The impact of the coronavirus

Information

The impact of the coronavirus

The impact of the coronaviirus

On society, consumption, sales channels and supply chain

“The coronavirus is a disruptive phenomenon,” says market analyst Hans Verwegen. “Trends that were always perceived as relatively stable have been or are being broken. We need to get used to a new reality which is slowly but surely taking shape.” How does he see the impact of the coronavirus on society, the consumer, sales channels and the supply chain?

Covid-19 has once again reminded us just how vulnerable our own health and that of other people really is. “With social interactions restricted, we have literally been confined to our own immediate surroundings,” says Verwegen. “We have suddenly been confronted with the negative consequences of globalisation. You can’t look at the rapid and ferocious spread of the coronavirus in isolation from our strongly globalised society in which people and goods move across large distances rapidly and in huge numbers. By focusing more on what is nearby and familiar to us, we can keep alien threats at bay for longer.” Companies and organisations are now also paying more attention to their vulnerabilities in times of pandemics. How do you organise your work if many employees are forced to stay at home or if your customers can no longer visit you in person, or vice versa? What partners should you choose to ensure you are less at the mercy of border closures? What do official measures mean for your sales channels and how can you anticipate them?

Consumer

One of the most visible and immediate consequences is consumers’ shopping behaviour. “People are shopping more carefully. We aren’t going to the shops as often as we did, we are buying larger quantities at each visit and we are looking out for special offers more. Online shopping has been given a massive boost, particularly in the under-45 age group. Unsurprisingly, older people are changing their buying behaviour less.” With many people having to sit at home for several months – even if they are continuing to work – people are spending more time cooking healthy meals from scratch. If you can’t go out to eat, this is a good way of combining providing quality food for the family and spending quality time with them. Verwegen: “This has given sales of fresh produce a boost, both via physical channels and in particular online. According to Kantar, 13.5% of fruit and vegetable sales in the UK in July were online. This could have been even higher had the supply capacity kept up with the sudden change in demand.

Frozen food is also selling well. With people going shopping less often, sales of more perishable leafy vegetables and pre-packed salads will focus increasingly around varieties with a longer shelf life – An important aspect in the breeding of these crops that Enza Zaden has been looking at for some time through post-harvest research.” Some trends that were already becoming evident, such as local-for-local, more demand for organic products and renewed interest in typical seasonal products, are growing as a result of the coronavirus pandemic. “The need for convenience products will continue to exist, but something is inherently changing,” Verwegen continues. “Instead of ready meals, the consumer is now looking for more pre-prepared semi-finished products that still require some cooking at home. People have more time for that now.”

Sales channels

Supermarkets – both physical and online – have the wind in their sails. Other sales channels, such as hospitality, have been hard hit by lockdowns and customer hesitancy the world over. The growth experienced by supermarkets has, of course, been strongest in countries in which eating out of home is common, such as the US. According to IRI, year-on-year sales of vegetables in the US grew by more than 20% from April to June this year and were still up by 15% from July onwards. The figure in fruit was around 10%, although fruit is eaten out of home less often. The same also applies to organic products. “Work canteens, catering companies and their immediate suppliers such as the fresh-cut industry are also having a tough time,” says Verwegen. “And therefore, so are the vegetable producers that sell via these channels. A substantial number of products are mainly sold via the out-of-home channel, varying from exclusive micro vegetables to plain and simple loose, round tomatoes. Producers may well be wondering whether it is wise to limit themselves to one single product segment or one type of client. Differentiation or working together in a cooperative could be a sensible solution.”

Supply chain

“What the coronavirus has made clear is that long, cross-border supply chains are particularly vulnerable. Where do you get products from if flights are grounded and sea or road transport suddenly takes a lot longer because of restrictions and additional formalities? How do you ensure you have enough people at harvest time if freedom of movement is restricted or more people are off sick? Or when migrant workers can no longer cross borders? It is crystal clear that mechanisation and robotisation can provide a substantial boost in this area.” In addition, shortening the supply chain will give the local-for-local trend a boost and will play a role in the further development and growth of PFALs (plant factories with artificial light) in and around large population centres.