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Food Business

How is COVID-19 changing the food industry?

In order to understand food system consolidation and resilience, we’ll be monitoring COVID-19’s impact on the structure and economics of the food industry, identifying where old business models are forced to expire and where innovation is shaping new alternatives. We’ll also be looking at where companies are prioritising food that is healthy and affordable, and where private sector solutions to food access problems are ensuring that vulnerable groups receive the food they need. In the long-term, will the changes we see in this sector hinder or accelerate progress towards a food system that is healthy and sustainable for human and planetary health?

Return to our homepage to view the COVID-19 Tracker in full.

Morrisons: Amazon Prime Now service capacity has doubled during lockdown

The evolution of how we buy our food continues as Morrisons scales up its partnership with Amazon Prime. The supermarket chain aims to increase the number of stores serving Amazon Prime customers from 17 to 40 by the end of May, and will be expanding the number of cities across the UK from which the service will operate.

Asda partner with Starstock to provide essential items food box for vulnerable groups

Asda have partnered with online platform Starstock to make an essential items food box available for vulnerable groups. The food box contains store cupboard staples including tinned fruit & veg, dried goods, bread and long-life milk, at a £30 price point. As  increased demand for alternative shopping channels continues, Starstock are also providing their click & collect platform for pub chains, as reported in this tracker earlier in April.

Is it time for more investor focus on inequalities, similar to the Taskforce on Climate-related Financial Disclosures? 

With Covid-19 exposing the inequalities in societies (see our content on Vulnerable groups) some investors are drawing parallels between investor engagement with businesses on climate change, primarily the Task Force on Climate-related Financial Disclosures (TCFD), and the need for a similar board level focus on society’s inequalitiesThe Food Foundation is looking at how food businesses are serving the needs of both the planet and society in our Plating Up Progress work, and would welcome this additional focus as long as the issues and solutions are joined up rather than operating in silos. 

Ocado’s succsses continues, but with a caution that the online sales trend may plateau.

As we highlighted in our share price analysisOcado has seen significant sales growth with its share price is outperforming traditional food retailers. The company cautions however that, even though it expects online demand to continue to grow throughout the crisis, it has seen some signs of “more normal shopping patterns” in recent weeks. 

IGD Market Update: retailers respond to increased demand for staples while online sales continue to grow.

IGD’s latest market update shows retailers responding to increased demand for potatoes (with Tesco taking supplies from foodservice potato producer Branston) and flour (with Morrisons bagging up and selling flour that would ordinarily be used in its own bakery operations).  Meanwhile online retailer Ocado has seen a 40.4% increase in sales in the second quarter so far, and Marks & Spencer has expand its partnership with Deliveroo. See our share price tracker here to see how differently Covid-19 has been affecting the share prices of different companies. 

Share prices provide an early indication of how covid-19 is impacting different sectors in the food industry

Food Foundation is tracking the share price fluctuations of major food retailers, quick service restaurant chains, caterers and casual dining chains.  Data from January to the end of April illustrates the significant impact the crisis and subsequent lockdown has had across the industry, with many companies’ share prices experiencing a relative fall in value in line with or worse than the FTSE100.

Notable differences exist however.  Food retailers have seen some recovery in April, with the exception of Marks & Spencer (also reliant on non-food revenues), and Ocado (seeing significant growth).  Quick service restaurants are , in the main, performing slightly better than or in line with the FTSE100, whereas caterers and, especially, the casual dining sector have seen greater relative loss in share prices than the other food sectors and the FTSE100.

See the graphs tracking these fluctuations here (link to research and data).  We will be updating these on a fortnightly basis.

Convenience stores ramp up home deliveries of groceries

 The Grocer reports that the proportion of convenience stores providing grocery home deliveries has increased from 10% to 65% during the crisis, with 600,000 deliveries being made each week. The Association of Convenience Stores (ACS) says that local stores are providing a vital lifeline for vulnerable people and can act as a key part of local food hubs. 600,000 deliveries is a significant contribution to meeting the rising demand for online services (by comparison the UK’s largest food retailer, Tesco, are providing over a million home delivery slots nationally) with independent food retailers having seen significant sales growth since March (see our analysis of retail sales in the Big Picture section for further details). 

MPs write to Chancellor asking for more support for the hospitality industry

85 Conservative MPs have written to the Chancellor asking that more assistance be given to the hospitality and tourism industry.  Specifically, they are asking for:

  • an increase in the business rates relief threshold
  • an extension of the furlough scheme
  • VAT relief.

As reported earlier, the industry itself has become increasingly vocal on the need for more help, with initiatives such as National Time Out going beyond the requests listed here and arguing for longer-term rent holidays for restaurants, and assistance for landlords to compensate for the loss of rental income.