COVID-19 and its Impact on the Food and Beverages Industry

Novel coronavirus outbreak has affected the entire world’s economy. Covid-19 is a large family of virus, that cause respiratory infections, ranging from the common cold to more harmful diseases such as Severe Acute Respiratory Syndrome (SARS) and Middle East Respiratory Syndrome (MERS) in humans and in many other different species of animals. Coronavirus is a communicable disease which can be transmitted from one person to other via small droplets expelled from the mouth or nose of a person infected with Covid-19. As per the US Food and Drug Administration (FDA), Coronavirus cannot be transmitted via food or water but it can survive on the surface of food for a day or even longer.

The food and beverages industries are facing significantly reduced consumption as well as disrupted supply chains due to coronavirus. Food and beverages industry include the companies involved in processing raw food material, distribution of alcoholic & non-alcoholic beverages, alcohol packaging and packed food. Pre Covid-19 outbreak, increase in adoption of ready-to-eat food and rise in number of on the go consumers were major factors driving the growth of the global food and beverages industry. But Post Covid-19 outbreak, the government of various countries implemented lockdown to prevent the spread of this novel disease is the major factor affecting the growth of the global food and beverages industry. Across the world, closure of numerous restaurants and bars caused an adverse impact on food production industry, fishing industry, wine market, beer production industry, food and beverage shipping industry, and so on.

Food and beverages industry is segmented on the basis of offline and online food chains. The outbreak of coronavirus has a dual impact on the food and beverages industry. Offline food chains include restaurants and cafe that are entirely shut down in various region facing huge losses due to prevailing lockdown. For instance, Greggs announced on March 24 that it would close its 2,000 stores. Tully’s Coffee shut 400 of their stores. National Restaurants Association of India asked Finance Ministry for a bailout for the industry on 23 March 2020. It announced its economic value as $56,218.8 million (INR 4.2 lakh crore). Foot traffic to restaurants and cafes declined by 75% in Latin America. North America and Middle East markets witnessed a decline of 90% in their overall foot traffic to restaurant by the end of March 2020. However, Germany’s parliament decided to cut value added tax on restaurants by more than half for one year, so that restaurants can recoup their losses occurred due to lockdown and European Vending and Coffee Service Association (EVA) has informed its customers that there is no increased risk of using vending machines for drinks and snacks in the light of coronavirus outbreak. These factors can help the restaurants to recover their losses. Whereas, online food delivery and takeaway are still available. For example, Starbucks shut down its nearly 2,000 branches in various regions due to lockdown and witnessed a loss of $400 billion, but their online services are still available. The Sausage Man, a UK based German hot dog and sausage seller opened its digital shop. MacDonald’s launched contactless delivery service to deliver food among its consumers and ensure that food reaches customer without being touched by bare hands and delivered safely with adequate social distancing measures.

In addition, packed & essential food and beverage industries witnessed a dramatic upsurge in demand of shelf stable foods and beverages such as wheat, vegetables, fruits, pulses, milk, etc. as consumers rush to stock the pantries. Supply chain witnessed a disruption in March and April 2020 due to coronavirus. For example, Coca Cola Company witnessed a delay in its raw material supply from China leads to an overall delay in production of beverages.

Overall, the novel pandemic Covid-19 have negatively influenced the global food and beverages industry and mindset of consumers. Prolonged outbreak of coronavirus may lead to food inflation followed by economic instability.