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.
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.
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.
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.
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.
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.
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