A post-pandemic industry: UK F&B reps outline recovery proposals
12 Jun 2020 --- The strain that COVID-19 has put on global food chains has exposed the inherent weaknesses in approaches to mitigating its sudden impact. Forward-looking industry representatives across the UK have published a “path to recovery” to guide businesses during this challenging period. The proposals, endorsed by over 30 British F&B organizations, outline steps that government and industry can take to “future-proof” the sector, while urging policymakers to acknowledge the UK’s negative balance of trade in food. FoodIngredientsFirst speaks to European agri-food stakeholders to delve into the post-pandemic future of business.
“COVID-19 has challenged the UK F&B industry in a once-in-a-generation way. Food manufacturers have been working harder than ever to ensure that the nation is fed – with companies having to adapt to an evolving situation at a rapid pace, responding to changes in demand and implementing social distancing measures,” says Michael Bell, Executive Director of the Northern Ireland Food and Drink Association (NIFDA) and coordinator of the report.
“Within a short period of time, firms have reengineered and reimagined processes, requiring a significant level of investment. Put simply, the industry has demonstrated both its ingenuity and its necessity in these unprecedented times,” he adds.
COVID-19 has challenged the UK F&B industry in a once-in-a-generation way, says Bell. The UK’s vital food and drink industry, from farm-to-fork, contributes £460 billion (US$581 billion) to the national economy. It directly employs more than four million people across the four nations, with value addition greater than £120 billion (US$152 billion). The four nation differences are very significant, with Ireland exporting 80 percent [of its produce], compared to just 50 percent across all of the UK.
In March, statistics from the Building a Path to Recovery report revealed an all-time peak in ever retail sales, even given significant stay-at-home measures. As workplace practices were “changed beyond recognition, SKU count has been dramatically streamlined.
“[Recovery] will require serious investment, but the economic and societal gains would be immense. The UK currently has a trade deficit of some £24 billion (US$30 billion) in food. Assuming 30 percent of this could be produced efficiently in the UK, a balance of trade benefit of up to £8 billion (US$10 billion) could be realized,” says Bell.
Industry bodies stress the need for additional investment in enhanced specialist export support across the UK, providing additional funding to existing successful models and addressing gaps in coverage, in particular in England and Northern Ireland. An annual investment of £120 million (US$151 million) in enhanced support should create £1.2 billion (US$1.5 billion) export sales growth.
“The UK’s food and drink industry and the wider ‘eating ecosystem’ of other sectors it supports – farming, transport and logistics, cold stores, packaging, catering, food service and retail – contributes £460 billion (US$581 billion) to the national economy, employing millions of people across England, Scotland, Wales and Northern Ireland. The ‘path to recovery’ proposals published today provide the opportunity to build on that success, and deliver new gains for society across the UK as we emerge from this pandemic,” the organizations concur.
Europe’s COVID-19 outlook
FoodIngredientsFirst also caught up with representatives from the broader EU agri-food sector on other market factors exacerbating the pandemic headwinds currently straining market conditions.
“Usually, EU consumers spend approximately one-third of their food and drink budget in restaurants, bars and cafés and so it follows that the hospitality sector has been particularly hard hit due to the COVID-19 pandemic. Thousands of companies, in particular micro-enterprises and SMEs, are struggling to survive, while others face insolvency. Our estimates indicate a loss of 80 to 90 percent in turnover for the hospitality sector during Q1 2020,” says Will Surman, Director of Public Affairs & Communications of FoodDrinkEurope.
Corporations have injected capital into scaling up their in-house delivery activities.When asked about the long-term implications of COVID-19, Surman highlights, “The multiplication of online shopping seems to be here to stay. Consumers are also looking to prioritize local products and businesses will be looking at their supply chains to see how they can shorten them while maintaining the quality and affordability of their products.”
As sweeping quarantine lockdowns have clamped down on out-of-home purchases, corporations have injected capital into scaling up their in-house delivery activities. For instance, meat alternatives heavyweight Impossible Foods recently launched a new e-commerce site for its US consumers to purchase family-size quantities of the plant-based Impossible Burger. In March, a new virtual “in store” concept by LifeStyles in 360 debuted, allowing consumers to shop from their homes thanks to virtual reality technology, paired with a white-glove delivery service.
“COVID-19 has certainly helped speed up the conversation on digitalization and how we can make Europe fit for the digital age. We need to continue to explore new ways to give consumers better information and digitalization has the potential to communicate to consumers more efficiently and personally as well as help the free movement of goods in the EU Single Market,” envisions Surman.
Into the future, industry’s pandemic-related concerns now include the collateral impact of adverse protectionism policies in trade, as outlined by the Food and Agriculture Organization (FAO). “Any protectionism that undermines the free movement of goods – both across the EU Single Market and globally – will inevitably hamper the food and drink industry’s ability to deliver the diversity, quality and affordability of products that consumers have come to expect,” Surman concludes.
By Benjamin Ferrer
