Food industry expectations for 2020 20-04-2020

Food industry expectations for 2020 20-04-2020

The food industry is a vital industry. Governments and stakeholders have asked the food sector to continue production and delivery of goods during the current crisis, confirming its importance to their respective countries.

Health & safety is of major concern to the food industry. Food companies already produce according to a food safety system, based on the principle of HACCP.  Most of those companies already have surpassed the basic HACCP standard, by switching to a GFSI recognized standard (e.g. BRC, SQF, FSSC22000); a natural evolution of the HACCP standard. Current versions of these GFSI standards already incorporate health and safety and company contingency plans in their prerequisites. Most contingency plans are written with fires, floods, power cuts or earthquakes in mind. Viral outbreaks or mass illness amongst personnel however was not one of those topics.

Due to the COVID19 outbreak, we now know the unbelievable impact such an event has on the industry. What if all warehouse personnel has befallen ill. What if everybody in the sales or purchase department ends up in the hospital? Can we still cope? The same can be said in regard to a full-stop in one of the essential food chain links outside your own influence.

Take Logistics for instance. It also is a vital sector that is closely related to the food industry. One third of all the road transportation in Europe is food related. A lot of food producing companies do not have their own logistic operations. They rely heavily on transportation companies to pick up the goods and bring it to and from their own facilities.

The Impact on the food industry

the impact on the food industry, depends on which market segments are being supplied. The corona virus probably has a huge impact on your revenue if you are a wholesaler selling to restaurants. If your company delivers to retail, then the corona virus probably has a positive effect on your revenue.  Companies that export oversees will find the logistics to be the biggest challenge, as international ports have limited service.

COVID19 also brings out the best in people. Food processing companies with limited production capacity are being helped by the bigger companies that have over-capacity. Some companies even shift their entire production to something else entirely.  A great example from The Netherlands is the company Auping, which normally produces matrasses, but now helps out the government by producing face masks.

Current estimates, expect the corona crisis to last at least 3 months. If so the damage to the world economy will be bad but remain limited. Food retail revenue will increase with around 10% and food delivery services will see a slight decline. The government of The Netherlands per example (based on a 3 month corona crises) expects the following:

  • Economic decline of around 1%.
  • food hoarding will continue after this 3 months
  • the restaurant industry will see a revenue drop of 2.500 million euro’s
  • Retail food consumption will increase with 1.800 million euro’s

Catering services situated in hospitals, schools/universities and airports will be hit just as hard as the restaurants and bars in general With some schools/universities closed entirely, some of these catering services will see a decline in revenue of 100%.

At Dipasa we hope the above contributes in answering some questions you may have regarding the expectations and developments in the Food industry during 2020. If you would like additional information, do not hesitate to contact our sales department at: sales@dipasa.nl

References

FSIN (2020. FSIN). Retrieved 20 April 2020, from  https://fsin.nl/actueel/nieuws/604/de-impact-van-corona