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Covid’s lasting impacts on the food industry

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Consumer concerns and behaviours have shifted since the start of the Covid-19 pandemic, but what trends are set to stay in the longer term?

According to Euromonitor International, the shift to home-based eating, health and wellness, and more plant-based, sustainable and locally sourced foods all look to continue to some extent beyond the current crisis. On the other hand, the internationalisation of food and concerns about plastic packaging have been paused.

The global retail value of packaged food reached $2.5 trillion in 2020, up 4.6% from the previous year, Euromonitor reported in a recent webinar. All sectors saw a big surge in sales – except for snacks as on-the-go and impulse sales were curtailed. At the other extreme, staple foods were up 6.1% and made up 37% of all packaged food sales in 2020.

“Meal occasions shifted into the home, they shifted into retail,” said Tom Rees, Industry Manager, Food and Nutrition at Euromonitor International. “People had to eat at home and had to make their food at home and eat it there.”

Medium-term changes

Some trends were linked with the rapid adjustments people made at the start of the pandemic, such as stockpiling and food shortages, but others have persisted into the medium-term.

Even now, as many out-of-home food businesses like restaurants and cafes are reopening, they often are operating with restrictions. This has had an impact on nearly all food trends, from the flavours consumers are looking for, to the importance of recyclable packaging and how people are shopping for groceries.

Although traditional grocery stores, such as supermarkets and convenience stores, still account for the vast majority of retail food and beverage sales, e-commerce grew by about 25% a year from 2015-2020, according to Euromonitor data, with annual growth already at around 20% pre-pandemic.

“In terms of growth, e-commerce is streets ahead of all the other channels,” Rees said. The pandemic has really accelerated what was already a growing segment.”

Other aspects of consumer behaviour also saw big changes – and many look set to stay.

Life stage nutrition

Fewer new products have been developed with older adults in mind over the past year, but this has not been because of low demand. In fact, many companies have been working at capacity to meet surging demand for their existing product lines, especially as it emerged that this group of consumers was particularly susceptible to Covid-19.

“As consumers increasingly looked at their diets to guard against disease, it is often those consumers who are most keenly aware that what they eat is more important than ever,” said Rees.

According to Euromonitor’s research, the 60-plus age group is most likely to be looking for on-pack statements to limit their consumption of added sugar, salt, high fructose corn syrup, GMOs and artificial ingredients, while also seeking out positive nutrients like fibre.

Among the general population, too, interest in healthy eating and mental wellness has grown.

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Which health benefits?

“Foods that are positioned for mental wellness and sleep are beneficiaries,” said Rees.

Immune health positionings have been among the most obvious growth areas, but Euromonitor found that all trends around functional foods and nutrient claims have accelerated, especially for foods intended to improve gut health such as pro- and prebiotics, fibre and fermented foods.

“One factor here is the extra impetus that has been given to reducing obesity rates,” he said.  “…Since Covid-19 hit, the fact that obesity increases mortality has been widely acknowledged, and it was in August 2020 that this was quantified with extremely concerning results given obesity rates worldwide.”

Rees was referring to a large scale study from the University of North Carolina, which found obesity increased risk of Covid-related hospitalisation by 113% and increased risk of death from Covid-19 by 48%.

Plant-based boost

Trends around plant-based eating and alternative proteins also have grown, and meat shortages in some regions helped encourage some traditional meat eaters to try alternatives for the first time.

“The hot topic of animal welfare has seen an acceleration,” he said, citing the initial link between wet markets and the virus crossing to humans from animals.

Reports of the virus being spread among workers at meat processing plants also served to underline this trend, and helped give plant-based dairy and meat alternatives a positive push.

“They have greatly benefited from their associations with health,” Rees said.

Environmental concerns

When it comes to preserving the environment, consumer behaviour has been pulled in both directions. Euromonitor found consumers have become more concerned about food waste and local food production, but less concerned about plastic packaging.

“Plastic packaging has been re-embraced as producers and consumers have looked to reduce the possibility of infection,” Rees said. “…The shift among industry professionals is most likely to be thought of as a mid-term change, but it’s also clear that over time fewer are seeing it as a short-term change.”

Meanwhile, as local food production has gained attention, some trends around food provenance seem to counter each other.

“Namely, as consumer appetite for international cuisine grows, different countries’ cuisines homogenise to some extent, and that creates the reaction of greater interest in home country food,” Rees said.

Apart from restrictions on international – and even inter-regional – travel, the closure of foodservice also has meant that fewer consumers are able to enjoy cuisines from different countries. This does not mean that the appetite for international foods has ended, but it may take a different form in the future.

“The desire, or maybe even the need, to keep things interesting may drive retail of exotic food and ingredients as the pandemic continues to influence our day-to-day,” said Rees.

Looking further ahead

Asia, where the virus first took hold, may provide clues as to which habits might continue in western countries as they come out from the shadow of the crisis. Euromonitor data suggest that more Asian consumers are shopping in smaller, local stores, preferring to avoid larger supermarkets where there may be greater risk of infection.

“There’s more online shopping and that’s been retained,” Rees said. “We expect that to be retained in markets around the world with online retailers having increased capacity to deal with the impact of the pandemic and more and more people having the experience of shopping online and the convenience of it.”

As for health benefits and nutrient claims, increased awareness of how food and nutrition affects both long- and short-term health clearly is reflected in the kinds of foods people buy.

“There’s also greater purchasing of immunity-boosting food as people look to continue to be healthy in the future,” Rees added.
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