The COVID-19 pandemic has altered our lives in ways too numerous to count. Several of these changes are temporary, and things will slowly return over time to some semblance of a new normal.
Five things, however, could be forever changed by the COVID-19 pandemic.
China has been a leading supplier – and manufacturer – for decades. The country’s exports have been its primary economic driver since 2009 when it became the world’s top exporter. China has also been the world’s largest trading nation since 2013.
Surprisingly, even though COVID-19 has hit the country hard, recent signs are positive. China’s PMI expanded in the past two months, and exports grew 3.5% in April from the previous year. Furthermore, the government announced fiscal measures that analysts say would equal roughly 4.1% of China’s GDP.
With that said, the pandemic has caused some industries to look elsewhere for ingredients. For example, dramatic shifts in source location are happening in the supplement space.
Loren Israelsen, President of United Natural Products Alliance (UNPA), had this to say, “We’re seeing a shift from buyers in the United States and Europe, who are looking to India as a strong second source of supply after China. There’s growing talk about re-establishing a primary U.S. source of supply.”
COVID-19 has rocked the global supply chain, and it’s going to take months, if not years, to recover fully. And when it does, China might not have the same role that it did in the past.
2. Grocery Habits
Shopkick, a Silicon Valley shopping app, surveyed its customers and found that brand loyalty has taken a back seat to availability. Nearly 70% of shoppers buy different brands if they don’t see their preferred choice on store shelves. Over time, consumers might decide to switch brands permanently, or forgo any sense of brand loyalty altogether, even if availability is no longer an issue.
Additionally, shoppers are going to the store less often, but spending more during each visit, which could continue once the pandemic dissipates. Impulse trips to the grocery could become a thing of the past.
3. The Future of Meat
According to leading market research group Mintel, “meat from animals will shift away from the center of the plate.” Meat consumption is high - in Mintel’s research on packaged red meat, nearly nine in 10 consumers in the U.S., Brazil, and select European countries reported eating meat. Unsurprisingly, staples like beef and chicken were flying off the shelves as consumers stocked up. As we enter the “new normal” post-COVID-19, consumers will continue to buy meat, but more likely in smaller quantities and with lower frequency.
The protein shortage – whether real or imagined – could drive consumers toward plant-based meat alternatives. According to The Good Food Institute, the industry has been flirting with the mainstream for the last few years, with U.S. retail sales of plant-based foods jumping more than 11% in 2019 to a record of $5 billion.
4. Sustainability Could Suffer
Companies – driven by consumer demand – have been embracing sustainability efforts over the last few years. Now, consumers aren’t likely to spend more on organic products when money is tight. With so many consumers unemployed or suffering pay cuts, they will need to be frugal. And stimulus checks aren’t likely to spur a run on organic fruit. These changes in consumption will likely leave lasting economic damage to higher-end produce growers.
“This is an interesting extreme event to food systems because it’s really just a social event,” Megan Konar, a civil and environmental engineer at the University of Illinois at Urbana-Champaign, told Scientific American. “There’s no weather shock or infrastructure failure or shortcoming.”
With stores banning reusable bags and containers from stopping the spread of coronavirus, sustainability took another hit. Plastic bags have seen a resurgence that could linger for months. Sustainability efforts will recover, of course, but this outbreak will slow the foreseeable future of this trend.
5. Food Delivery
In 2018, the business consultants at Frost & Sullivan estimated the global food delivery market was worth about $82 billion in terms of gross revenue bookings and expected it to double by 2025. That translates into a cumulative growth rate of 14%.
While most restaurant owners are trying to figure out how to stay in business, Grubhub has experienced a financial windfall. The delivery platform recorded record revenues of $363 million from January through March. In its earnings report, Grubhub said, “For now, COVID-19 is a net tailwind for our growth metrics.” Orders in April increased by 20% over 2019, and the company has over 100% growth in many markets.
The New Normal
It’s notoriously difficult to change consumer behavior. The key is breaking habits, which are very difficult to alter. While most buying decisions are impulsive – ask the toilet paper manufacturers – consumers tend to buy what they’ve always bought.
This outbreak has upended that paradigm. As the pandemic drags on, consumers pick up new habits daily – and drop old ones. And even though people are venturing out to restaurants and retail outlets, it’s unlikely they’ll revert to former habits in the near term.
Here at TraceGains, we’re doing our part. In addition to our solutions that can help companies source new ingredients and suppliers, while keeping production safe and compliant, we’ve put together a couple of additional resources.
The first is a checklist “When a Food Plant Employees Test COVID-19 Positive” that walks companies through what steps to take should this unfortunate situation occur. The second is a data sheet for “Sanitation, Social Distancing, and Other Precautions on the Plant Floor.”