The Coronavirus Is Impacting the Entire Food Industry
Trade fairs take a huge blow and EU member states start to seal off borders—wholesale ingredients are still moving smoothly in the online sphere. Consumers face closed restaurants and empty supermarkets—food delivery services are seeing a surge.
17 March 2020. In recent weeks the coronavirus pandemic has taken the world—and with it the food industry—by a storm. In Europe, every day we wake up to new government regulations and recommendations, which at this point include a continent-wide shift toward remote work wherever possible alongside widespread restaurant shut-downs and a rapidly rising number of bans on people's movements and activities. Everyone is grappling with developing emergency measures to keep businesses running and the economy afloat. At foodcircle, we are carefully monitoring the situation as it unfolds. We compiled this overview to help you understand how the food industry has been affected so far.
The B2B Food Industry - Supply Chains
Looking at the B2B landscape, there is still much uncertainty around how supply chains have been and will be affected in the food industry. In the United States, eatery.com recently published the alarming claim that “[...] there have been major interruptions in the food supply chain as factories temporarily close amidst the outbreak and concerns grow surrounding the importing and exporting of goods”. It is our understanding that this statement was primarily referring to distribution shortages between traditional wholesalers and supermarket retailers, not to eCommerce. Many EU member states, including Poland, implemented emergency measures this weekend and closed off their borders to tourists, giving rise to worries surrounding trade blockages. European governments are working to keep their trade routes open and truck drivers, for example, are currently still exempt from the rapidly spreading border-crossing bans.
One global concern that is currently still very much overlooked is the indirect effects of the coronavirus's spread on food suppliers and farmers around the world. BBC Newsday’s James Copnall recently spoke to the Ivory Coast’s Prime Minister, Arthur Coulibaly about how the cashew industry in his nation has suffered from the indirect effects of the coronavirus’s spread: “[...] China is about 10% of the global cashew kernel consumption. And that kernel consumption is mainly supplied by Vietnam. So with coronavirus, that means the Vietnamese got some stock in hand. And it happens that they are trying to find ways to dispose of that kernel, so the price of the kernel really decreased during the last two to three weeks. [...] The second point is that if the Vietnamese are expecting a slower market in China, they would also be slow to buy raw cashew nuts from Cote d’Ivoire and from other African countries.” As digital wholesalers with a global network, we will continue to monitor how developments around the world are impacting pricing, demand, and supply.
Prior to Italy’s nation-wide shut-down FoodNavigator highlighted how the peninsula’s government was preparing emergency economic measures and support packages for businesses in all industries. According to the Financial Times, this now also includes the suspension of mortgage payments. Across the EU governments are currently pushing to develop emergency packages for businesses in their countries. Please consult your local government’s regulatory bodies for more information on what support is available for your business as there is currently no pan-European strategy in place for this.
The B2B Food Industry - Trade Fairs
While goods continue to move freely between countries, trade shows were amongst those to take the biggest blow in all sectors. With widespread bans on large-scale events of 1000+ people extended throughout the EU, as of 16 March, over 550 trade shows in Europe have either been cancelled or postponed. In the food industry, this includes Natural Organics Products Europe in London (postponed until 7-8 July), Alimentaria in Barcelona (postponed until 14-17 July), and Cfia in Rennes, France (postponed until 26-28 May). While these changes have admittedly also put a dent in some of our planned efforts to generate new business in upcoming months, at foodcircle, we continue to offer our entire wholesale organic ingredients portfolio and services online. Deutsche Welle assumes that bulk of the losses will fall on backs of trade fair operators and that, while exhibitors will certainly experience losses in revenues, they will most likely be able to reclaim exhibition and travel costs under current legislation. While numbers for this do not currently exist, the economic repercussions that come with these unforeseeable alterations are expected to be extensive.
A comprehensive overview of all postponed and cancelled trade shows can be found here: expodatabase.de
The B2C Food Industry - Restaurants
“Of all the industries threatened by the novel coronavirus (COVID-19) outbreak, few have felt the impact as deeply as the food industry. Restaurants around the world have experienced dramatic drop-offs in customer traffic [...]” Eater.com aptly highlighted last week. Since then, the escalating situation in many European countries has given way to further crackdowns. In Austria, all restaurants are shut, and residents are no longer permitted to leave their houses unless they are going to the supermarket or seeking medical help. In Germany, while bars and places for social gatherings were ordered to close on Saturday, non-smoking restaurants are still permitted to stay open if they can guarantee a 1.5-metre distance between tables and adhere to strict hygiene policies. Measures such as these also extend to numerous other member states, such as the Netherlands, Spain, and France. The short and long-term economic effects on the restaurant industry remain to be seen.
An overview of how European countries are responding to the coronavirus can be found here: politico.eu
The B2C Food Industry - Supermarkets
While widespread social distancing measures seem to be resonating with the general public in Europe, hoarding of food in supermarkets has led to a dramatic uptake in empty shelves. According to Katy Askew at foodnavigator.com, research conducted by HIM & MCA in early March found that, even at the beginning of this month, “one-third of UK shoppers [were] stockpiling food” and “67% of shoppers [were] concerned in some way about shops running out of groceries due to a major coronavirus outbreak”. Fast-forwarding one week, The Guardian revealed that the outbreak of empty shelves across the United Kingdom has led to a unified outcry from retailers: “Britain’s leading supermarkets are pleading with customers to refrain from panic buying during the coronavirus crisis, with some already rationing items and turning new customers away to cope with demand.” The Guardian goes on to highlight that this has resulted in leading retailers, including Tesco’s and Sainsbury’s, issuing a government-backed joint plea directed at consumers asking them to shop considerately, “We are working closely with [the] government and our suppliers to keep food moving quickly through the system and making more deliveries to our stores to ensure our shelves are stocked”, while vowing that they are working to speed up deliveries. In Germany, on the other hand, zeit.de reported this weekend that, while the dent in German supermarkets’ shelves is “clearly tangible”, notable industry associations, such as the German Retail Association (Handelsverband Deutschland, HDE) and the Food Federation Germany (Lebensmittelverband Deutschland) remain confident that the industry has “sufficient stocks” to supply the country. Their biggest challenge now is to continue to extend this confidence to the general public.
The B2C Food Industry - Food Deliveries
While the retail industry is facing some severe setbacks, food delivery services are benefiting greatly from consumers choosing to stay home during the spread of the coronavirus. To minimise exchanges between individuals who are ordering and delivering foods, US and European delivery services are now hastily catching up to their Chinese and Japanese “zero-contact” or “contactless” counterparts. For some time now, numerous food delivery services in these nations have already introduced innovative processes by which foods can be dropped off at people’s doorsteps instead of handed to them at the door.
How We Are Dealing with the Effects of Coronavirus at foodcircle.com
Our entire team is currently working remotely to ensure the safety of our employees. As a digital wholesaler, we are able to give you full access to our product portfolio via our website and digital dashboard as well as provide you with real-time support by ordering ingredients over the phone and via email.
We have not experienced any notice of shortages or delays from our suppliers to date. Rest assured, we are monitoring this situation carefully and are in constant communication with our partners and suppliers. Should any unforeseeable challenges arise in the future, we will be sure to inform you immediately if your orders are affected in any way. In the meantime, we are delighted to keep supplying you and your business with organic ingredients from afar.
As the coronavirus pandemic across Europe continues to develop and nationwide travel restrictions in many European countries are in place, trade routes are being even more tightly controlled. Although the transport of essential goods continues to be ensured, please contact the foodcircle Team if you have queries or in the event of delays.
Buy organic wholesale ingredients online: foodcircle.com/products
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