COVID-19 Impact on Snacks in Food and Beverage Industry

COVID-19 Impact on Snacks in Food and Beverage Industry

  • Food & Beverage
  • Sep 28, 2020

COVID-19 Impact on Snacks in Food and Beverage Industry

The pandemic have impacted the food and beverages industry by up surging in their consumption globally. Whereas, due to the extended lockdown, food service sector have been drastically impacted in Europe, Americas and all over world. The lockdown have been creating opportunities for the processed snacks and beverages sector due to their demand because of taste, high storage shelf life and attractive availability of waste products.

Before the pandemic, snacking has been considered as a comfort food by the consumers regardless to their health benefits. However, the pandemic have changed the preference of snacks with the consciousness of functional ingredients in their diet and are shifting towards healthy snacking. The healthy snacking concept has been evolved due to the elimination of the contents such as sugar and carbohydrates with functional ingredients.

For instance,

  • According to the International Food Information Council’s (IFIC) 2020 Food and Health Survey, 85% of Americans made changes in the food they eat or how they prepare food because of the coronavirus (COVID-19) pandemic.

Due to the extended lockdown, consumers become more dependent on the processed food including different types of snacks such as potato chips, dips, tortillas and others. Consumers preferably turns to snacks for their comfort, before COVID-19 have fueled number of food and service sectors. According to a survey conducted, Mondelez have stated that 71% of adults prefer snacking time to connect with themselves and 53% of have responded that snacks for them is more than a meal.

Due to the current scenario, consumers are looking for function snacks products with perspective of immunity booster with mental benefits and relaxation. Creating a new twist to old favorite snacks could be a good option for snacks manufacturers. The snacks industry have shown a significant growth in purchasing in the month of March as consumers stocked up their food supplies to be prepared to stay at home as per the government orders. The potential increase in purchasing of the snacks due to the pandemic may have more lasting impact in fiscal year 2020.

For instance, in the United States it has been observed the tremendous growth of the snacking in the lockdown duration. 

According to the SNAC International (SNAC), the total sale of snacks in America have been raised to directly 10% from previous year 2019 which have contributed approximately USD 404.00 million in 2020.

FIGURE: TOTAL SALE OF SNACKS (IN USD MILLION)

covid-19 impact on snacks in food and beverage industry

FIGURE: CHANGE IN SNACKS SALES (IN PERCENTAGE)

covid-19 impact on snacks in food and beverage industryVarious manufacturers have doubled their revenue in their snacking segment, which have accelerated them to develop more sustainable and fascinating snacking for adults as well as kids.

For instance,

SNACKS COMPANY FINANCIAL RESULT IN SNACKS SEGMENT

Brand

Total Revenue (USD Million)

Growth Rate (%)

Lay’s

2,400.00

7.2%

Ruffles

1,100.00

2.7%

Pringles

825.00

4.1%

Cape Cod

282.40

7.9%

Flagship Potato Chips

253.40

10.8%

Kettle Brand

234.90

10.6%

Pringles Grab & Go Stack

59.40

4.0%

Pringles Snack Stacks

49.20

11.9%

COMPANIES PROFIT

Due to the pandemic, out of 6 to 10 consumers prefer healthier type of snacks especially chips and various companies have stated that,

  • “Snacking will continue to see increased sales through COVID-19 and into the impending recession period since it is an expandable consumption food.”
  • “Consumer snacking for those employed may actually increase with a reduction of restaurants and kids at home for the rest of the school year in some areas.”

The companies have initiated more responsibility in terms of deliver of the snacking directly to consumers and this has made a new development of “Direct to Consumer (D2C) snacking segment”.

  • PepsiCo is one of the major leaders which have entered in DTC market by providing online and e-commerce delivery services of their own brand to consumers on their door step.

Growing preference of function snacks and target of the consumers providing on e-commerce services have led the development and initiatives by the manufacturers to enter in DTC snacks market which will target consumers by using various channels and with the balanced quality and price of healthy snacks. These steps taken by companies will boost the growth of overall snacks market with the strong volume sales in 2020.

INITIATIVES

The outbreak of coronavirus has affected every sector in the snacks market which also includes snacks industry. The industry has affected as the supply and demand are badly disrupted. With the increased demand for the healthy essential products, the manufacturers are taking new initiatives for products availability.

For instance,

 “We are taking proactive, precautionary measures to manage business continuity, including plans to help ensure we have sufficient ingredients, packaging, inventory and logistics support,”

- Kris Bahner, Kellogg's

Conagra Brands announces production and distribution facility with employee cash bonus for extraordinary efforts during COVID-19.

"Throughout this unprecedented time, the hard work and dedication of our supply chain employees at all of our food production and distribution facilities has been truly inspiring. I thank each team member for their extraordinary efforts to meet the needs of consumers, achieve outstanding customer service levels and keep our plants operating effectively and efficiently."

- Sean Connolly, President and Chief Executive Officer at Conagra Brands

"We commit ourselves to continue to give every possible support to the communities and to the authorities who are fighting tirelessly and valiantly each day against the spread of this virus. This dedication to a national cause goes from our supply chain, to our factories, our people, and our distribution partners, who work round the clock to ensure that we continue to meet the nutritional needs of families."

"We heed to a call of duty to ensure that much-needed food and beverage products are available to our consumers and communities throughout the country,"

- Suresh Narayanan, Chairman and Managing Director of Nestle India

“As the COVID-19 situation evolves, Kraft Heinz leadership will continue to evaluate and adapt as needed to ensure the health and safety of its employees and support for our consumers.”

 - The Kraft Heinz Company

As consumers increasingly turn online for their food and beverage needs during the COVID-19 pandemic, PepsiCo, Inc. has launched snacks.com and pantryshop.com, two direct-to-consumer websites where shoppers can order an assortment of PepsiCo's food and beverage products.

“Investing in ecommerce and digital capabilities and talent has been – and will continue to be – a big part of that effort. In these uncertain times, as more and more consumers are using e-commerce channels to purchase food and beverage products, pantryshop.com and snacks.com offer shoppers another alternative for easy and fast access to products they love."

 - Pepsico and e-commerce

ReGrained launches upcycled Pus online amid COVID-19

“Our pus perfectly showcase ReGrained’s versatility and innovative spirit,”

- Dan Kurzrock, CEO of ReGrained

“Purple-powered food startup Uala launched a new-to the-world snack in the time of coronavirus.”

“We are intent on emerging from this crisis even stronger than before. We are accelerating a number of strategic initiatives and continuing to invest in our brands and capabilities to remain the preferred choice of our customers and consumers,”

- Mondelez International U.S.

"We drove nearly 50% growth in e-commerce net sales in scal ‘20, including accelerated growth in the fourth quarter as consumers increasingly turned to this channel for their shopping needs,"

  - General Mills CEO Je Harmening

CONCLUSION

As the effects of COVID-19 are felt around the world, the food and beverage consumer product manufacturers have been significantly impacted by reduced consumption and disrupted supply chains. With regulatory norms around social distancing across multiple nations, reduced social gatherings were expected to impact the snacking industry to a high extent. However, snack manufacturers have been seeing a stable sale in their products and hence, foresee a steadiness in demand during the coming months of this fiscal year.

On the contrary to expectation, according to IRI reports, salty snacks have been one of the major essential products demanded in retail stores, which has raised the sales of PepsiCo brands Lays and Tostitos by 32% and 42%, respectively. There have been vast changes in the consumption pattern among consumers, wherein “at-home” experimentation with new snacking items has been gaining popularity.

Though, there has been a stable growth in demand for snacks, the purchasing behavior among consumers have greatly disrupted the distribution channels for these products. According to the IR data, e-commerce sales of snacks have grown up by 44% during this pandemic period. Also, in response to the high demand for snacks products through e-commerce sites, the major manufacturers have been focusing on e-commerce as the primary channel for product distribution. For instance, Frito-Lays, one of the major savory snack manufacturers, recently launched snacks.com to boost its direct-to-consumer offerings.

Also, owing to the COVID-19 outbreak, there has been an increasing awareness among consumers, on healthy diet, wherein demand for healthy ingredients has been on a rise. Protein bars and energy bars, along with snacks from healthy ingredients have been gaining demand in the global snacks market. The segment of healthy snacks in this industry is expected to grow substantially during the coming years, with the rising awareness among consumers.

Thus, the impact of pandemic has been neutral for the snacks industry across many nations, as compared to other food product segments, and hence, a stable growth can be observed in the snacks industry during coming years, with many opportunities of new product development for the manufacturers.

COVID-19 TRACKER

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