The Long-Term Impact of Coronavirus on the US Food and Drink Market

June 2020

The coronavirus (COVID-19) pandemic has caused unprecedented upheaval across the US food and drink industry. This will have far-reaching consequences, such as a permanent uptick in consumer adoption of online ordering in the food and drink space and an enduring shift in spending from consumer foodservice to grocery retailing. The economic fallout from the pandemic will also linger, undercutting key industry trends and transforming the entire US food and drink landscape for years to come.

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Scope
Key findings
COVID-19 shifts US consumer spending from foodservice to retailing
Consumer behaviour transformation expected to leave lasting changes
US food and drinks will be markedly different in the wake of COVID-19
Shifting labour patterns reduce the number of eat-in dining occasions
Case study: Grocery retailers expand assortments of prepared meals
Premiumisation is poised to retract as financial scars remain
Case study: Important product attributes become luxuries
Industry consolidation will accelerate
Case study: Independent restaurants bear the brunt of the pandemic
Delivery and pick-up become table stakes for restaurants and grocers
Case study: Curbside pick-up powers Walmart’s e-commerce growth
Restaurants and grocery stores’ approach to space will be transformed
Case study: Ghost kitchens come alive
The US food and drinks space will be fundamentally transformed by 2025

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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