The Impact of Coronavirus on Packaged and Fresh Food

April 2020

The Coronavirus (COVID-19) pandemic has had a huge impact across packaged and fresh food. Shoppers in many markets have reacted to the possibility of quarantine by stockpiling, foodservice options have been shut down, and eating occasions have shifted into the home. The result has been surging sales (and e-commerce growth). The outlook is less promising long term, as the economic impact of COVID-19 will see consumers reduce spending on food as disposable income falls.

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This report comes in PPT.

Key findings

COVID-19 drives eating occasions into the home

The implementation of social distancing policies and city (or country) wide lockdowns mean many out-of-home options are off the table. In addition, institutions such as schools have closed, and some consumers believe that home-prepared food is safer, shifting millions of eating occasions into the home and driving growth of food through the retail channel.

E-commerce grocery retailing receives a huge boost

There has been extreme growth in e-commerce grocery retailing, with governments pushing its use and consumers switching to comply with social distancing/quarantine or in order to actually secure groceries that they cannot be sure will be available in store. Retailers are betting that the change will hold once restrictions are lifted, with many expanding their operations. Prior to the outbreak, e-commerce was the channel with the fastest growth rate; this forced acceleration could result in a paradigm shift in some markets.

Food sales up across the board but future financial conditions will hurt

In the short term, many packaged and fresh food items have seen sales soar as consumers stock up, with some categories (ie staples with long shelf life) proving to be primary choices. But beyond this initial boost, the pandemic brings significant risks to packaged food value sales through damage to the global economy; as spending power weakens, trading down will occur and premium ranges will be in the firing line.

APAC gives signposts for future

As the first region hit by the COVID-19 outbreak, the reaction of APAC’s consumers is instructive: there is now more e-commerce grocery shopping, increased use of smaller, local stores, greater purchase of food with immunity-boosting claims, and use of delivery for (previously unavailable) foodservice options.

Supply line problems

Food supply is being tested, with border closures and absence of workers key problems. In future, localism is likely to gain prominence as the ‘need’ for produce from around the world comes into question, given COVID-19’s demonstration of how interlinked and vulnerable different markets are.

Key findings
Food and COVID-19
COVID-19 in context
Global GDP is likely to contract in 2020 under the baseline scenario
The COVID-19 pandemic impacts both supply and demand
In our baseline view, the pandemic peaks in June 2020
Three scenarios examine the impact of a more severe outbreak
Our view in short
Forecasts for Real GDP growth in 2020 under different scenarios
Financial markets on risk-off mode as COVID-19 entered Italy
China: An early glimpse into the economic cost of the virus
COVID-19 highlights need for supply chain diversification
Fiscal stimulus a challenge with restrictions on expenditure
What could alleviate the economic effects of the pandemic?
What could exacerbate the economic impact of the pandemic?
A short-term boost followed by negative echoes
COVID-19 impact at a glance: Food categories A-N
COVID-19 impact at a glance: Food categories P-Z
Routes to disruption
Macro-environment: Downturn/recession will change food spending
Supply chain faces severe challenges
Channel use: Food companies must contend with changes that may stick
The five-step consumer progression of COVID-19
Consumer behaviour and consumption patterns drive empty shelves
Snacks: Consolation for people in self-isolation at home
Snacks: E-commerce may improve post COVID-19
Staple foods: Less frequent shopping benefits long shelf life goods
Cooking ingredients and meals: bridging the eating out gap
Dairy products and alternatives: Fresh milk to suffer the largest hit
Fresh Food: A rush to buy fresh produce to serve immediate needs
APAC: Surging demand online and away from large stores
APAC: Some changed behaviours will remain in place
Western Europe: Major lockdown measures boost e-commerce
US: Lockdowns reverse longstanding channel and category trends
Food majors exposed to COVID-19 through China and the US
Case Study: Unilever’s on-demand ice cream to ease self-isolation
Case Study: COVID-19 spurs Meiji’s larger R-1 packs for families
Key insights
Outlook for food
About Euromonitor International’s Macro Model

Packaged Food

In packaged food we consider two aspects of food sales: 1) Retail sales. 2) Foodservice. Retail sales is defined as sales through establishments primarily engaged in the sale of fresh, packaged and prepared foods for home preparation and consumption. This excludes hotels, restaurant, cafés, duty free sales and institutional sales (canteens, prisons/jails, hospitals, army, etc). Our retail definition EXCLUDES the purchase of food products from foodservice outlets for consumption off-premises, eg impulse confectionery bought from counters of cafés/bars. This falls under foodservice sales. For foodservice, we capture all sales to foodservice outlets, regardless of whether the products are eventually consumed on-premise or off-premise. Foodservice sales is defined as sales to consumer foodservice outlets that serve the general public in a non-captive environment. Outlets include cafés/bars, FSR (full-service restaurants), fast food, 100% home delivery/takeaway, self-service cafeterias and street stalls/kiosks. Sales to semicaptive foodservice outlets are also included. This describes outlets located in leisure, travel and retail environments. 1) Retail refers to units located in retail outlets such as department stores, shopping malls, shopping centres, super/hypermarkets etc. 2) Leisure refers to units located in leisure establishments such as museums, health clubs, cinemas, theatres, theme parks and sports stadiums. 3) Travel refers to units located in based in airports, rail stations, coach stations, motorway service stations offering gas facilities etc. Beyond the scope of the foodservice research are captive foodservice units that serve captive populations around institutions such as hospitals, schools, and prisons. This is also known as institutional sales.

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