COVID-19 Impact on Pharmaceutical Packaging in Chemicals and Materials Industry

COVID-19 Impact on Fat Replacers in Food and Beverages Industry

  • Food & Beverage
  • Dec 17, 2021

Globally, countries are expecting a drastic decline in the economy in low- and middle-income countries as a result of loss of income, the shutdown of businesses, human and goods movement restrictions imposed by governments, de-globalization, and breakdown of food markets due to both demand shocks and supply constraints. This disease has a variable impact in different countries depending on their cultural norms, mitigation efforts, and health infrastructure, and each country is working its way out to fight against the pandemic. The outbreak of the COVID-19 pandemic has impacted all industries, including the global fat replacers market. The global fat replacers market is subjected to a positive and negative impact due to the sudden outbreak of the COVID-19 pandemic. Amidst the lockdown, production activities of fat replacers have been stopped partially or completely during the Covid-19 pandemic due to the unavailability of raw materials and hindrances in the supply chain. The distribution channels such as supermarkets, hypermarkets, specialty stores, and others were closed during the lockdown. This resulted in reduced volumes of sales and overall revenue. However, the demand is estimated to increase during the post-lockdown as distribution channels begin their operations and the supply chain recovers.

AFTERMATH OF COVID-19 AND GOVERNMENT INITIATIVES TO BOOST THE GLOBAL fat replacers markeT

The demand for fat replacers has not been affected but the supply has been significantly impacted by the COVID-19 pandemic. COVID-19 has led to disruptions in food processing industries, which have been affected by social distancing rules, labor shortages due to sickness, and lockdown measures to contain the spread of the virus. Bottlenecks in transport and logistics have disrupted the movement of products along supply chains. Moreover, the unlocking of the situation and opening boundaries by various nations have regulated the supply of raw materials. Various governments are taking initiatives to regulate the supply of raw materials for food, beverages, and pharmaceutical products. Additionally, various governments are liberalizing the regulation in the food and beverage industry to smoothen and regulate the raw material supply for the industry. Therefore, in the post-pandemic period, the demand for fat replacers will increase moderately due to its increasing food and beverage industry. In addition to growing consumer demand for low-fat food products, government associations and global organizations across the globe are introducing new regulations on consumption of foods containing trans and saturated fat, along with setting a limit on daily consumption of fat which also boosts the global fat replacer market.

For Instance,

  • World Health Organization (WHO) has introduced REPLACE, a guide to eliminate industrially produced trans-fatty acids

STRATEGIC DECISIONS FOR MANUFACTURERS AFTER COVID-19 TO GAIN COMPETITIVE MARKET SHARE

The global fat replacers market is gaining popularity across various industrial sectors all over the globe. Since the lockdown due to COVID-19, the fat replacers manufacturers are required to follow a series of mandates and procedures to battle the crisis and keep a healthy workspace environment. To combat the current situation and gain a competitive market share, the manufacturers are offering attractive packages. Various marketing strategies are being adopted by the key manufacturers of the market, such as product innovation, regional expansion, and new product development to sustain the competitive market and meet the changing consumer trends. Adoption of such strategic marketing policies by various competitors will help to them to gain competitive market share in the post COVID-19 era.

For Instance,

  • In January 2021, ELIMA Oil Products introduced healthier plant-based alternative fats, including Premeo animal fat replacer, frying oil, and dairy fat replacer, for food & dessert manufacturers, with an objective to meet their growing demand in countries such as Japan and South Korea
  • In 2020, J. RETTENMAIER & SÖHNE Group unveiled its broad portfolio of Vivapur meat alternative fibers, including fat replacers, designed to ensure ease of use in a cold production system. These fat replacers can be seamlessly combined with oil and water

Also, many companies are taken initiatives for the employee’s beneficiaries which has directly impacted the fat replacer market.

For instance,

  • Cargill is one of the leading fat replacer company and it launched a USD 15 million employee disaster relief fund after the COVID-19 pandemic

Impact on Price

The COVID-19 has impacted the global economy growth terribly. Many organizations remained shut while others scaled down their operations or put their expansion plans on hold as they survived the unpredictable crisis. The outbreak of the COVID-19 pandemic resulted in nationwide lockdowns, and various stringent regulations on border closing were imposed by the government of nations across the globe, which resulted in the spike in the prices of fat replacers. Import and export of raw materials were hampered due to the closing of the border of various nations. This resulted in an increase in the prices in countries that were dependent on the imports of fat replacers. At the same time, the price in the major fat replacers exporter countries had fallen owing to the larger production than the demand. However, the ease of lockdown and various initiatives by the government to export and import fat replacers resulted in the subsequent price drop owing to its availability. The price impact on the global fat replacers market was relatively dependent on specific commodities. Thus, The COVID-19 has increased the price of fat replacer packaging

Impact On Demand

The demand for fat replacer has faced an incline due to the COVID-19 outbreak across globe. As most of the countries are running under lockdown, the consumption of fat replacer has increased. Due to increase in consumption of low-calorie and low-fat diet food products. As the consumption of the fat replacer has included with increasing health awareness. Major players in the fat replacer sector are expected to experience an increase in revenue in fiscal year 2021. Also there have been changes in the budgetary support from the government for the next fiscal year keeping the revised estimate of this fiscal year in concern due to growing food and beverage industry.

For Instance,

  • According to the U.S. Department of Agriculture’s (USDA) Economics Research Service, the global food retail sales is valued at USD 4 trillion annually

Another application of food fibers is in bakery, dairy products, frozen products and others industry. Since the theses industry has registered high sales during this pandemic, the demand of fat replacer has also grown. Thus, The COVID-19 has increased the demand of fat replacer products.

Impact on Supply Chain

The COVID-19 pandemic has highly disrupted the supply chain of raw materials used to manufacture fat replacers. It was attributed to the lack of resources and transportation, which led to lower access, delayed stock, and supplies of raw materials products. Additionally, many governments restricted the movement of goods across the countries, and the entire supply chain was distorted. Due to the disrupted supply chain, transportation of raw materials has been interrupted, stalling production. Similarly, inflated prices and halt on production of fat replacer have resulted in the unmet demand for fat replacer in various end-users such as food, beverages, manufacturing, and other industries.

The restriction over transportation and labor availability is another factor that has affected the supply chain of fat replacer. At several parts, the manufacturers are struggling for raw material reach and at the same time, some are struggling for delivering the product. For few manufacturers, the end-product is ready but are not able to reach their customers due to restrictions on transportation and thus losing money. Thus, the impact on supply is facing obstructions due to multiple factors. Thus, the COVID-19 has impacted negatively on the supply chain of fat replacer market.

Conclusion

COVID- 19 pandemic has taken a toll on the population and economy. Increasing demand for food and beverage industry across the globe is expected to increase the demand for fat replacers during the COVID-19 pandemic. The COVID-19 pandemic is having a strong impact on various facets of the fat replacers industry.

Governments in hard-hit countries have imposed nationwide lockdowns and travel restrictions to avoid further virus infection, creating several barriers across the supply chain in the global fat replacers market. Market players are chalking out innovative strategies to address this uncertain period. While the demand for fat replacer will increase in the food and beverages industry with adding high amount of fat replacers in weight loss management programs and increase in research and development activities in fat replacer market.