From cheesesteaks and crab cakes to cocktails and beer, tariffs ripple through Philly’s food, beverage, and grocery industries
Uncertainty is high, but food and drink professionals are anticipating an increase in prices across the board.
“Force majeure” was the term of the day in the food-wholesaling world on Thursday, a day after the Trump administration announced a sweeping array of tariffs on imported goods the world over.
Mark Oltman, chief financial officer of Burlington County-based distributor Foods Galore, was fielding letters from the company’s many vendors, all pretty much saying the same thing. He read from one sent by its largest importer: “‘Since it is unclear how these tariffs will affect our costs in the coming days and weeks, we may need to enforce’ — and this is the big one — ‘the force majeure [clause],’” Oltman said. “It basically means they can rip up contracts and just say, ‘Well, [stuff] happened, and here we go.’ ”
If Foods Galore — which services 1,000 restaurants, gourmet grocers, supermarkets, universities, and hospitals throughout the Mid-Atlantic, plus federal prisons nationwide — pays its vendors more, it has to charge its customers more. “If my price goes up, their price goes up. We’ll sell them at the same profit margin … I can’t have that shrink and all of a sudden I’m selling everyone stuff and making no money,” Oltman said.
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Big clients like the federal prison system are better equipped to weather the price changes, Oltman said. “But what happens to the restaurants and the pizza shops and the bars? It’s going to be a problem.”
On Thursday, it was hard for him to identify an upside to the rapidly impending tariff-induced chaos. “If somehow this ultimately works and this guy’s right, and it really boosts farming and manufacturing in our country, maybe. But right now it’s hard to see through the forest, if you want my opinion. It’s scary to our customers. It’s scary to the end users who have to worry about how much they’re going to be spending on food and how much they’re willing to spend on a cheesesteak.”
He rattled off some products that would be especially hard-hit: tuna fish, crabmeat, shrimp, canned vegetables, sugar, maple syrup, olive oil, Australian beef.
Oltman had already talked with a Philly-area client who uses crabmeat from Vietnam to make its well-known crab cakes; they were thinking about reformulating with crab from Phillips Food in Baltimore. It wasn’t the only customer who had been in touch. “What we’re hearing is that [restaurants] are already reevaluating what’s on their menus.”
Likewise, business owners in the drinks industry were still wrapping their heads around what the tariffs would likely mean for their bottom lines. Melissa Walter, co-owner of Love City Brewing in Callowhill, had been anticipating a big hike in the cost of Canadian malt ahead of the “Liberation Day” announcements. “It appears that might not be the case anymore, but then there was a blanket 25% tariff on all aluminum [cans]‚” Walter said. “I haven’t fully digested everything, but it seems like one way or another, it’s going to mean increased costs of some kind.”
An across-the-board tariff on imported beer didn’t offer too much comfort to Walter. “If the larger imports get more expensive, I don’t know that people are going to shift to craft. I think they might look to the domestically produced beers, like a Bud or a Coors,” she said. “We’re definitely not going to be able to compete on price with the big guys.”
On Friday, Bar Palmina owner Nikki Graziano was drafting a spreadsheet of all the ingredients she uses at her nonalcoholic cocktail lounge in Fishtown: scotch from Scotland, mezcal from Mexico, vermouth from Greece, lemon aperitif from South Africa, vodka from the EU, amaretti from Australia. The booze-free list went on.
Graziano had posted a mock-up of her menu on Instagram the day before with every tariff-affected cocktail scratched out; only four of 20 beverages were untouched. But commenters were quick to point out oversights. The coffee beans from the espresso syrup were imported, and the herbs and glassware for a brand of bitters came from overseas. Graziano felt like the only purely domestic ingredient was nonalcoholic bourbon.
“I think I can pivot at this point, but it’s either going to be the prices affected or the quality,” she said, adding that she already battles the conception that NA cocktails shouldn’t cost anywhere near as much as the real thing. She’s not sure whether she should start stockpiling inventory. “As a business, I’m only nine months old and I can just start to see the breaking-even point coming closer and closer, and now this is happening. So it’s very disheartening.”
At least one beverage industry-adjacent business owner felt optimistic about the tariffs. Chester County maltster Mark Brault — who helped bring the art of malting grain back to Pennsylvania after a decades-long absence with Glen Mills’ Deer Creek Malthouse — saw opportunity in Wednesday’s tariff announcements.
“Probably 99% of the global malt that’s consumed by beer, primarily, and spirits [makers are made by] huge companies. They’ve got global supply chains. They manufacture things all over the world. They grow grain all over the world, so they will certainly be impacted,” Brault said. “It’s not like all of a sudden our ingredients are going to be less expensive than some of these commodities. But it definitely, I think, will close the pricing gap a little bit.”
Deer Creek sources locally grown grain, which it then malts for use primarily in brewing and distilling. Its products have been deployed in whiskeys and beers by the likes of New Liberty Distilling and Troegs Independent Brewing, but its malt is pricier than the mass-produced, imported alternative. Brault is hopeful the tariffs enhance Deer Creek’s value proposition, and he said he’s prepared to scale up fast should orders come flooding in.
“We started this business to create infrastructure, to shorten the value chain,” he said. “I’m cautiously optimistic that this is something that, in the grand scheme, maybe helps us achieve our mission.”
The tariffs may present a potential leg up to some local and domestic makers, but it’s not a universal benefit, and it’s not without shock waves, Weavers Way Co-op general manager Jon Roesser noted. “A lot of the local food producers we deal with are still reliant on imported products, like all the awesome local coffee roasters and chocolate makers and everybody else like that,” he said. “We’re just part of this global food supply chain that — our focus on local notwithstanding — we’re going to see price increases across the board."
Roesser gave olive oil as an example: “We have olive oil from Italy, Spain, Portugal, Tunisia, Palestine, Turkey, they’re all impacted. We also have domestic olive oil from California. Theoretically, that will be more competitive because the price of the imported stuff is going to go up, but all that’s going to mean is the demand for the California olive oil will increase, and then that price is going to go up.”
Roesser worried that small grocers like Weavers Way — and even larger ones like Acme and Giant — would suffer in the shakeout from the tariffs, because the requisite increase in prices can drive people to megastores like Target, Walmart, and Amazon, which are better positioned to keep food retail prices down. “They make their margin getting people to come through the door to buy groceries, and while they’re at it, they buy clothes or electronics or vacuum cleaners or whatever else,” he said. The tariffs could potentially exacerbate the market consolidation the grocery sector has seen for decades.
“Everyone that sells berries from South America in the wintertime is going to receive the same 20% increase, but Walmart and Target and the like are going to be in a better position to be able to absorb more of that and capture more market share,” Roesser said, adding that the tariffs will almost certainly have implications on Weavers Way’s planned update to its Chestnut Hill store’s 15-year-old refrigeration system.
“If that equipment is going to cost 20% more, it’s going to either mean that we have to raise more money in order to be able to do this project, which means we’re going to have less money for things like staff wages, or we’re going to have to increase the price of food more, or we just don’t do the project,” he said. “You talk about the economic impact that this has. It’s not just that all of a sudden stuff costs more to the consumer; ... it also means that small businesses like us punt on capital projects, because all of a sudden the capital project is now 20% more expensive.”
A longtime grocery-industry vet, Roesser has qualms with the American food system’s dependence on fossil fuels, plastic, worker exploitation, and animal cruelty, but he gives it a lot of credit, too. “The system itself is amazing in its complexity and its ability to get food everywhere at a ridiculously low price,” he said. “We are so fortunate, and we don’t even know how fortunate we are. To be able to have blueberries in Philadelphia in January, to be able to have bananas any day of the year for less than $1 a pound is just — it’s ridiculously fortunate.
“And now we’re messing with that system, totally unnecessarily messing with that system.”