One year on: signs of optimism and the need for an economic recovery that tackles society’s global and local challenges
As the UK approaches a full year since the first lockdown in March 2020, the government has published its roadmap for lifting restrictions during the spring and summer. With the budget announcement coming hot on the heels of this and UK Hospitality publishing a recommendation for the sector’s economic recovery, for the first time since we began tracking these developments in the food industry, we see some optimism creeping in.
Our share price tracker indicates renewed optimism for both high street and pub/restaurant chains and caterers, who have tended to be hit harder by the pandemic (both in the UK and abroad for those with global operations). The cost of the pandemic has been less severe on more ‘take-away friendly’ businesses such as the quick service restaurants and, of course, supermarkets who have remained open. The actual impact is less clear-cut than just winners and losers however and the expectations of many, that supermarkets would simply be pandemic beneficiaries, has not necessarily played out with Morrison’s recent announcement of an actual profit loss in 2020 due to covid-related cost increases and the loss of fuel and food-to-go revenues.
Forecasting what an economic recovery might look like is a risky business but one area we expect to see a greater focus is the role the food industry has in contributing to positive health outcomes, on wages and working conditions for food industry workers (both in direct operations and supply chains) and, with the UN Food Systems Summit and COP26 both being held in the second half of the year, sustainability.
In recent weeks we have seen Tesco, under pressure from shareholders to set targets around sales of healthy food, responding with a target to increase healthy food sales to 65% of total sales. Morrison’s have committed to pay all staff at least £10 per hour (roughly in line with the Living Wage Foundation’s recommended wage), and are focusing on sustainable farming practices in their supply chain, aiming to only source from net zero farmers by 2030. In the high street, despite a tough year, Greggs have launched the Greggs Pledge with a series of commitments that cut across health, community and environmental concerns.
The big opportunity may be in ensuring that capital, either provided by government or raised by companies themselves (the most recent being a £175 million share issue by Restaurant Group) comes with the right outcomes attached to it. Currently this remains only an emerging approach in the food industry. Assuming we do slowly come out of the current lockdown, the manner of economy recovery, and the direction it takes across social issues such as health, livelihoods, and the environment will probably be the measure of our longer-term response to the last twelve months.