Insights by AUSPACK

The new normal for food and beverage manufacturers post-COVID-19

Posted on August 4th, 2020 in Insights by AUSPACK

Most businesses have been disrupted by the COVID-19 pandemic, but the food and beverages (F&B) sector has been especially dramatic.

While many bars, cafes and restaurants have closed, others have shifted their business model to deliveries and curb-side pickups.

At the same time, demand has sharply increased for certain food and drink categories, such as quick-cook and frozen meals, which some manufacturers and retailers have struggled to meet as they contend with smaller workforces and disrupted supply chains.

Although the worst is hopefully over, the threat of further waves is likely to see some of these trends and disruptions continue through the rest of 2020 at least. Here are the main areas F&B manufacturers and retailers should pay attention to.

More direct supply chains

One consumer behaviour associated with COVID-19 that won’t go away is the preference for online shopping as a convenient alternative, rather than a necessity. Even as lockdowns and social distancing rules relax, it’s expected that more people will continue to order groceries and meals online compared to before the pandemic.

For F&B manufacturers, this presents the opportunity to market your brand and products directly to consumers through your own ecommerce website and online marketplaces, avoiding the need for intermediary warehouses and lessening reliance on retailers.

New preferences could remain

Along with the shift to ecommerce, many consumers also changed what they purchased during the coronavirus crisis, and some of these habits and preferences are expected to remain.

While panic buying of everyday groceries was a short-term anomaly, the high demand for shelf-stable food, frozen food and ready meals over the longer term suggests these will remain popular while some social distancing rules are still in effect.

Manufacturers should pay attention to sales volumes during COVID-19 and adjust production to match the demand, rather than banking on a return to pre-COVID volumes for struggling food and drink categories that may take a long time to recover, if ever.

Safety and sustainability

It’s expected that some of the new health and safety precautions at manufacturing plants, such as time spent on cleaning and wipe-downs, will ease as the crisis lessens, but consumers will still demand a high standard of safety from food and drink packaging. This is likely to conflict with a resurgence in demand for sustainable packaging that can be easily recycled or reused.

Sustainability led the conversation in packaging before COVID-19 brought the more pressing need of safety to the fore. This shift was clear to see in the increasing reliance on single-use plastics. Packaging safety will remain a concern post-COVID, but research and development into sustainable alternatives will aim to find the perfect middle ground.

Positive customer experiences

Beyond safety and sustainability, consumer experiences with packaging during the crisis – and other people’s experiences they read about on social media – have set higher expectations when dealing with other companies.

Many consumers now expect food and drink packaging to be attractive, informative, leak-proof and to keep food fresh and crisp during deliveries (for takeaway orders). Design features such as handles and ‘smart’ packaging that can be read by a smartphone helps to give brands the edge.

Lower prices vs. higher overheads

Food brands need to be competitive not only in quality, but also value. With widespread concerns over a recession and unemployment likely to remain for a long time, price will continue to be a pain point for consumers, who will favour brands that offer promotions or discounts.

This will strain many manufacturers who may also be facing rising prices from vendors that are dealing with their own financial issues.

Social distancing to continue

It’s already clear that social distancing will continue to characterise the ‘new normal’ after COVID-19 for some time. This will affect manufacturing in a number of ways.

As well as maintaining demand levels for home deliveries, manufacturers should also expect some production and supply chain inefficiencies to continue, particularly with regard to remote working.

Technology investments

The high pressure on food and beverage manufacturers from multiple fronts during this extended crisis will cause many to explore alternative ways of doing things. For many, the answer will lie in automation.

Investments in technology need to be made carefully in areas where they’ll have the greatest long-term impact. Whether it’s cloud computing lowering IT costs or automated picking and processing making sure orders are completed on time and with reduced errors, post-COVID manufacturing will be increasingly digital.

No going back

There’s no way of knowing what the future holds for the industry and society at large, but it’s likely that the new normal that emerges following COVID-19 will be a combination of the old business-as-usual and lessons learned from the pandemic.

Manufacturers and retailers should have a clear risk management strategy to guide them through these uncertain times and should pay attention to what their customers are saying so they can continue to satisfy their demands.

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