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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?

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COVID-19 impact on food businesses: weekly summary 

March and early April saw a range of responses from the industry, some voluntary, some more a matter of business survival.  Food retailers applied purchasing restrictions, in-store social distancing measures and dedicated shopping times for clinically vulnerable groups and NHS and care workers.  Restaurant chains and caterers, being forced to close, were forced to either shut their doors or innovate, with a number of new partnerships and initiatives springing up to provide home delivery, take-away or click & collect services.   

As April has progressed we are seeing retailers maintain their position on demand management (although purchasing restrictions have eased and empty shelves are returning to something a little more like normality for now).  British Retail Consortium provide a useful summary of current retailer responses here. 

Capacity building and new partnerships continue to evolve in order to meet demand for home deliveries, for example Morrisons partnering with Deliveroo, and other retailers adapting their delivery offering. 

Some restaurants are reopening for take-away or delivery services, from smaller independent operators to high street names, and quick service chains. 

Zooming out a little, the longer term forecast for many in the sector appears uncertain.  Tesco warns that increasing sales in March and additional operating costs may balance each other out.  With restaurant giants such as McDonalds acknowledging the potential for long-term negative impacts and Burger King not making its April rent payments, the industry cry for more government support for the sector is getting louder. 

We’ll be keeping an eye on the financials across the sector, with some stakeholders arguing for any economic re-boot to be an opportunity for all industries, food included, to make sustainability, resilience and social responsibilities more central to their core strategy 

 

Food businesses offer discounts to NHS staff

In the last couple of weeks a number of high-profile companies have been offering dedicated services and discounts to NHS staff. NHS England has a handy list of key offers.  From the food sector these include discounts and vouchers for deliveries (Deliveroo and Just Eat), several 50% discount offers from restaurant chains pivoting their business models to takeaway and delivery, and 10% discount offers from retailers Morrisons, Coop & B&M).”

Jay Rayner discusses current and future challenges for restaurants

Jay Rayner discusses the financial challenges for restaurants during the lockdown, and the hurdles they may still face when they re-open.  Concerns revolve around paying ongoing fixed costs, cashflow for re-opening, and genuine uncertainy about how the public will respond to life after the lockdown.  Interviewees call for a phased and government supported approach to re-opening.”

Tinned tomato demand causes ripple effect up the value chain.

A 30% increase in UK demand for tinned tomatoes has led to Italian suppliers warning of restrictions being placed on UK retailers.  Compared to other countries the UK has seen higher demand increase for tinned tomatoes, placing capacity pressures on suppliers, potentially risking the security of future supply.”

Calls for sustainable financing gain traction

With so many businesses under significant financial pressure, including many in the food sector, the call for more sustainable financing to re-boot the economy is gaining traction. Both investors and governments can seize the opportunity to attach future-proof conditions to bailouts and capital, in order to shift the global economy onto a more resilient, sustainable and equitable footing.  In our Plating Up Progress analysis later this year, we will be shining a light on how UK food businesses are progressing and highlighting where key issues remain unaddressed.

Waitrose provides additional support for farming communities

IGD reports that Waitrose is providing additional support for farming communities and overseas suppliers.  The additional package (£200,000) will provide advice on social distancing and physical assistance in the shape of food parcels and sanitisation kits.  The retailer is also working closely with smaller suppliers in the UK in order to help vulnerable local suppliers to continue to sell their produce.