The current COVID-19 coronavirus is driving countries to major precautions and requiring people to refrain from their social activities and stay at home as much as possible. This shift in behaviour, the insecurity around the pandemic and the precautions taken by authorities is driving consumers to different buying patterns. Last week we took a look at the impact on the Fresh Produce industry, this time we will examine some of the effects of the COVID-19 virus on the food industry.
A Nielsen investigation classified six consumer behaviour threshold levels that link directly to concerns around the Coronavirus outbreak. Depending on the level of reported COVID-19 outbreaks, the number of thresholds is determined. Currently, most of Europe is identified as #5 “restricted living”. Consumer behaviour shifts that are common here include severely restricted shopping trips, price concerns rise as limited stock availability impacts pricing in some cases. Common COVID-19 indicators include restaurant closures and restrictions on small gatherings.
With the closing of restaurants and a sharp decline from businesses active in food service like catering but also hotels, airports and events, food companies that normally rely heavily on these sectors are faced with a challenge. Businesses like restaurants and café’s are in most countries closed for people to dine-in but alternative delivery options, such as take-away and home delivery are allowed. A report by UBS today also found the uptick in food delivery across different European markets.
The retail industry is experiencing a major uplift as consumers are forced to shift to retail as the near single source to supply them with food. Furthermore, the uncertainty around the developments of the coronavirus is causing consumers to swift in buying behaviour and start to hoard different food and household items to cover their uncertainty towards the future. The two countries where this hoarding behaviour was shown predominantly are Belgium with a 44% growth in week 11 compared to previous year and Spain with a 71% growth in week 11 compared to previous year. One thing that should be considered when comparing these numbers is whether governments enforced regulations such as lockdowns across the entire country at once, like in Belgium, or if this is happened gradually per region like in Italy. Especially once a lockdown is in place, a tremendous pressure is put on retail stores to ensure all the isles fully stocked.
The food industry is a crucial sector. Meaning that even during a pandemic like COVID-19, the negative impact on this sector is limited, compared to other sectors like tourism and aviation that are not as critical to daily life. While some food companies are certainly facing difficulties due to a drop in revenue, others are working around the clock to continue to meet the growing demand from retailers. One major concern all food companies share relates to the health and availability of their employees. With increased pressure from retail, food businesses really need all the capacity they have to continue production and meet the growing demand. Luckily, companies have policies and regulations in place to do their best to prevent any virus transmission.