COVID-19 Impact on Bakery Products in the Food and Beverage Industry

COVID-19 Impact on Bakery Products in the Food and Beverage Industry

  • Food & Beverage
  • Jun 15, 2020

The novel coronavirus/COVID-19 pandemic has significantly impacted the whole food and beverages industry among which bakery industry is one of them. This pandemic has resulted into mass production shutdowns and supply chain disruptions which has also affected the economy as well.

Due to lockdown, during the start of 2020, sales of non-edible products such as disinfectants, toilet paper, paper goods, and hand sanitizer were high in demand and the sales of edible products such as bakery, meat products, and many others were up to the mark as the supply of bakery was insufficient as many of the bakers have shut operations due to shortage of labors. Along with this, disruption in logistics facilities due to the lockdown has created more issues in the market as consumers were not getting products as per their requirement which ultimately affected the market. Another factor that has created an impact on the market is the lack of raw material availability due to which production of products was not proper. Due to these issues, smaller bakers in the unorganized segment are the worst affected, as stated by Mago, who is also a president of the All India Bread Manufacturers Association.

But as the time passed, government started allowing reopening of the shops, the demand for the bakery products took hike especially bread and others as these are the essential products which are used in daily diet, majorly as breakfast and evening snacks. Therefore, the demand from house hold sector for bakery products has increased on the other hand the food services sector has faced decline in the market for bakery products that were considered to be one of the demanding products in food service sector.

This coronavirus pandemic has increased the demand for bakery products in household sector as it has brought inner bakers in people. Due to this, bread and cookies demand is increasing.

For instance,

  • Sales in the bakery aisle sector increased by 62.3% over the week ending March 15, 2020 and it has also been found an increase of approximately 44.3% for combined cookies and crackers in food sector.

Fig. 1: Sales Growth of Baked Goods

Source: America Bakers Association

As the Schools and offices are closed due to COVID, significant jumps in sales in the bakery aisle have been calculated due to high consumption of these bakery products more at-home in breakfast, coffee break and other occasions.

For instance,

Below table represents bakery product demand scenario within the March month of 2020.

Increase in the bakery sales demand during COVID-19 (in month March 2020)

  Sales increase for the week ending 3/1/2020 Sales increase for the week ending 3/8/2020 Sales increase for the week ending 3/15/2020
Bakery aisle -1.3% +3.0% +44.3%
Fresh bread and rolls -0.4% +4.9% +58.6%
Pastries and doughnuts -0.8% +0.9% +29.1%
Bakery snacks -2.8% +2.2% +23.1%
Pies and cakes -6.5% -5.1% +2.4%

Source: America Bakers Association, Total US, MULO, week ending 3/15/2020, represents all UPC items

In bakery industry, where one sector i.e. food service is plummeting due to lockdown, another sector i.e. household sector is making an increase in sales of bakery products. The increase in the sales is possible due to the incredible efforts of the entire bakery supply chain.

At present time, it is difficult to estimate for the bakery products sales of food service sector, but once the situation of COVID is under control, it will also regain its position as it was in previous years and market value of bakery products will increase in future. 

BAKERY PRODUCTS MANUFACTURERS: PERSPECTIVE & INITIATIVES

The outbreak of COVID-19 has brought world to a halt where each and every industry has got an impact of it. This crisis has brought to an unexpected situation through which everyone is going on. With such unscrupulous situation, everyone is trying to get over of it. In all, one of the industries is cocoa related product industry which has fallen badly due to covid-19 in the beginning of 2020. But rising support from several companies as well as governments are helping the industry to rebuild the position again in the market.

Due to the long time lockdown companies have taken initiatives to open a webshop for the micro bakers and service providers to connect directly through the customers. The pandemic have initially slows down the artisan bakers sector but due to the regularities and initiatives taken by the manufacturers for home delivery service, development of bakery products and systems will fast-track the bakery sector soon.

For instance,

  • In 2020, PURATOS leader bakery product manufacturers have developed an optimized in-store management store in which bakerOnline allows the local bakeries to create a personalized webshop where consumers can easily order and can receive the bakery products at home.

“COVID-19 has impacted the company’s operations, distribution and internal policies in its business units around the world, including the hardest-hit regions such as China, Italy and others.”

Jorge Zárate, global vice president of operations at Mexico City-based Grupo Bimbo stated:

“With cafes, restaurants, school and college canteens, supermarket in-store bakeries and a vast number of other foodservice outlets being closed to help stop the spread of the Covid-19 virus, it is inevitable major suppliers to this channel will be facing extremely difficult circumstances and will have some big decisions to make about future strategy.

Andy Coyne, deputy editor, ARYZTA stated:

“It’s important to invest upfront in a strong supply chain plan so bakers can try to prevent disruptions caused by seasonality, changing consumer preferences and global crises like the novel coronavirus pandemic. Bakers should consider if they have enough equipment and personnel to manage increased production and if products have enough shelf life to sustain the timeframe of production.”

Dawn Foods’ Supply Chain team stated:

“If bakeries want to scale up their artisan bread production with consistently high quality, they need to have one thing: a perfect process organization,”

Richard Breeswine, President & CEO of - Koenig Bakery Systems USA

Source: Company Websites, Magazines, Nutrition Journals, Portals

CONCLUSION

Covid-19 pandemic has taken a toll on the global population and economy. A collaborative effort on governments, public health departments, and hospital fraternity to fight the coronavirus has led to economic slowdowns, global lockdowns, and extreme public safety measures. The public health measures include creating awareness about home quarantine measuring, maintaining food and healthcare supply, especially to the poor are being strictly followed by governments across the world. During this pandemic situation, public awareness about maintaining high immunity levels has become a serious concern. However, as a staple food in the majority of the countries, bread and bread products have faced a lower impact as compared to other bakery products such as cakes, pastries, and croissants. Household consumption of bread has increased during the lockdown period reducing the consumption of bread products in the foodservice outlets. With foodservice representing approximately 70% of the sales of bakery products, the market for frozen bakery products players has hindered as food consumption has changed from restaurants to home kitchens. However, retail players are has shown considerable growth due to the fresh bread segment. With changing conditions, leverages in the regulations of lockdown and reducing the effect of COVID-19 in the future, the market is estimated to grow at a higher pace.

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