SIAL Talks 2022: Post-pandemic food – challenges and opportunities
In December 2022, Karine Dussimon, Industry Manager Food and Nutrition for Euromonitor International, took to the SIAL Talks stage to discuss the food retail and food service industries in the post-pandemic. In this special feature, we look back at that talk and highlight some of the key points to come out of it.
Firstly, Dussimon asserted that, despite unprecedented challenges, there are also opportunities to seize by understanding changing consumer behaviour and adapting models to better suit it.
Focusing first on the the short term market analysis post-pandemic, Dussimon commented: “Food retail has generally come through strongly from the COVID global outbreak. This is in spite of severe contractions in enclosed channels, to what you see is that snacks as a discretionary type of purchase and dairy where we tend to have high margin products have seen slower growth than expected pre-COVID. But staples and cooking ingredients have grown quite dynamically. So consumers have increased their shopping in retail, their food shopping, and of course it reflects more living and more eating at home.”
She noted key drivers as “structural shifts, sustainability, climate change and increased online demand”, as well as other disruptions to the global food chain, including the war in Ukraine, and resultant economic sanctions on Russia.
The Euromonitor expert said that most challenges facing the food sector would last into the long term. “When demand exceeds production capacity, it creates tension on the production side. You can see how many of these have affected the food supply chain. If you think about the complexity of the supply chain that tells you there’s going to be a lot of challenges, and they’re going to be long term”.
Dussimon added that there would be a lasting legacy from COVID in the post-pandemic world, including a shift away from eating out to eating more meals in the home, a shift from buying in grocery stores to shopping online, supply challenges that would need to be looked at through a sustainability lens, an increasing focus on holistic health, and increasing price sensitivity from consumers hit by the cost of living crisis.
Eating at home vs eating out
“When looking at a potential no-COVID scenario versus what actually happened, we estimate that in 2020 the global retail sales of packaged foods were bolstered by over 50 million tonnes.
“Away from home meals have regained momentum and food service channels are functioning again, but we anticipate that the share of restaurants and cafes within total food sales is going to lose one percentage point so go down to 22% of total sales, and that’s the equivalent of losing 7 million tonnes to retail between 2019 and 2026.
“So many breakfast and lunch occasions are now occurring at home and can be fulfilled through retail.”
Post-pandemic retail channel shifts
Dussimon said that, increasingly, consumers are ordering groceries online, rather than going into physical stores. “Packaged food ecommerce shot up by 50% between 2019 and 2020. So it shot up to $116 billion, and that is across meals ingredients, dairy snacks, staple foods, and it’s kept going up in 2022.
She said that the food service sector has also adopted a lot of online orders and home delivery is now becoming a major stream of revenue for restaurants.
She noted that the ecommerce channel would continue to grow dynamically.
Dussimon explained that while in 2020/2021 ecommerce was deemed a safer way to do your food shopping with regards to viral contamination, increasingly, ecommerce will be embraced simply as a means to save time. And moving on from a more planned approach to grocery shopping. We have new possibilities with things like quick commerce subscription models, etc.
Sustainability and the post-pandemic shift to plant-based
The issue of sustainability and environmental concerns were also key points of discussion from the Euromonitor speaker. She said that “pretty much all main areas of sustainability have gone up substantially in companies in investment plans for the next five years”, and she noted how consumers have been shifting increasingly from meat and dairy towards their plant-based alternatives. This she said, has been driven by health concerns, but also by environmental concerns.
“Natural resource depletion is a major challenge seen by companies so energy, water, forest acres ecosystems. And it also means diversifying raw materials suppliers, and ingredients where possible.
“So, thinking about resource intensiveness exposure to climate events, crop resilience. Challenges very much include faltering supply chains. We’ve seen how the pandemic, the war in Ukraine and even climate events are linked to major disruptions to the supply chain and the complexity of this challenge makes it a long term one as the mechanics of the markets have been shaken.”
She added: “We need a new approach often a holistic new approach to supply and demand. This means considering shorter routes to the consumer more circular models, that sort of thing.”
Finally, in terms of the key challenges faced by food suppliers across sectors, Dussimon noted the increasing price sensitivity amongst consumers who want greater value for money, but she stressed that with these challenges, come opportunities.
“There are undoubtedly challenges to overcome, and it may almost seem impossible right now, but if we look longer term, there are many opportunities to seize for being successful.
“The first is additional at-home eating which food brand owners, but also food service operators can leverage. They can offer more hassle-free delivery models, more and better subscription models, quick commerce, etc.
“Adequate commerce is one way of creating impulse purchase behaviour at home. We have new supply options for example, a local approach to food supply. With ingredient diversification, we have a consumer desire for foods that makes them stronger, immunity to support brain health mood enhancement, energy boost, that sort of thing.
“And finally, a better consumer experience for less, so through smaller pack sizes but also presenting discounted attractive online offers.”
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