Wealth Management: Industry Insight - Food Production and Consumption
Taking a deeper look at the food industry, we explore how the pandemic has impacted the way we produce, prepare and consume our food. In this podcast, Sophie Kilvert speaks with three experts across the industry, chef and restaurant owner Paul Ainsworth, food journalist Dan Saladino and Akeel Sachak, Rothschild & Co's Global Head of Consumer.
Listen to the interview below.
Nowadays we expect plenty, choice and convenience when it comes to our food, rarely having to consider the journey it makes from farm to table. One of the most striking consequences of COVID-19 is the disruption it has caused to the food industry, highlighting the complex and fragile processes by which our food is harvested, distributed, sold and consumed.
During the initial outbreak of COVID-19, we witnessed panic stockpiling and empty supermarket shelves, as restaurants and other eateries were forced to shut their doors. Many have had to adapt to preparing all their meals at home as a result, yet the demand for traditional groceries and fall in sales of frozen ready meals suggests that people are sincerely embracing scratch-cooking and home baking.
Some pre-existing trends have also seen a surge since March, such as the push to support local mom-and-pop stores, more health-conscious food consumption and a vast acceleration in the shift towards e-commerce. While big brands like Amazon are clearly benefitting from the demand for delivery services, many smaller retailers are also using technology and social media to reach customers and adapt the way they operate.
Yet it remains to be seen how far the pandemic represents a turning point in our shopping and eating behaviours, or whether these habits will be short-lived. The shutdown of restaurants, pubs and cafés is critical to this issue. As 30% of our calories were previously consumed out of the home, the way in which this 'out-of-home' segment recovers will be pivotal in how our habits evolve. Akeel suspects that the majority will resume their old ways once they get the chance, though this may well be mediated by the likelihood of continued social distancing and working from home.
Indeed, while consumers have been adapting to cooking and eating at home, the restaurant and hospitality sector has been forced into a near total shutdown. Akeel observes how the market for many businesses has essentially disappeared overnight, thereby losing all their revenue while continuing to bear significant fixed costs. Paul Ainsworth recounts his own experience of having to close his restaurants, and the impact not only on his employees but also on the farmers and suppliers he works with. The furlough scheme has been crucial to keeping business afloat, yet as Paul says, it only stops you going over the cliff. A return to business is needed for the survival of restaurants and suppliers in the long term. Despite the tough circumstances, he remains resolutely positive about the prospect of returning, even as he acknowledges the difficulties that this 'new normal' will involve.
Beyond the changes in our own supermarkets and kitchens, the supply-chain of the food industry has also been heavily affected by the pandemic. The board of Deere, which is held in portfolio, often note how the agricultural profession is one of the best at social distancing. Nonetheless, British fruit and vegetable production has been dealt a severe blow by lockdown travel restrictions, impeding the usual influx of 60,000-80,000 seasonal farm workers from eastern Europe. Whilst the Pick for Britain campaign has inspired around 30,000 domestic workers to take to the fields, this event has highlighted the dependence of British farming on foreign workers and global trade. In the context of impending Brexit regulations and trade dynamics, Dan Saladino reflects on the issue of food security and the need to shore up our 'just in time' supply chain.
The unique set of circumstances presented by lockdown has vastly altered the landscape of the industry. The experiences of different sectors and businesses have highlighted critical deficiencies in both local and national supply chains and fundamentally call into question how we produce and consume our food. Our current situation has certainly been a catalyst for certain changes, but only time will tell which trends persist beyond the easing of lockdown and the pandemic.