a strong meat lobby dominates, and campaigners have a tough time shifting public attitudes towards giving up meat.
“The meat lobby is one of the biggest barriers to the reduction of meat and dairy in France,” says Benoit Granier, a spokesperson for France’s Climate Action Network in Paris. “These groups spend millions on propaganda mass-media campaigns that convince people that they need to eat meat to be healthy,” he says.
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A Greenpeace report published last year included evidence of meat lobbyists targeting schools and coming into conflict with teachers and parents in the playground. And one farmers union once advocated for meat with the slogan, “To save a peasant farmer, eat a vegan”.
In 2020, meat consumption in France amounted to around 84.4 kilograms per person, with French households spending a total of almost €40 billion on meat.
Despite being home to the second largest population of livestock in Europe, France still imports large quantities of meat and offal — €4 billion worth in 2020 — from elsewhere in the European Union to meet demand. “So it’s not as if by buying meat alternatives you are hurting French farmers,” says Granier. The problem is that “the culture of traditional food is so strong”. In addition, “consumers think that purchasing meat is good for farmers, whereas in reality it is only profiting the meat industry”, he says.
As the EU’s leading producer of beef, France has arguably the most to do when it comes to reducing agriculture’s carbon footprint. Although insect farming helps to cut emissions by supplementing the feed of livestock such as pigs, chickens and fish, it can’t help to reduce cattle-farming emissions because cows eat only grass and dried grain.
Meat products are in high demand in French food markets.Credit: Owen Franken/Getty
And the innovation landscape Hubert finds himself in is far from perfect. “The amount of European and French funding available for industrial and innovative projects like ours is not on the same level as in the United States — there the amount is much more significant,” he says.
Automation, alongside $425 million in global investment funding, has made Ÿnsect’s rapid growth possible. Robots manage stocks in much the same way they do in Amazon factories or large supermarket chains, but they are also able to measure the airflow and density of each tray to determine the growth rate and size of its inhabitants. And a heat-imaging technique gathers data on the contents of each tray, providing information on whether the insects have eaten recently, their moisture levels and other key determinants of health. “Studies have shown they like to be packed in with their mates — if you see a beetle on its own away from the crowd, it becomes anxious. It’s a biological tactic, safety in numbers,” Hubert explains.
Finish your meal
In 2022, Ÿnsect’s research arm, which has secured more than 341 patents, launched the world’s first industrial genomic selection programme dedicated to insect breeding. Through Ÿnfabre, Hubert’s team has sequenced the genomes of the mealworms it breeds to gain an understanding of what makes the optimum protein-producing beetle4.
The programme brings together researchers from different fields to develop phenotyping tools for identifying certain biological traits and genotyping techniques for identifying genomic variation. Hubert wants to develop the most effective model possible for breeding resilient insect lines, as well as to help further scientific understanding of insect proteins in general.
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In the United States, the Center for Environmental Sustainability Through Insect Farming is in the process of being set up in College Station, Texas, with the aim of studying insect proteins for more efficient farming.
But Granier is pessimistic about the prospect of insect food denting carbon emissions. By supplying animal feed to farmers, he says, Ÿnsect’s products encourage the continuation of industrial livestock farming, even if it is to a lesser extent. “As long as you are still farming animals in an industrial way, you are creating issues like carbon emissions, pollution of the water and of the land,” he explains.
Berggren agrees there are lingering concerns. Unless you create a sustainable cycle, “you haven’t changed the food chain”, she says. “You’ve just put more animals in it.”
When it comes to shifting insect protein towards human consumption, Granier, too, advises caution: “I don’t think the public are there yet. And if you ask the environmental organizations and environmental NGOs in France, most of us don’t think insects are a viable solution. What we need is to encourage plant-based diets and to support farmers and food manufacturers that produce healthy and sustainable plant-based products,” he adds.
But Hubert says that something is better than nothing. “We know what we do is a good answer to climate and biodiversity collapse, the more people we can get on board, the better,” he says. “Insect farming is not the only solution, and there will need to be more. But we know we are reaching a tipping point in the climate crisis — so if we want to go quickly and make an impact, this is a fast and efficient way of doing it.”
The housing marketplace downturn is poised to push the U.S. financial system into a moderate economic downturn this year, according to the National Association of Home Builders’ chief economist.
Elevated inflation and mortgage premiums coupled with the higher setting up product and building expenditures that have plagued the market due to the fact the start of the COVID-19 pandemic keep on to take a toll on residential contractors, Rob Dietz stated at a push briefing at the Intercontinental Builders’ Exhibit Tuesday in Las Vegas.
2022 was the initial time in 11 several years that one-family members begins declined, slipping an approximated 12{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} to 999,000 models, the NAHB noted. “Our thesis is that economic downturn is underway,” Dietz stated.
Dive Perception:
Dietz pointed out that the dwelling creating field is a bellwether for the overall health of the complete U.S. financial system.
“We’ve never experienced a interval where by household rates have declined and there has not been a recession,” he mentioned. “I believe the rest of the overall economy will truly feel it in 2023 via slowing economic output and mounting task losses.”
NAHB is projecting damaging GDP expansion for the first two quarters of 2023. Two sequential quarters of economic contraction is one regular indicator of a recession.
Even though residence charges are declining in several U.S. marketplaces, it has not been plenty of to increase housing demand. Affordability situations go on to deteriorate, as house loan premiums have far more than doubled given that the starting of 2022, Dietz reported.
The difference concerning a 3{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} and 6{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} mortgage price can add far more than $700 for every thirty day period to the price tag of a usual household bank loan. As a outcome, NAHB is forecasting that dwelling rates could tumble as substantially as 15{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} in 2023 pursuing a just about 40{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} acquire due to the fact the pandemic started.
Curiosity level outlook
NAHB is also forecasting that the Federal Reserve will raise small-expression prices by a further 25 foundation points in February and a remaining quarter-issue raise in March, according to a push release.
The NAHB believes the cumulative effect of the central bank’s level hikes will be a peak amount of just previously mentioned 7{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b}. But seeking ahead, the group expects property finance loan prices to slide below 6{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} by 2024.
“Falling premiums will established the phase for a housing rebound later in 2023, and a superior affordability setting will direct to a recovery of housing need,” mentioned Dietz.
Other concerns addressed by Dietz include:
Supply-facet factors. When making product price boosts have slowed, several contractors keep on to expertise provide chain disruptions for electrical transformers, concrete, appliances, doors, home windows and other merchandise.
One vibrant location is that the selling price of framing lumber has fallen down below $400 per thousand board feet — back again to pre-pandemic amounts, Dietz explained. However, builders will need to have additional lumber as the housing market place rebounds later on in 2023.
“We will need the administration to attain a new softwood lumber agreement with Canada so that lumber offer will be ample for long run gains in development,” Dietz reported.
Labor. The variety of open up construction positions was 388,000 in November, and resolving the labor challenge will be a vital challenge for the marketplace in the coming 10 years, he explained.
“We will want 740,000 development employees every year to account for industry growth and marketplace retirements,” mentioned Dietz. “Recruiting, schooling and retaining skilled personnel will be position No. 1.”
Multifamily. Apartment development boomed in 2022 to 545,000 begins, an believed 15{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} rise from the preceding yr. Mainly because of slowing hire advancement, growing unemployment, tighter financing and a decades-high amount of stock in the pipelines, NAHB is projecting that multifamily starts will drop 28{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} this yr to a 391,000 complete and will stabilize in 2024 at about 374,000 starts off.
There are at the moment extra than 940,000 residences less than construction, the highest total because 1973.
On the lookout in advance, Dietz mentioned he is hopeful that the 2nd half of 2023 could lead to a turning point for housing and the economic climate.
“With curiosity prices projected to normalize in the next 50 percent of 2023 as the Federal Reserve faucets the brakes in its struggle from inflation, the rate of one-household design will bottom out in the initial 50 percent of 2023 and commence to strengthen in the latter part of the yr,” he claimed. “This ahead momentum will lead to a calendar 12 months obtain for single-loved ones begins in 2024.”
State officials were noncommittal this month when responding to a voluminous request for funding from the nursing home industry, which is struggling to staff its facilities and keep up with soaring inflation.
The nursing homes, stung by chronic staffing issues and wage pressure, had asked for $193 million more in aid to help sustain struggling elder care facilities. The state’s social services budget allows for an additional $28 million. Leaders at the department did not immediately agree to send more money to the sector.
“We look forward to continued discussions as we work to improve the lives of Connecticut nursing home residents,” wrote Andrea Barton Reeves, commissioner of the state Department of Social Services.
But lawmakers and advocates say they want to see greater transparency on nursing home spending before signing off on such a request, arguing the state has already provided the industry with millions of dollars in extra funding during COVID.
Matthew Barrett, president and CEO of the Connecticut Association of Health Care Facilities, and Mag Morelli, head of LeadingAge Connecticut, which together represent 186 of Connecticut’s 205 nursing homes, wrote in a Nov. 30 letter to the state that there is an “urgent need” for additional funding.
“We are writing to you once more to ask you to provide additional financial relief to our state’s skilled nursing facilities as they endeavor to provide quality care during this now elongated and unrelenting environment of double-digit inflation and increasing staffing costs,” they wrote.
From February 2020 to December 2022, the nursing home industry lost 210,000 jobs nationally, and staffing fell to levels not seen since 1994, officials with the American Health Care Association and National Center for Assisted Living said.
Facilities added an average of 3,700 jobs per month over the last nine months. At the current pace, staffing would not return to pre-pandemic levels until 2027, AHCA noted.
In Connecticut, understaffing has led to widespread problems in some facilities. The CT Mirror reported that Athena, one of the largest long-term care providers in the state, has come under the scrutiny of officials in three New England states after receiving consistent complaints about conditions in its nursing homes.
Athena is facing numerous lawsuits alleging it owes money to temporary employment agencies that provided workers to short-staffed facilities. The company is also accused of failing to pay nearly $6 million in employee health benefits and has faced consent orders at facilities in Connecticut, Massachusetts and Rhode Island.
Residents of some Athena homes complained of being stranded in bed for long stretches of time, missing meals or medications and being unable to attend daily activities. Family members described their loved ones as unkempt during visits. Residents have reported regularly missing showers and haircuts.
In some homes, residents say they’ve seen a single nursing aide assigned to 20 people. A typical ratio to ensure good care is one worker to every eight or 10 people, the state’s long term care ombudsman has said.
The state Department of Public Health recently placed one of Athena’s facilities, the Newtown Rehabilitation and Health Care Center, under immediate jeopardy because of troubling conditions found when inspectors visited the building. Immediate jeopardy occurs when violations cause or are likely to cause serious harm or death. Athena fixed the problems in less than two days, and the order was lifted.
But nursing home officials and state investigators say Athena’s problems are not isolated and that staffing shortages and cost increases are affecting care in many facilities.
Barbara Cass, chief of DPH’s health care quality and safety branch, said the department issued four immediate jeopardy orders across Connecticut nursing homes during the last quarter from Mystic to Windsor.
“It’s really the staffing,” Morelli said of the funding request. “And it’s not just direct care staff, all staff costs have gone up. There’s been very real pressure on the cost side and not getting [enough] on the revenue side.”
Legislators, advocates call for more transparency
Lawmakers and advocates acknowledge the situation in nursing homes is dire and must be addressed. But while some are supportive of sending additional funds, many say greater transparency is needed to show exactly how managers are spending the money.
“There’s been no accountability for where this money went,” said Mairead Painter, Connecticut’s long-term care ombudsman. “[The state has] given them lots of dollars since COVID — lots of lots of money. Where did this money go? Because it’s not going to the staff and the residents that we can see.”
During the first year of the pandemic, the state announced more than $90 million for nursing homes to help deal with plunging occupancy, staffing costs and protective gear, among other expenses.
Still reeling from the worst of COVID, the state in 2021 extended nursing homes a temporary 10{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} Medicaid rate hike that sent another $86 million to the facilities between July 2021 and March 2022. And nursing homes and Gov. Ned Lamont’s administration averted a major caregivers’ strike in spring 2021 with a significant package of wage and benefit enhancements. The state bolstered Medicaid rates to send an extra $125 million to $130 million annually to help cover labor costs.
Facility operators are required to submit annual cost reports that feature revenue, expenditure and balance sheet information. But Painter and others are calling for deeper explanations of the spending.
As part of her legislative agenda this year, Painter asked lawmakers to mandate that nursing home managers turn in narrative summaries of expenditures, with explanations of many individual costs. She also recommended that the social services commissioner make the reports easily identifiable on the state website and include comparisons between the homes’ spending.
In addition, Painter asked legislators to pass a bill forcing nursing homes to halt admissions if they don’t meet the minimum staffing requirement of three hours of direct care per resident per day.
Officials at the AARP in Connecticut support the transparency measures.
“It’s historically been too easy for the industry to say, ‘We need more money,’” said Anna Doroghazi, associate state director for advocacy and outreach. “We’ve seen that going on for years and years, and we have increased rates. … What is harder to see in the cost reports and data that’s available is at the end of the day, who’s benefiting the most? Is it residents? Is it workers? Is it facility owners?
“The concern we have as advocates is there are a lot of clues that seem to indicate someone other than residents are the ultimate beneficiaries here.”
As the legislative session gets underway, lawmakers have signaled they will craft bills to boost accountability.
“A key question for us is, ‘Where is the money going if it isn’t going to pay for more staff?’” said Jillian Gilchrest, a West Hartford Democrat who is co-chair of the Human Services Committee. “Before we can take any policy steps, there has to be some funding transparency from the providers.”
“It’s hard enough to attract people to do these difficult jobs, and we know they aren’t adequately paid in many cases,” she said. “So we need to make sure if we end up raising rates, that it is going to pay the staff.”
Considerable surplus
Given that the state is projecting a $3.2 billion budget surplus, Barrett said, nursing home leaders are keeping the lines of communication open with officials at DSS.
“Dynamics are different in a year when there’s a considerable surplus,” he said.
At issue for the nursing homes are Medicaid rates that haven’t been adjusted to compensate for inflation since 2019. The legislature and social services officials launched a three-year process in 2021 to begin to correct that problem.
But that became far more challenging when inflation rates hit a 40-year high. The Consumer Price Index topped 8{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} for most of the last calendar year and hit 9{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} in June. By comparison, the CPI was just 5.4{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} when the legislature adjourned in June 2021.
By Nov. 30, when Morelli and Barrett made the funding request, the inflationary correction needed was 16.2{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b}. Legislators, however, gave DSS discretion to limit rate growth based on available resources. This “stop-loss” provision effectively was used to cap rate increases far below the recommended inflationary adjustment.
Connecticut nursing homes receive, on average, $282 per patient per day from Medicaid. Based on that, a 16.2{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} adjustment would require the state to boost the average facility’s rate by $45 per patient. The stop-loss provision capped the inflationary adjustment at $6.50 per patient per day — one-seventh of what the industry says it needs to tread water financially.
“Nursing homes are losing ground,” Barrett said in an interview. “Generally, nursing facilities will continue to be disadvantaged and undermined in their ability to hire additional staff. … And that will mean there will continue to be issues related to nursing homes’ ability to accept hospital admissions.”
Crisis situation
Jane Garibay, a Democrat from Windsor, has received a flood of emails, texts and calls from constituents with loved ones in nursing homes.
“What I’m hearing is we’re in crisis,” said Garibay, a co-chair of the Aging Committee. “I get pictures of their loved ones with whatever’s happening to them. I’ve gotten pictures of bedsores. I’ve gotten videos of their loved ones in pain.
“We have to work on legislation to protect our seniors. It seems to me like it’s a forgotten group. We rightfully put a ton of money into our children, they are our future. But I feel we’re not treating our elderly with the dignity they deserve.”
Senate Minority Leader Kevin Kelly, D-Stratford, suggested the General Assembly consider an increase in the Medicaid reimbursement in the next state budget to help bolster staff.
Facility leaders are not opposed to greater accountability, Barrett said.
“The sector is open to even more transparency,” he said. “We believe Connecticut’s system is one of the most transparent in the nation, and we’re open to ideas where there could be greater transparency.”
Recently, the Connecticut Association of Health Care Facilities donated $25,000 to Lamont’s inaugural ball, a glitzy event kicking off the governor’s second term, headlined by Kevin Bacon’s band, The Bacon Brothers.
Barrett said it was not the first time the organization had donated to an inaugural ball. When spread across the 151 nursing homes it represents, he said no single facility contributed more than $200 a piece — the price of a ticket.
“We were able to get to the $25,000 figure because of our important presence throughout the state,” he said. “Helping to defray the cost of the governor’s ball at a $25,000 amount – which is not an insignificant amount – is quite remarkably different [however] from the inflationary adjustment … in excess of $100 million.”
CT Mirror Reporter Keith M. Phaneuf contributed to this story.
Russell Turner, owner and CEO, 1915 South, Thomasville, Ga.
We have just finished a five-year run of the most aggressive growth and infrastructure retooling in our 107-year history.
PPP was rolled out and totally necessary to keep our team together and at work. We are now dealing with the extra stimulus that the federal government spread throughout the economy. The big push for wage increases to $15 that seemed to be such a stretch then is now a distant memory left in the past.
The Fed is now tasked to slow the inflation to 2{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b}, but labor drives that as the reason it will be tough. We, at 1915 South, don’t see that the effects of the rate increases and the reduction of the Fed’s balance sheet will have much effect in the next six months. The second half of the year we could begin feeling it, and the Fed will always go too long to get to the 2{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} target. First quarter of 2024, fed rates will probably be coming down again and hopefully this recession is a quick one.
We are looking to perfect our processes in 2023 and increase cash for growth again in 2024.
Stuart Carlitz
Stuart Carlitz, president and CEO, Bedding Industries of America
I would suggest that we are already in a recession. While unemployment remains low and gas prices are coming down, we must continue to monitor housing starts because it is always a solid indicator of demand in our industry. We expected 2023 to be soft but anticipate that it picks up in the latter part of the year.
To counter that softness, we will continue to invest in our portfolio of products so we can appeal to every consumer looking for a mattress, especially at more moderate price points. In addition, we will continue to provide great value at premium price points, which supports our core tenet of offering affordable luxury.
Lastly, we will continue to invest in digital commerce to reach consumers who want to purchase online. But we are taking a different approach there. We are working closely with our brick-and-mortar retailers to partner with them, collaborating instead of taking sales from them. Our Harvest program is a good example of this. We built a very dynamic platform which creates economic opportunity for our dealers. We will continue to expand our digital work into other areas as well in the coming year.
Eugene Alletto
Eugene Alletto, CEO, Bedgear
I do believe that there will be a slowdown, relevant to the large increases that many industries had due to COVID and the stimulus money. I don’t believe we will have an all-out traditional recession.
We feel at Bedgear that the trend for innovative and better products is going to continue as well as commodity price points. The mushy middle price points are going to take the biggest hit in volume.
The real concern I personally have and think about is what are middle price points today? It has shifted due to inflation and the inefficiencies of direct-to-consumer model, with such high returns and cost of acquisition, what are customers thinking with respect to quality innovation versus convenience and buying something in a box? What does the consumer really consider differentiated product and price points?
The other trend that we are paying attention to is where the consumer is going to spend their money and where are they going to reduce their spend. There are going to be winners and losers within different sectors of business and then within those sectors, they’ll be variant degrees of winners and losers.
Being in the home furnishings category we think that the baby and kids segment has the opportunity to grow. The sleep category is always important, home office, family rooms and outdoor. This is where the consumers are focused.
Elizabeth Dell’accio
Elizabeth Dell’accio, president, Blu Sleep Products
It’s the million-dollar question. The one quote that we enjoyed was: “The U.S. will probably stick a soft-landing next year.” Simply meaning that we will narrowly avoid a recession as inflation fades and unemployment goes up. Economists are hovering around 30{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} to 40{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} probability of a recession while Wall Street forecasters are saying 60{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} to 65{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b}. We would like to stick on the positive side of things.
There are even other economic factors saying that real personal income is springing back, and this translates to an increase in real disposable income, the question here now is when will we see the impact of this increase in the retail market?
The initial reaction of most companies is to tighten the belt during challenging times, but transformative leaders such as Blu Sleep are simply working harder on finding creative ways to drive long-term growth. At a moment when we are seeing competitors pulling back their spend, strategic investments against targeted, high-value audience segments will open opportunities to increase market share or strengthen our already high level of customer loyalty.
We are already getting creative with our media approach to the industry and are positioning ourselves to be more than ready for the market upturn.
Denny Boyd
Denny Boyd, president, Boyd Sleep
I do believe the likelihood of a recession is greater than 50{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} over the next six months. We have experienced a number of recessions over that past 46 years in business.
Our strategy remains the same. We offer innovative quality products, great brands, superior customer service and aggressive pricing to support our customers.
Alex Shuford III
Alex Shuford III, CEO, Century Furniture
Unfortunately, I think we are likely already in a home category recession and likely that a general one will be “called” in the dpring.
We believe that the softening of demand will turn around by the second half of 2023, and until then we are focused on reducing our backlogs and improving our lead times. We are still focused on increasing capacity to improve service levels and will have this same focus through most of the first half of 2023.
Eric Rhea
Eric Rhea, CEO, Corsicana Mattress
It appears the majority of the U.S. realizes we are already in a recessionary economy. As a result, we shouldn’t be focusing on what we call this but spending our time planning on how we will deliver for our retailers and consumers during this challenging period. We believe that the steps Corsicana has been taking since last year position us well for these new economic realities.
Fortunately, we have been recession-proofing our business for a number of months, making strides daily, weekly and monthly in our journey to improve our business.
We have made new additions in talent and realigned internal responsibilities to support our growth objectives. These changes assure that we are very focused on serving the needs of our customers, offering the necessary breadth across our product line from promotional to premium, and the absolute best value available in both our branded and private-label programs. We are delivering our customers the products they need, when they need them, with a fierce concentration on getting even the smallest details right.
Our national footprint enables us to serve customers from coast to coast very effectively and the feedback we are receiving from our customers is that we are serving them well.
At the same time, we continue to drive efficiency throughout our business. We are simply ensuring every function of our business is operating effectively. We still have work to do but feel very good about our future.
Shaun Pennington
Shaun Pennington, CEO, Diamond Mattress
From our perspective, we’ve been in a recession for the past few months. As a financially stable, 80-year-old company, we have been through tough economic times and see recessions as opportunities for us to grow market share. We’ve already seen some factory closures in our region, and with our demonstrated strengths and ability to help retailers differentiate and capture the margins they need, we see opportunities to help them grow and remain profitable through a downturn.
Also, when retailers partner with Diamond, they can feel more secure knowing they have a stable supply and can maintain quality without having to cut corners on the products as things get lean. We are prepared for a recession and will be here to help our partners every step of the way.
Joe Bright
Joe Bright, president, Dunk & Bright, Syracuse, N.Y.
I would put the likelihood of a recession in the next six months as low. All the macro statistics indicate a healthy economy.
We are continuing to grow and invest in our business. The fundamentals of driving traffic and growing sales are important in both a growing- or shrinking-demand environment.
Jon Stowe
Jon Stowe, managing director, E.S. Kluft & Co.
The U.S. will experience some sort of recession, much like 2009 with recovery to begin in the second half of 2023. Over the past few years, consumers have seen their buying power shrink over the course of 2022 as the cost for gas, travel, groceries and housing has skyrocketed.
The biggest problem facing the economy — high inflation — remains a major challenge. Per the Federal Reserve, inflation is expected to begin declining in 2023, but it does not seem that inflation will return to its target of 2{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} until 2025. Still, as global supply chains continue to improve and the labor market stays relatively strong, we expect that, by the end of the year, we’ll start to see a return to normalization for our industry.
Although we see the probability of a recession and a challenging 2023 year for the furniture and mattress industry, we are still planning for growth of our business this year.
We have several key strategies in place that we believe will help us weather the uncertainties that lie ahead. We plan to: continue close relationships with our retailers, to support them on their plans and make sure they have everything they need; provide continuous commitment to an exceptional service level that will be enhanced with the opening of our third factory, in Grand Prairie, Texas; continue collaborating very closely with our suppliers, securing our supply chain and sourcing alternative suppliers for key components; and, implement promotional and advertising activities that will remain a key part of our marketing programs in 2023.
Ultimately, we see three key drivers that will help contribute to the growth of our business: strengthening our business and relationships with our current retailers, opening key new accounts in the U.S., Canada and export, and answering the demand for continued consumer interest in high value products.
Anne-Marie Earl
Anne-Marie Earl, U.S. communications manager, Ethnicraft
If there is a recession coming, Ethnicraft hasn’t felt the effects of it. We have continued to grow year over year as more and more Americans learn about our quality product.
Our goal for next year is to outsell what we’ve done this year, and I’m confident we will meet that goal as we have for the past five years by wide margins. We will show at High Point Market, HD Expo, NeoCon and BDNY in the U.S., and we are in the process of building a U.S. headquarters with a showroom and expansive warehouse. This more than $20 million investment is indicative of how confident we feel about the U.S. market in both the short and long term.
Alan Hirschhorn
Alan Hirschhorn, executive vice president, GhostBed
We are, in fact, already in the midst of a mild recession. It will most likely get slightly worse before it gets better, but I think it will get better in the third or fourth quarter of the year. Lower gas prices are one harbinger of a change that we are seeing now, and I suspect we will start to see other costs stabilize in the months to come.
For the mattress industry, there is no question that the focus is going to be value, at all price points. Whether consumers are looking to spend under $1,000 or more than $5,000, they will take a closer look at whether the products they are buying are the best possible value for their dollars. The industry is going to make sure that we meet those expectations.
Through our continued offering of superior products at a wide variety of price points and our commitment of millions of dollars to marketing to support our retailers, we are protecting our business and our retailers’ businesses from economic downturns. This is not something new, rather a core tenet of what GhostBed stands for.
In addition, we are continuing to bring innovative products to retail, like the industry’s first-ever massage bed. We are partnering with Cozzia to present a bed at Las Vegas Market that is not only restorative, but therapeutic. Innovations like this as well as the success of the Venus Williams collection keep us at the forefront of our industry and lay the foundation for a bright 2023.
Bob Naboichek
Robert Naboicheck, president, Gold Bond Mattress
In short, I don’t think we’ll experience a dramatic recession this year. The Fed has increased rates, some would argue too aggressively, and we are already beginning to see signs of a correction. The lower-income consumer may need to pause spending, but that is not the case in the moderate and luxury sectors of the market.
As long as unemployment remains very low, and energy and fuel prices stay low, I have a positive outlook for 2023.
We’ll continue to do what has made Gold Bond successful for nearly 125 years: offer unparalleled quality, handmade products and personalized RSA training along with superior customer service. This positions us well for any challenges in the year ahead. Since our products are designed for durability and longevity, they will continue to resonate with both retailers and customers who are walking away from disposability. We are optimistic about the coming year for our dealers and our company.
With the overall furniture industry, it’s obvious there’s a slowdown. We all knew we wouldn’t maintain pandemic levels. We expect business to slow down. But furniture is cyclical. When the economy slows, it tends to affect us significantly. We’ve always been cyclical. We’ve been in a super cycle. No one could have predicted the business boom. A lot of buyers have been taken out the market.
We will focus on what we do best. It’s not that we will do anything differently. We’re going to provide great product at a great price. We will service our customers the best we can with the best products we can. We’ll make sure we’re focused.
Skipper Holliman
Skipper Holliman, CEO, Homestretch Furniture
Based on all available information, we certainly believe at least a mild recession is coming sometime during 2023. We are probably already in one, but it is somewhat disguised because the labor market has remained pretty tight due to the fact that there are still a good many potential workers that have not yet reentered the workforce. That seems to be changing now as we are beginning to see more layoffs and business failures across various industries, which should make labor more available to those companies that need workers.
We are focusing on the fundamentals of being the very best supplier we can be to our customers by providing them with an outstanding quality product and keeping plenty in stock. Our in-stock/quick-ship model allows our customers to place orders each week for what they sell and get the product immediately without having to tie up a lot of working capital in finished goods inventory. In the long run, we believe that model will always succeed, especially as we enter an uncertain business environment in 2023.
Felipe Orozco
Felipe Orozco, vice president of sales, Horizon Home Furniture
The recent heavy inventory situation has most suppliers already in an industry-wide recession. And retailers apparently are struggling to normalize inventory levels. With this process clearly taking longer than most of us expected, the big question is, will consumer demand be there when inventories finally get back to normal?
The Fed rate hikes clearly are not helping the situation as this has a direct impact on housing in general.
When the Fed slows down, or stops raising rates, we should see a turn around on housing sales. This will give the industry a much-needed boost. And may be the beginning of a turnaround in demand.
Right now, Horizon Home is concentrating on our domestic warehouse business. By increasing our in-stock inventory levels many of our customers are ordering just what they need vs. stocking up. Our Arizona and Texas warehouses have seen steady increased volume over the past six months as the direct business has taken a hit and more dealers choose just in time vs. price.
As for Horizon Home, we see a quick turnaround to this chapter and get back to extended stability for all.
David Binke
David Binke, CEO, King Koil
The United States by all accounts is already in a recession, whether The Fed wants to admit it or not. Consumers are being very cautious in their spending. We are seeing more corporate layoffs, reduced bonuses being paid by financial services firms, and real estate is toggling down. I believe you are going to see these trends continue, probably even getting worse, in the first half of this year. I do think it will level off in the latter part of the year as the economy resets itself to a ‘new normal’ of tightened credit and higher interest rates.
The key for King Koil continues to be in creating superior value products in the affordable and aspirational luxury categories that are unlike anything else in the marketplace today. We are defining that product range by price points between $1,000 and $3,000.
We’re introducing both new products at the Las Vegas Market and remerchandising key collections to bring prices that had shifted due to supply chain issues, back into line. They will also have added features, exceptional feels and well-thought-out stories that are easy to share with consumers. Watch for a new take on our hand-tufted Intimate collection and an expansion of our ground-breaking sustainable denim line ReSpun.
Frank Hood
Frank Hood, CEO, Kingsdown
Last month, Bloomberg reported that economists are saying that there is a seven-in-10 likelihood that the U.S. economy will sink into a recession this year. It is further expected that the Fed will not reduce interest rates in 2023 and that GDP growth will average 0.3{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b}.
But I think our industry needs to carefully monitor consumer sentiment, which is clearly getting more cautious. Whether an official recession or consumers slowing their spending, it has the same effect on our industry. I would be less focused on monikers and more on watching consumer spending patterns which are already changing.
Simply put, we intend to out-innovate our competitors. Product innovation manifests itself in many different forms at Kingsdown. It presents itself through new fashions and styles, new component specifications or new pricing strategies. We’re leaning in by reevaluating all the collections to create more dynamic visual appeal and ensure we’re providing choice, value and in some cases keener price points at the Las Vegas Market.
Fortunately, our AUSP is holding and in some cases growing, so we intend to capture more share on every floor and continue to establish more points of distribution in markets where we are under-penetrated.
David Cybulski
David Cybulski, CEO, Klaussner Home Furnishings
I support the notion of rolling recessions where certain segments of the economy enter and exit a recessionary period at different times. With respect to the furniture industry, I believe we’ve been in a recession for quite some time, primarily driven by the pandemic and the corresponding economic swings.
As such, Klaussner prepared by continuing to focus on two key areas: (1) profitability by maintaining a lean organization and expense structure, and (2) cash preservation through prudent investments in inventory and capital expenditures.
As we begin 2023, I believe Klaussner will continue to see success by building on our legacy of innovation and customer service while constantly assessing the business horizon, with the agility and willingness to adjust where necessary.
Neill Robinson
Neill Robinson, CEO, Legacy Classic Modern
I think we’re in a recession now. Maybe a year from now, things will get better. We will have finally gotten through all of the pandemic-related issues of supply and pricing. We can get back to 5{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} to 10{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} growth mode. Everyone will get back to a more predictable pace of business.
My experience in the furniture business is by the time we realize we’re in one, we’re already coming out. Business is definitely contracting. The challenges for furniture companies, particularly for case goods businesses, is to get back to outperforming competitors. Whether its design or values. Execute your business model better than your competitors if you want to grow.
We’re focused on three things: Consistent quality, operational performance — so when we get an order we can ship it on time — and market share gain.
We’ve moved to being a direct container with large American distribution. This allows us to increase market share with smaller and medium retailers. We’re onboarding new accounts and increasing distribution.
Dexter Weber
Dexter Weber, president, LogicData
We believe it’s very likely that we’ll see a recession within the next six months due to the high inflation rates, decreased consumer/business confidence, changes in consumption and investments, and the geopolitical issues going on.
To address this, LogicData is focusing on flexibility to empower retailers of all sizes with their adjustable base offerings. We offer single-package drop-ship options, a domestic inventory program for pallet orders, and container programs to fit the needs of different retailers and e-tailers.
By offering the domestic inventory program it allows retailers to have less cash tied up into container orders with product shipping over the ocean. It also removes the risk of having too much inventory on hand in the retail stores and warehouses.
For the larger companies that prefer container volume in the U.S., we have opened another production facility in Malaysia to eliminate the impacts of the tariffs on products produced in China.
Curtright
Billy Curtright, vice president of sales, Magniflex
A number of factors indicate that we are headed toward an economic downturn at the very least. Retail business has slowed, and consumer confidence is down. However, we are seeing positive trends as well, so while the first part of the year may be challenging, we expect 2023 to be a successful year for us, overall.
We are deploying several strategies to meet consumer needs this year. First, we are focused on growing brand awareness in the U.S. In addition, we are fostering relationships with the design community. With higher margins than many manufacturers can support, designers and retailers select Magniflex not only for quality and luxury, but for greater profitability.
We also are expanding our offering in Las Vegas to include a broader range of price points while maintaining luxury features, which will allow our retailers to introduce more of their customers to Magniflex.
An addition to Virtuoso, which will be introduced in Las Vegas, is a great example of this. It has the dual-sided comfort of silk and linen (for summer) and cashmere and wool (for winter) cover and a dual-core designed for couples with different comfort preferences. We’ll continue to bring innovative luxury to the marketplace throughout 2023 and beyond because we feel the consumer at this end of the market will continue to invest in a quality and restorative night’s sleep.
Rit Mathis
Rit Mathis, chief marketing officer, Mathis Home, Oklahoma City
We are already in a recession. Don’t believe the news if you hear otherwise elsewhere. Yes, it will continue over the first half of next year.
Cycles happen. They are part of it. We do in recessions as we always do: pay attention to details, address changes where they are needed, don’t panic or overreact, just take things one day at a time.
Oscar Miskelly
Oscar Miskelly, CEO, Miskelly Furniture, Pearl, Miss.
I think it’s more likely than not that we’re going to experience one. There are still discussions among economists about the likelihood and how severe it will be. Our hope it is it will be a short-term one.
We’re meeting with our leadership team to discuss strategy to address that. No. 1 is to be as efficient as we can be to control what we can control and cope with the things we can’t control and concentrate on what counts, which is taking care of the customer every day.
If we do all of those, we should be able to come out of it in good shape. We need to circle back and tighten up in some areas to make sure we’re here on the backside of whatever we’re facing and however long it lasts.
Glenn Kobylarczyk
Glenn Kobylarczyk, executive vice president, Mlily USA
Whether or not the economists determine a recession has or will hit is less important than the decisions the consumer has to make with their paycheck every week. If it’s groceries vs. a new mattress, we know what that decision is going to be. But if it’s groceries vs. sleeping and feeling better, the thought process changes, and now the RSA and consumer can have a conversation.
Our strategy is to help our retail partners make sleep and health key elements of the question so that the mattress is not seen as a commodity. A component of that strategy is our exclusive partnership with the International Chiropractors Assn. to educate retailers and consumers about better sleep and health, and to design and build innovative products to achieve quality sleep.
Mlily has vast experience in building affordable, quality sleep products making us a strong strategic partner through any economy. Recession or not, consumers are always looking for the best value.
Moe Samieian Jr.
Moe Samieian Jr., co-CEO, Moe’s Home Collection
Yes, we think we are already in it and will continue into 2023. We are expecting for things to improve by fall 2023.
We are using this time to continue to bring efficiencies to our organization that can help reduce costs, and also using this time to continue to invest in product development, technologies, and improved processes for the future growth of Moe’s when the economy does start to improve again.
Chris Bradley, executive vice president of consumer products, NCFI
I don’t think there is any question that we are already in a recession. We saw contraction in both Q1 and Q2 followed by an unexpected GDP increase in Q3. More importantly, private goods have contracted for three straight quarters and four out of the past five, and at a much higher rate than the other sectors. In fact, Q3 saw a more than 10{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} decrease in the private goods sector.
At NCFI we have been preparing since the middle of 2022 in two main ways. First, we are constantly evaluating our cost structure to make sure that our products are delivered in the most cost-effective way possible.
Secondly, we are meeting with all of our customers to see what we can do to give them an advantage in the marketplace. Whether it’s a new product or a new technology, it’s important for us to make sure that our customers are as competitive as possible. Those companies that operate efficiently and keep their customers competitive are the ones that are going to weather this storm the best.
Zolferino
Peter Zolferino, CEO, Omnia Leather
Based on the decline in sales and the rate of inflation over the past several months, we do feel that the recession is already in its initial first stage. Consumers no longer have the confidence in the stability of their investments, nor the disposable income to justify non-essential purchases. Those who can afford luxury spending are now interested in leaving their homes to travel.
The nesting mentality that propelled the home furnishings industry during the pandemic and beyond has obviously cooled considerably. On one hand, that surge could never have continued at such a rapid pace, but now we’ll have to see when we can get back to a “normal” sales volume or if it will it sink below pre-pandemic levels.
We know our retailers are overstocked with primarily import products due to an over-projection in sales. We saw this slowdown in the horizon, so while we are a custom, made-to- order product, we started offering in-stock programs and quick-ship items early this fall.
Giving our retailers the ability to order best-selling American made goods in this fashion alleviates the investment and risk of stocking merchandise. It also saves them non-existent warehouse space. The products are sold and ready to schedule for home delivery the minute it hits their dock.
We will always have a solid inventory of raw materials regardless of the market, but we have adjusted our inventory to the current market trend. We remain cautiously optimistic and will continue to listen to our amazing dealers. They’ve always stood by us because they know we will do whatever we can do to help them survive and succeed during these difficult times.
Jonathan Johnson
Jonathan Johnson, CEO, Overstock
With high inflation, rising interest rates, and the current economic situation, I believe the likelihood of a recession within the next six months is significant.
In our 23-year history, we’ve experienced many ups and downs in the economy, including 2008’s great recession. Although we are not immune to economic downturns, unlike others in our industry, our asset-light business model and strong balance sheet position us well to weather a prolonged economic drought.
Overstock’s quality-for-less “smart value” proposition resonates well with customers, especially when they are seeking to stretch their dollars farther. Additionally, we will continue to support our partner suppliers by paying them quickly and being able to sell their products on our site.
Douglas Townsend
Doug Townsend, chief operating officer, Parker House
We are preparing for one. We are very cautious. Between inflation where it is, interest rates and a general uncertainty, we’re not planning for a big improvement. Whether that’s a recession or just a slowdown, who knows. But we don’t think it’ll be anything good.
We’re replacing people but not growing our headcount. We’re expecting the slowdown to continue.
Michael Parasmo
Michael C. Parasmo, CEO, Precision Reclining Chair
We are optimistic because we are always on the ground hunting for new value and new bigger factories with higher efficiency capabilities to handle quick responses of retailers need for urgency to deliver goods, and we continue to outwork ourselves to be more competitive.
We are optimistic, buying raw materials, developing new relationships and having modest growth, and we moved to a new showroom that proved very successful, making the investment and change in a doom-and-gloom period where many were pessimistic.
Retailers are very strong lions that react quickly, and they have to buy to fill their warehouses for the consumers to reboot and spend.
We do not see prices going back to pre-2022 levels but within 15{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b}. We are seeing oil prices coming down to 42{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} off their high back to December 2021, which is good for all of us. Shanghai freight rates have fallen 77{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} off their January high, which is a marvelous plus for merchandising products for margin. We believe these drops will stimulate more growth and positive results for everyone.
We are projecting our business model with powerhouse brand Kathy Ireland home motion products to see a very healthy April market spending cycle for retailers due to retailers cleaning out their over inventoried warehouses and making “New Playbooks” to win market share and steady growth.
Toby Konetzny
Toby Konetzny, CEO, South Bay International
I think this could be the most anticipated recession on record, but yes, I believe we will be in a general recession mid-2023 and in the home category we will see it sooner. The home category is coming off a pandemic fueled economy for the past two years, so any pull back will be more pronounced, and those companies that over extended themselves based on that growth may have some larger challenges ahead, and those who were already challenged prior to the pandemic bounce will be experiencing those challenges once again.
Our strategy remains largely unchanged by providing a quality product at a value to the end user. We implemented many long-term strategies in 2022 for sales growth and product R&D, and we will continue with those strategies through 2023.
Our main focus is to be hyper-focused on the data from our customer demand and product flow. With our mix of customers, we are able to gather data from multiple sources to get a good reading of where we are heading.
Nick Bates
Nick Bates, president, Spring Air International
I believe we are already in a recession, and it will continue until we start to see inflation under better control. The economy is already moving in that direction, which is indeed a good sign. That said, I don’t believe in wasting time debating with economists because it makes more sense for us to focus on how our industry pivots to handle the challenges that are coming in 2023.
Our strategy is unchanged, and that is to continue to help our retailers drive door clicks and close sales on their retail floors. Our approach to accomplish this is very comprehensive.
We’re benefiting from the fact that we now have national licensee coverage coast-to-coast. Those licensees are also finding greater value in our brand and are transitioning business that was either private label or another brand, over to Spring Air.
We are also gaining significant super regional and national account business over the past few years, and that is only accelerating with our extended licensee base. More retailers than ever before are giving us opportunities to grow within their walls, especially as other manufacturing facilities and licenses close or lose market share.
For us, this year will be about fine-tuning our manufacturing processes and continuously building on how our licensees work together as a force to be reckoned with. Our product development meetings, where we bring what I consider to be the best minds in the bedding business together to examine what the market needs and when, continue.
We have two collections as a result of this strengthened collaboration launching at the winter market: Last Mattress by Spring Air and Back Supporter Hybrid Plus, both of which are evidence of how well that business model is working.
We also will continue to launch products throughout the year as we identify opportunities in the marketplace. Indeed, one of the things that really sets Spring Air apart is that we are no longer tethered to the traditional market cycles. It’s an outdated business model that we just don’t think makes sense any longer for the health and well-being of our industry.
Tom Murray
Tom Murray, chief market officer, Tempur Sealy International
During our third quarter earnings call, we shared that we continue to see an impact on the U.S. consumers’ behavior from macroeconomic pressures, particularly from strong inflation and a sense of near-term economic uncertainty. We’re watching the macro developments closely and adjusting to the market conditions, while staying aggressive and on-strategy.
This approach has driven Tempur Sealy to outperform the broader market through the third quarter. Our ongoing investments in developing and marketing premium products position us well in the current macro environment, as the premium segment has remained resilient despite the current economic uncertainty.
Combined with our continued commitment to our Retail Edge consultative-selling approach and toolkit, we believe that our 2023 product and marketing plans — particularly for Tempur-Pedic and our recently launched lineup of Stearns & Foster premium-innerspring mattresses — will continue to enable us, and our retail partners, to make the most of the category opportunity in the coming year.
Luis Ruesga
Luis Ruesga, CEO, Zuo Modern
I will not call this a recession; it is more of an adjustment of the amount of furniture that the consumer bought in 2021. Now we will experience a slow down on the residential side, but we will see an increase on the hospitality side when we see all the small restaurants re-open with a new concept and a new design.
In addition, the small boutique hotels are getting ready to upgrade or change their concepts.
The decrease in business will come if you don’t look for the business, but it is out there. Just a matter of finding it.
It is a very little little bit tough to truly feel joyous heading into this new year. Economic predictions array from shaky to dire, with stagnant advancement, ongoing inflation, a tighter-than-ever labor current market and soaring deficits bringing poor news. On leading of that, a continuing general public wellbeing crisis and shifting command of Congress all make it harder than ever to predict what is to arrive in the environment of homecare. And nonetheless, our marketplace specialists weigh in here about their most important predictions and priorities for the future—and most say they are optimistic about the potential.
1. A See From Washington By Tom Ryan, President, American Association for Homecare Of system, reimbursement fees will continue being a top rated problem for the home clinical machines (HME) community and for the American Association for Homecare (AAHomecare), but I’ll get this possibility to spotlight a notably pressing situation for 2023. We hope and assume that the Biden administration will be able to raise the COVID-19 general public health and fitness crisis (PHE) sometime this 12 months, and when that eventually transpires, there will be a major impression on many flexibilities and waivers granted to well being treatment companies through the PHE.
For HME vendors, the waivers for oxygen and constant glucose displays that ended up put in put for the duration of the PHE are specially important. We will will need to lobby Capitol Hill and the Centers for Medicare & Medicaid Companies (CMS) to grandfather in all of these clients established up during the pandemic. We also want to see telehealth flexibilities manufactured lasting, and policymakers need a discover a way to keep entry to care for the thousands and thousands of men and women who could likely drop eligibility for Medicaid and who are now employing HME.
We have to have to guarantee a steady Medicare reimbursement methodology that demonstrates the complete scope of charges related with delivering higher-top quality, house-primarily based care. We simply cannot transfer forward once more with a competitive bidding assemble that makes it possible for CMS to reject bidding final results due to the fact they did not see the expense cost savings they wanted. Why must suppliers go by way of that physical exercise all over again only to possibly have CMS reject the results?
In the nearer expression, we’ll carry on to press for a 90/10 blended price for suppliers in previous aggressive bid parts (CBAs) and to have the 75/25 blended rate in non-CBAs and 50/50 blended prices in rural parts manufactured long lasting.
I’m optimistic about the potential potential clients for homecare, and, if inflation premiums and provide chain problems continue to relieve, I see the marketplace being in a better location at the conclusion of 2023.
Two of our country’s major issues in decades ahead are climbing wellness treatment expenses and conference the wants of an getting older inhabitants. HME must be a important part of addressing equally of all those. We have manufactured some strides in speaking a lot more efficiently about the worth of HME and significant-high-quality property-dependent care to policymakers and the community, but I assume we’ve just scratched the floor of what this industry can reach in highlighting these messages.
2. Concern: What just one problem should homecare companies request on their own as they enter 2023? “The a single issue suppliers should question themselves as they get ready for 2023 is: How can they maximize their return on financial investment on the providers they offer? We all sense the ache of elevated charges considering that the pandemic—fuel, products, assistance service fees, labor, and so forth. It is far more important than ever to decide how to come to be efficient in your operations.
You could not be equipped to influence the expenditures of merchandise, but you can glimpse at how you are processing orders, promises, deliveries, and so on and make improvements that will lessen the charge attributed to people tasks. Check with by yourself:
Can you outsource any features?
Are there merchandise or expert services you want to cut to be more financially rewarding?
Can you retain the services of a expert to support recognize the waste and duplication of attempts that cut down your gain margin?
How can you superior leverage technological innovation to lessen charges?
These questions appear to be logical, and suppliers have requested these for many years, but the challenge is that they are questioned and it’s possible even some action is taken, but extensive-term execution of all those initiatives rarely appear to fruition. Make it your 2023 resolution to act and execute on these financial gain-creating ideas.” —Sarah Hanna, VP of Consulting Companies, ACU-Serve Corp.
3. Question: Do you see providers ending 2023 guiding or in advance of exactly where they are now and why? “I attempt to be the everlasting optimist, so which is why I would say I suspect that companies should really be additional ahead in 2023. If worker lack troubles dissipate and technology continues to make improvements to, vendors should really be assisted in shoring up their operational efficiency—and, of system, their base line.
I also consider that as payers continue to deliver integrated expert services these types of as HME and they agreement with HME organizations, companies will need to be extra savvy and selective about the enterprises they husband or wife with. Even when they want to negotiate for a contract, they’ll have to make positive that pricing is these that they can still get paid a financial gain.
With regard to pricing alone, the buyer price tag increase—which will be a rather balanced this year—will help boost the condition. Even as the community health and fitness crisis waivers and loosening of the pricing regulations goes absent, we’ll nonetheless see even now some reduction. And simply because we have payer diversification and really do not depend so closely on Medicare, I think we’ll be in a position to negotiate much better pricing with some contracted events or third-social gathering payers, so I appear forward to a lot more diversified possibilities for HME corporations.
With regard to the remember and offer chain shortages, I imagine this will carry on to increase in 2023, and will enable HME companies to get back to accomplishing business the way they know how and dispense merchandise in a far more well timed style, which will in switch support with operational performance.” —Miriam Lieber, President, Lieber Consulting
4. Problem: What do you feel will be the most important issue to face the sector in 2023? The biggest problem in the advanced rehab and mobility sector will be educating state legislatures on serious remedies to handle the delays consumers are going through in finding timely access to wheelchair assistance and repairs. Sad to say, it is a multifaceted challenge that will demand numerous steps to resolve, but both equally the Nationwide Coalition for Assistive and Rehab Technology and AAHomecare are doing work in collaboration with members to proactively deal with it.
The largest prospect for this phase of the industry is on the Medicare protection facet. CMS is scheduled to launch a proposed conclusion memo for Medicare protection of ability seat elevation systems in February, and the electrical power standing units national coverage examination (NCA) really should be released for comment in 2023 to commence that protection system. Above 3,500 supportive reviews had been submitted to CMS as a section of the preliminary comment time period on the ability seat elevation NCA, and protection of this technology is a acquire-acquire for all stakeholders, like Medicare. —Seth Johnson, Senior Vice President, Govt Affairs, Delight Mobility Goods Corp.
5. Problem: Is there a one thing—a regulation, legislation, or financial factor—that would make the greatest impact on the industry? “Sure: Any regulation or legislation outlining value-based mostly excellent and outcomes metrics that can be specifically impacted by residence-primarily based care. The idea is to incentivize care that is less fragmented and siloed in favor of coordinated, longitudinal treatment. We’ve found a ton of motion to price-centered care in excess of the past decade, and even though that will continue, we want to be very clear on aligning incentives unique to dwelling-primarily based treatment so that we get the sought after outcomes—including much better client outcomes, reduce expense, and increased individual pleasure. These are consistent with CMS’s objectives in its benefit-based treatment courses.” —Vijay Kedar, CEO and Co-founder, Tomorrow Well being
“The major concern for 2023 will be the unwinding of all the functions connected to the finish of the community health and fitness crisis. HME vendors will have to deal with a myriad of troubles, several of which we never know because Medicare and other payers have yet to articulate the vital transition problems with regards to protection and documentation for the provision of respiratory and other objects to people who have continued health-related want.” —Cara Bachenheimer, Head of Governing administration Affairs Observe, Brown & Fortunato
“One significant external component that will considerably have an affect on the full industry is the continued rise in desire costs. The Federal Reserve Financial institution will continue to raise fascination charges at an intense amount through the foreseeable upcoming in an hard work to control inflation. In unique this will tremendously have an impact on the mergers and acquisition current market, resulting in additional scrutiny in because of diligence, more time transaction cycles, considerably less leverage and private fairness staying additional mindful with their acquisitions.” —Bradley M. Smith, Taking care of Director/Lover, VERTESS
6. A Long run Aim for PACE By Carlos Perez, Govt Vice President, CareVention Health care at Tabula Rasa Health care For people today with complicated treatment wants, acquiring extremely coordinated residence-primarily based professional medical and social services is vital to safely aging in spot. Benefit-based care systems, this sort of as the System of All-Inclusive Care for the Elderly (Pace), which believe total economic possibility for participants’ health-related and social expert services requirements, are becoming an ever more interesting alternative for those wishing to stay in their communities. Pace-lined providers involve the core gains furnished to all Medicare recipients this kind of as most important treatment, actual physical and occupational therapies, dwelling care, clinic care, social providers, and prescription medications—but Pace also gives so much much more in the way of adaptability and creativity to produce personalized treatment to enrolled participants.
Since a lot of Tempo contributors have complicated treatment requirements, typically driven by a number of long-term health conditions, it is widespread for members to get quite a few prescription drugs. Ensuring that all remedies and their doses do the job together securely and optimally is critical for unique properly-becoming. For case in point, certain drugs for urinary incontinence are related with delirium, dementia and falls. Getting larger doses of these medications could maximize risk for the participant. And due to the fact price-based mostly courses like Tempo use a capitated payment model of treatment, exactly where the corporation is paid a established fee to provide the person’s treatment, this rapidly gets a value hazard to the business.
Optimizing drug therapy is critical for Pace packages to boost overall health and perfectly-staying even though steering clear of unneeded downstream wellbeing treatment expenses. Even though classic treatment therapy management targets individuals based on the selection of continual disorders and how several different medicines they get, modern day, far more complex technologies can concurrently examine how all the medication getting taken interact with every single other. This approach improved establishes the danger of harm from a person’s each day medication regimen, which can be especially elaborate.
With chances to launch new courses and grow enrollment in current programs on the horizon, Pace is properly-positioned for expansion in 2023. Built-in solutions that involve fashionable, advanced medicine therapy management can enable packages generate achievement by optimizing drug routines and advertising and marketing the overall health and wellbeing of their individuals, all when preventing pointless well being treatment bills and increasing operational efficiency.
Over and above optimizing medication use, Speed systems have prospects to reduce prices and boost efficiencies in other places of their procedure these kinds of as 3rd-bash administration, service provider instruction, and danger adjustment with partners specialist in supporting worth-dependent treatment companies. When all of these functions are section of an integrated suite of remedies, customized precisely to worth-dependent care, packages can provide optimized care to participants, streamline operations, lighten administrative workload for personnel, and make knowledge much more obtainable and useable.
7. A Path to Residence Accessibility By Jim Greatorex, Vice President, VGM Live at Dwelling The residence accessibility marketplace has viewed a turning issue get there in the past 18 months. There has been a fantastic deal of financial investment into the marketplace, community consciousness has grown, legislation has been introduced and, most of all, the improved demand from customers for our companies has resulted in our estimation an 18{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} to 20{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} sector growth price for 2022.
We consider that double-digit progress will keep on by the future four to 6 several years fueled by the retail sector for getting older in position.
The marketplace is starting up to choose methods to outline what we do and professionalize ourselves. To assure sustainability, we are starting off to create an apprenticeship program for area professionals. This will be a very long-term undertaking that will convey much more price by furnishing abilities and know-how to the latest workforce and incubate a entire new technology of technicians who are captivated to the construction industry and the meaningful shopper contact that property access provides.
Listed here at VGM, we are operating to develop a white paper that will depth the very best techniques for collaboration concerning scientific experts and dwelling entry experts. By defining roles and conforming the evaluation procedure, we hope to establish an field that can come to be an included and precious piece to the homecare spectrum—and a lot more broadly to the continuum of treatment.
The a single concern house obtain corporations need to talk to themselves as they get ready for 2023 is: “What infrastructure and units should really I employ into my organization functions to let for scalable advancement shifting forward?” As a modest but rising specialized niche industry, we presently do not have project management or working computer software specifically built for our distinctive demands. In quite a few conditions, we also do not have polished sales applications that empower us to properly present ourselves and our methods to retail prospective customers. We foresee potential options on the horizon and the household obtain market requires to embrace this kind of technological know-how and progress.
I see the future two years as the time the place the house accessibility marketplace exhibits terrific development in its maturity and becomes a regarded entity in the United States sector. There are quite a few worries forward, but market place growth is not a person of them.
This report supplies strategists, entrepreneurs and senior management with the crucial data they need to evaluate the global dwelling fragrance sector.
The world-wide home fragrance marketplace is envisioned to increase from $6.52 billion in 2021 to $6.94 billion in 2022 at a compound annual development charge (CAGR) of 6.4{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b}. The house fragrance industry is expected to improve to $9.2 billion in 2026 at a CAGR of 7.3{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b}.
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Main gamers in the home fragrance current market are S. C. Johnson & Son Inc., Voluspa, Newell Brand names, NEST Fragrances LLC, Godrej Aer., Reckitt Benckiser Group Plc., The Procter & Gamble Company, Seda France, ScentAir, 3M Business, Bougie Et Senteur, Bath & Human body Functions LLC, The Estee Lauder Companies Inc., Faultless Models, Air Necessities, Esteban Paris, Korona Candles S.A, Illume Inc., Faultless Manufacturers, and Ripple Fragrances Pvt. Ltd.
The house fragrance sector consists of revenue of home fragrances by entities (companies, sole traders, and partnerships) that refer to fragrances that are manufactured and used in households. A dwelling fragrance is a combination of natural and organic compounds that emits a attribute aroma or scent that is now turning out to be as important a characteristic of residence layout as any piece of furnishings or decor. Household fragrances are intended to scent the air or mask odors to produce a pleasurable inside ambiance. Household fragrance products are inexpensive, aromatic, assist in the routine maintenance of air high quality, and provide as a supply for getting rid of unpleasant odors.
The most important varieties of household fragrances are candles, place sprays, reed diffusers, important oils, and incense sticks. The candle is a cylinder or block of wax or tallow with a central wick that is lit to deliver mild as it burns. The fragrances in residence fragrances are lemon, lavender, jasmine, rose, sandalwood, vanilla, other fragrances that are distributed in excess of supermarkets and hypermarkets, on the web retailers, comfort stores, other distribution channels in liquid, the dry, or sound sorts used in-house care, healthcare, hospitality, museums, commercial, other finish-end users.
Western Europe was the largest location in the property fragrance sector in 2021. Asia Pacific is expected to be the speediest-expanding area in the forecast interval. The locations coated in the property fragrance current market report are Asia-Pacific, Western Europe, Jap Europe, North The united states, South The united states, Middle East, and Africa.
The increasing demand for purely natural essential oils in house fragrance products is expected to propel the progress of the household fragrance marketplace. The use of normal essential oils is getting significantly well-known as folks place a bigger emphasis on their well being and well-currently being, as effectively as a favorable impact of aromatherapy. It is categorized as a supplemental medicine that is applied to enhance one’s wellness and well-being.
According to the European Federation of Necessary Oils (E.F.E.O.), an Food and drug administration regulated human body, entire world vital oil generation accounts for approximately 600,000 hectares of the 1.6 billion hectares of agricultural creation. Around one million farms produce in the business, accounting for .06 percent of all farms around the world (1.600 million).
Technological innovations are shaping the dwelling fragrance market. Technological improvements are the discovery of know-how that advancements know-how.
The international locations included in the Home Fragrance sector report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, British isles, United states.
Chris Bradley, executive vice president of consumer products, NCFI
