There really is only one topic of conversation at this time – the coronavirus pandemic.
This global issue is everyone’s business and unusually, there is very little solid advice or predictions about the future.
Indeed the advice changes daily and the impacts are increasing substantially. Events have been cancelled or postponed, airlines have folded and the streets, especially in Italy, are deserted.
So what does this mean for the UK food and drink industry? The answer is simple. We don’t know. None of us. Yet. The only thing that is certain is that the sector has to respond to current and future circumstances…and fast.
First, let’s debunk a few myths. We are not going to run out of toilet paper. Antibiotics have no effect on the virus; neither does spraying your body with alcohol, eating garlic, taking cold or hot baths; or avoiding Chinese takeaways. As a virus, it is airborne, therefore it can be carried anywhere by the air and therefore, it’s inevitable.
Cleanliness is being urged. This message is getting through as we can see from the global shortage in hand sanitisers. While some branches of KFC are already removing its ‘finger-lickin’ good’ slogan to support the cleanliness message.
On a more serious note, the food and drink supply chain will inevitably be affected. A major outbreak of the virus could result in permanently empty shelves, panic buying and food riots in a worst case scenario; but retailers have ready-made plans in place. For example, Tesco has been practising ‘multiday simulation’ exercises with different teams preparing responses to a flu pandemic. There will be a priority list of products drawn up by the supermarkets to ensure that, again, in a worst case scenario, staple food groups will be available to all. On the plus side, the frozen food industry is benefiting: sales of frozen food have seen notable increases.
Ian Wright, the chief executive of the Food and Drink Federation, said “at this stage, supply chains have experienced disruption; but there is no evidence of significant disruption to food supplies. UK food and drink manufacturers have robust procedures in place.”
The industry will be more affected by the cancellation of events. The food and drink sector relies heavily on revenue from outdoor concerts, festivals and other events. The loss of this revenue will hit hard. Plays on Broadway in America have already been cancelled; theatres in the UK are clsoing. Sporting events are being postponed and football matches are being played in closed stadiums.
Coming on the back of the excessive flooding experienced earlier this year in many areas, pubs are feeling the pinch. According to Coffer Peach Business Tracker, pubs saw a decline in both food and drink sales, down 3.9% and 4.6% respectively, with managed pub groups also seeing collective like-for-like sales fall 4.2%. The sector, as a whole, saw like-for-like sales dip 3.3% compared to February last year.
Executive director Trevor Watson believes there may be a redistribution of trade with local pubs and restaurants seeing trade sustained as people stay local. “People will not shut themselves away indefinitely and will see smaller scale local pubs and restaurants as less of a health risk,” he predicts.
But as of 16th March even this prediction may fall flat; with the advice to stay away from pubs and restaurants. But with no government ban on this, various insurances have not been triggered that might allow the business to deal with no trade for longer.
The coronavirus impacts food and drink supply chains and global trade but to what extent, we are unsure. It goes without saying that panic buying will only make things worse. We have lived through and survived other viral infections and we will survive this one however severe it becomes.