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Impact of COVID-19 pandemic on Food & Beverage Industry World Wide

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   April 06, 2020
   Dipen Bhatia - Head, International Business (ACE)

COVID-19, the disease spread by the novel coronavirus SARS-nCoV-2, has quickly spread to six continents and caused a public health emergency in more than 30 countries in Asia and Europe. On March 11, 2020, the World Health Organization (WHO) declared the rapidly spreading coronavirus outbreak a pandemic and urged countries to plan their preparedness and response actions in line with the WHO Global Strategic Preparedness and Response Plan.

The impact of Coronavirus on the manufacturing supply chain could affect worldwide revenue to the tune of €14 trillion this year as the nutrition industry sets about assessing the long-term ramifications.

The greater significance of this with the food industry is related to the very fact that China is among the most important markets for food & beverage imports and exports for several countries. Consistent with World Integrate Trade Solutions (WITS), in 2018, China imported food products worth approximately $27 billion, and within the same year, it exported food products of roughly $34 billion. China is the world’s second largest economy, and the effect of the coronavirus extends – much like the coronavirus itself – far beyond its borders. In fact, according to Fortune.com, 94% of Fortune 1000 manufacturers are being hit with disruptions as a result of the coronavirus.

Globally, the food & beverage industry is affected at stage of its value chain through the mediums of the affected workforce at industrial level, raw material supply (agricultural produce, food ingredients, and intermediate food products), trade & logistics, demand-supply volatility and uncertain consumer demand at food service outlets—among other factors. Production, distribution, and inventory levels across the food & beverage industry spectrum are expected to be impacted at much higher level compared to at the moment.

A surge in sales of shelf-stable foods and beverages may boost profits for some food manufacturers and retailers in the near term. Sales of powdered milk products, staples like bread and eggs along with rice, beans, instant food, Juices and frozen foods also have increased as consumers rush to stock their pantries as a result of panic and lockdowns.

For food retail outlets, the challenge would be to deal with the possibility of the irregular footfall of consumers and, contrasting, to also assess the possibility of stockpiling food & beverage products to ensure continuity in consumer access to products they intend to purchase. The idea for this can be further assessed from the indication that some processed food manufacturers are foreseeing an increase in their product sales due to the growing trend of home dining. This scenario is influenced by the fact that more and more consumers are increasingly isolating themselves from public occurrences or are quarantined for testing positive. As a result, food service outlets are facing challenges with declining consumer footfall, together with a shortage of labour and food supplies. Food safety concerns and the potential risk of virus transmission through public contact has drastically affected consumer visits to food service outlets.

The bulk of dietary supplement ingredients, botanical or otherwise, now come from China and factories there have reportedly, in large part, returned to full production.

However, the pause in operations may still cause shortages that will begin radiating through coming times.

So, overall some sectors of food and beverage sees a boost in sales, however the constraints of logistic, supply chain and labour continues to be a universal issue at all ends even when all the industries giants are working to ensure that there is no shortage of food. The lockdowns will create more pressure on food and beverage industry as the intensity of demand over supply ratio gap is increasing. People do not have options but to stay home and eat more than they use to during normal times.