COVID-19 Sends Mixed Economic Messages

Posted by Denis Storey on April 30, 2020 at 8:00 AM

COVID-19 Sends Mixed Economic MessagesWhile the coronavirus pandemic continues to keep everyone at home, its damage to the economy has been nothing short of devastating. The statistics almost defy belief.

  • Over the past six weeks, more than 30.3 million Americans have filed for jobless benefits.

  • More than 3 million restaurant jobs and $25 billion in industry sales vanished over the first three weeks of March.

  • Restaurant same-store sales fell more than 28% in March, making it the industry’s worst month on record.

  • More than half of the Chinese restaurants in the United States have closed.

  • Most recently, the Congressional Budget Office predicted a $3.7 trillion budget deficit, a 5.6% economic contraction, and a jobless rate of 12% before the end of the year.

These, of course, have been the most immediate consequences. But the ripples are still being felt.

In its latest earnings report, announced earlier this week, Coca-Cola announced a 1% drop in revenue for the first quarter, but “since the beginning of April, the company has experienced a volume decline globally of approximately 25%, with nearly all of that decline coming in away-from-home channels.”

Silver Linings

But the news hasn’t been all bad. Apparently, peanut butter and jelly sandwiches have emerged as a quarantine staple. The J.M. Smucker Co. reported that it expects its net sales for fiscal 2020, ending April 30, to be down 1% to the year before, better than its earlier expected guidance of a 3% drop. The company attributes the improved results to increased demand across all U.S. and Canadian retail channels driven by consumer stockpiling efforts. The company added that all of its manufacturing and distribution facilities remain open, and in fact, it’s actually boosted production.

Then there’s Nestlé, which just reported its best quarterly sales numbers in five years. North America and Europe sales were especially strong in March, powering a jump of 4.3% in the first three months of 2020, outpacing analyst expectations.

  • TraceGains customer King Arthur Flour Co. is another example of a company thriving during this crisis. The company experienced an unprecedented 2,000% jump in sales in March year over year, as consumers take to baking during quarantine.

  • And it’s not just home bakers driving sales. Bread sales across the board jumped sharply during the early days of the pandemic, as panicked consumers rushed to stock up on staples. Another TraceGains customer Bimbo Bakeries USA just reported a jump in first-quarter sales of 10% over the previous year. The company also recently reopened a manufacturing plant in West Hazelton, Pennsylvania, to make bread and buns and keep up with demand, according to Food Business News. Company officials plan to keep the plant open until at least Labor Day.

Nearly two-thirds of TraceGains customers have performed better than expected during this outbreak, based on an internal survey.

Good News, Bad News

Dietary supplement manufacturers in particular, have seen soaring demand over the last four to six weeks. That’s not surprising since a recent study found that “consumers have been increasingly looking for food and beverage options that offer functional benefits during the past year, but interest has risen even more during the pandemic.”

One example of this trend: Web searches for kombucha for health reasons grew 73% month-over-month, and searches for ingredients like elderberry and rosemary have seen triple-digit increases.

Amazon has reported vitamin sales in March were up 166% over last year.

According to research from Imbibe, one of the industry’s leading beverage developers, “Expect greater demand for beverages that support improved immunity, sleep and stress relief. There was a market for all three of these types of functional beverages before COVID-19, but consumers have a heightened focus on staying healthy right now and are experiencing considerable stress and lack of sleep due to the uncertainty of their physical and economic wellbeing.”

Finally, Joan Driggs, vice president of thought leadership and content for IRI, a Chicago market research firm, told Nutritional Outlook that during “the one-week period ending March 8, 2020, sales growth for overall dietary supplements skyrocketed more than 35%.”

A frequent complaint from manufacturers, however, has been a chronic struggle to find alternate suppliers because of the lingering tension on the supply chain. Market Hub is a comprehensive sourcing directory for ingredients, packaging, and service providers. Powered by TraceGains Network, manufacturers can acquire new ingredients and collect supporting quality and regulatory documentation automatically from an expanding document library. With a global supplier network, buyers can leverage Market Hub’s powerful search criteria to quickly find new suppliers and keep their operations running.

Tags: Market Hub, COVID-19, coronavirus