For months, the world could be defined by one word, “pandemic.” The Covid-19 virus, which began in January in Wuhan, hit the world, and one of the most serious countries as of March 23 was probably the United States.
The impact of the coronavirus hit two markets in the United States, retail and food services, respectively. Major retailers in the U.S. such as Costco, Walmart and Kroger have long been busy with people trying to buy groceries. Products such as water, rice, dry noodle and frozen foods, which can store more than a few months, are quickly exhausted. In addition, stores such as Whole Foods and Trader Joe, which deal with relatively high-priced products such as organic and ethnic, products from self-tables and frozen aisle are quickly being consumed, except fresh food groups with short expiration dates.
As a result, Large retail food businesses which mass-produce frozen and self-table products, are expected to achieve higher short-term performance business compared to usual. Of course, distribution companies such as Costco, Walmart and Kroger are also expected to perform well in the short term.
In fact, more important than performance is manufacturing. Under these circumstances, food factories in the United States are no exception exposed to the impact of the pandemic. In fact, in the case of larger size food company factories that sanitize every day under the supervision of FDA and USDA, can be safer than factories which produce other general goods or other internal spaces for the factory workers. In addition, in these areas, producing food factories in terms of viruses and germs can be safer than cooking directly in the kitchen of an unclean and unmanaged house. Food companies are at a crossroads between the responsibility for national food supply and to close their business temporally (temporarily – more common) to protect their employees.
But the situation at Food Service is the opposite of retail. All food service business, including restaurants, K-12 universities, airports, and fast food, are currently paralyzed, or stationary. Especially, companies related to fine dining, midscale, and casual dining, which require hospitality services, are expected to be impacted tremendously in the short term or later in the business.
In addition, the performance of food service distributors, which distribute to operators (restaurants) like these, has also been impact hard by business and a sharp decline in stock prices due to customer rush and short-term business suspensions.
Most of the large food companies are expected to recoup some of their losses in the food service business due to the increase in the performance of the retail business, as the brand-centric retail is a big part of their business and relatively small portion of the food service. However, meat processing and frozen food companies that specialize in producing food products for food service may see a sharp drop in sales and profits. However, the minimum sales are taking place around such restaurants as delivery or to – go.
However, regardless of the performance, stable supply of processed foods in the U.S. is a very important factor in the current situation. With very limited access to the outside world, processed foods with a minimum shelf life of three months or more can be nourished reliably and taste above a certain level by decades of steady effort, if not comparable to restaurants, is the best choice in the current situation and disproves radical demand. Personally, I expect the world’s most mature food industry which is US Food Market to be of great help in solving this difficult situation in this Pandemic situation.
* This is author’s personal opinion and view of situation. It may be different with real situation and real business result.