- The biggest challenges food processors and equipment and service suppliers have had during the coronavirus pandemic include workforce issues, big changes in the way business is conducted, dealing with the supply chain and changes to projects, according to a survey of 324 leaders across the industry done by Food Industry Executive. More than 40% of processors and one in five suppliers said employees have been afraid to come to work amid the pandemic.
- Processors and equipment suppliers both have seen an impact on their revenue so far, but they do not expect it to be large. In the second quarter of 2020, the suppliers have seen revenue slip about 9.3%, but for 2020 as a whole they only expect a 3.9% decrease. Processors saw their revenues tick up 0.8% in the second quarter, and anticipate a 1.3% decline for the whole year.
- Nearly three quarters of processors (72.5%) have changed their business strategy in the wake of the pandemic, with many focusing on core brands, best sellers and more local suppliers. Fewer equipment suppliers — just 39% — have changed their business strategy. In this sector, the biggest change has been adapting to business being done virtually. Almost 85% of respondents said at least some employees have been working remotely during the pandemic.
There are few surprises in this study, which ties together many of the common themes heard throughout the food business since the coronavirus began spreading in the United States. Employees are afraid. There's been a refocusing of priorities. Everyone is adjusting. And demand has changed, either rising or falling dramatically depending on whether the companies serve retail consumers or foodservice.
Results focused on processors and equipment and service suppliers because they made up the two largest groups of respondents. But their challenges seem reflective of many sectors of the business.
Considering that coronavirus cases or fears have caused nearly 60 factories to shut down or reduce production so far, it makes sense to see the pandemic as a dark cloud hovering over the industry. According to statistics from the United Food and Commercial Workers last week, in meatpacking plants alone, more than 3,000 employees have been infected with coronavirus. At least 44 have died. Survey respondents said they've used incentive pay, increased personal protective equipment available, enhanced facility cleaning procedures and even dismissed workers who are at a higher risk for illness.
While coronavirus may have strained the food supply at the beginning of the pandemic, however, grocery stores have fewer empty shelves today. Meat production is close to where it was last year, according to U.S. Agriculture Department figures. Still, the dark cloud hanging over manufacturers has yet to move on and will continue to pose a challenge until there is a coronavirus vaccine or effective treatment.
Survey respondents were relatively positive on their revenue outlooks, projecting only minor impacts for the year as a whole. While many food manufacturers have seen sales and profits rise after foodservice outlets closed and consumers relied on grocery stores for most of their sustenance, the picture for the larger food business is less rosy. According to the survey, 52% of processors reported less demand because they primarily served food service.
At the same time, 23% saw more demand because of additional retail shopping. The survey does not indicate if it was given before the Food and Drug Administration relaxed labeling laws to allow products prepared for foodservice to go instead to grocery shelves. However, while that change is helpful, it can't make up for lost business, especially since individual consumers are unlikely to buy staple products such as flour and eggs in the quantities that they are generally sold to food service.
Given these challenges, the industry has been able to persevere. The survey found 70.3% said their companies had no layoffs during the pandemic. Just above 5% didn't have any layoffs, but may have reduced shifts or let go employees who didn't come to work.
Survey respondents were optimistic about the future. More than half — 54% — said they think the business will come back stronger after the pandemic. An April survey of industry leaders done by food innovation lab Mattson had the same response. While the food business has made several big changes in the wake of coronavirus, it's been there to serve consumers. Many of these changes could enhance and improve business practices and employee sentiment in the long run, as well as shift consumers' viewpoints of the industry that feeds them.