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The disruption and accelerated trends of Covid-19 within the food industry

Photo by Pineapple Supply Co.

The general shift towards a more health-conscious diet has been impacting the food industry for the last few years from the rapid rise of dairy alternatives to plant-based food becoming the new norm. Even though Switzerland was already in flux with the advent of this new era, the Corona pandemic in the first half of 2020, will most likely strongly influence what we eat, how we eat but also the way we are going to interact with restaurants, bars and cafés in the future.

To thrive in the competitive market of changing demands, companies across all around the world are more than ever forced to stay agile and evolve quickly by offering the right food and services that satisfy not only our hunger but also our nutritional and emotional needs.

But what are the actual food trends that will rise in popularity throughout this crisis? What is going to change? We take a look at 4 topics that generated buzz so far and probably continue to set the tone throughout the rest of the year 2020.

The plant-based bandwagon
Inevitably in Western countries, the trend towards a plant-based diet has been in motion even before the pandemic started. In the last two years, we’ve been watching international dairy giants making significant moves to get a foot into the growing market for dairy alternatives. Even in Switzerland where dairy products are deeply anchored within the food culture, milk consumption has been drastically on decline whilst vegan milk sales are going up. Given this development, it is no surprise that also renowned Swiss dairy companies are starting to launch their own vegan line.

The rising popularity of a flex-vegetarian to a vegan lifestyle has fueled food trends worldwide, also triggering a wave of novel meat substitutes, aiming to please carnivores, cutting for the sake of climate change, a healthier diet and animal welfare. With the latest news of the break-down of the meat industry, this trend seems to further accelerate. While environmental, health and ethical reasons have driven the movement in the past, Covid-19 has put the fundamental ills of a whole industry in the spotlight, that seems to crush under the spread of the virus. Social grievances in the work conditions and accommodations of laborers have made headlines even before the pandemic. But they have now become a serious health risk by providing insufficient precautionary measures that resulted in high infection rates throughout the industry. After the immediate closure of a serious number of slaughterhouses and meatpacking plants in the US, UK and Germany, the industry now fears meat shortages and rise in prices whilst livestock farmers are faced with tough decisions to depopulate their unprocessed herds.

Over centuries we’ve been quite aware that human activities have a profound impact on our and the earth’s health. Even though the outbreak of the coronavirus is linked to an Asian wet market, escalating intensive farming especially with livestock and global trade have been related over years with the development and spread of zoonotic diseases. Leading scientists, including the WHO, have published warnings that the widespread overuse of antibiotics in intensive farming combined with the high density of animals with low genetic diversity is posing a significant threat to both animal and human health. Even though the trend towards a more plant-based diet is not an unexpected disruption, the outbreak of the coronaviruses might be the tipping point to rethink our nutrition with a central pivot for plant-based proteins.

Further digitization across the whole food chain
The worldwide shut down of the economy due to the corona pandemic forced food businesses worldwide to rethink their whole business models in the blink of an eye. From online ordering, virtual beer hours to pivoting to online grocery, the food industry had to become creative to be not brought to its knees over the last few months. What was nice to have before Covid-19 became essential during the lockdown with companies benefiting, that invested before in Omni-channels, direct-to-consumer models, automation and mobile services.

Especially business models for online groceries such as the Swiss startup Miacar have seen a strong increase in demand for their services since the outbreak of the pandemic and its movement restrictions. “Compared to the months before Covid-19, we could more than triple the household penetration in our delivery area with plenty of new adopters”, said Dominic Mehr, the CEO of Miacar. With a highly personalized approach, the team has grown its loyal customer base and triggered a habit change that is here to stay.

As social distancing measures for public venues and social activities still apply in post-lockdown, the food industry has to play along with the movement of digital transformation. From signing up on food delivery platforms to artificial intelligence within the kitchen, new technologies along the food chain certainly hold an opportunity to the food sector to future proof their businesses and cope with unexpected situations as the pandemic.

Local manufacturing and production
Over the past decades, local manufacturing and production have been widely replaced by central organized global value chains. Raw materials and pre-produced goods are traded around the globe often multiple times and then sold in yet another market. With Covid-19’s impact on the global trade and hub regions in China, Europe and the US, global value chains could be affected for years to come. When the infection rate of Covid-19 started going up in the first months of 2020, authorities worldwide reacted by imposing curfews and quarantines across countries with an immediate impact not only on the global trade but also on the production itself.

Especially farmers of high-value commodities were facing challenges as they still majorly rely on manual work for their harvest. Given the closure of the borders seasonal harvest workers could not travel as planned abroad.
With the asparagus crop standing in the fields, a vast amount of farmers in Germany were short of hands to harvest, resulting in crops remaining in the field. Unlike high-value commodities, staple foods like corn, potatoes, and wheat are largely cultivated with machinery. Yet the implications of Covid-19 might not be less noticeable as agricultural commodities such as seeds or fertilizers are globally traded goods.

To what extent the coronavirus crisis will affect agricultural production, and the security of the supply chain still remains unclear. To avoid the scarcity of agricultural products and food, the self-sufficiency ratio of countries — the proportion of agricultural commodities that comes from domestic production -will gain greater importance. The enhanced demand for local food chains and production has been a great response to cope with the challenges of the post-lockdown.

Following this trend also the Swiss parliament reacted by agreeing to a billion Swiss Francs investment to strengthen the national production of commodities and items of essential importance.

Shifts towards more sustainability
With people starting to worry about their health the rethink around food has been globally reinforced. Fueled by the rising awareness of the link between nutrition and health, the demand for organic and sustainable food has massively increased. Organic foods are majorly cultivated without the usage of synthetic pesticides and insecticides and are therefore perceived as healthier and more nutritious than conventional food. The noticeable change of customer behavior continues to drive Swiss retailers such as Migros to further expand its product assortment of locally produced and organic foods.
According to a recent market study of the Swiss news channel SRF, the market for organic food has been on a steady rise with a total value of 3.2 billion Swiss Francs in 2019. Several weeks of containment have increased the sales of organic food in March and April 2020 by almost one third, as Swiss retailers reported in May 2020.
And also functional food with immune system improving characteristics such as fermented or probiotic food seem to develop from a niche to a trend with an accelerated demand boosted by Covid-19.

While restrictions are eased around the world the new customer behavior will most likely not be completely altered. Even though the coronavirus pandemic has partially halted the economy, it mostly accelerates changes, which were already happening at a much slower pace.

Changing macroeconomic as well as microeconomic factors whether influenced by Covid-19 or not, require us to stay ahead of trends and digital technology even before they rise in popularity. An unfortunate event such as the pandemic will hopefully serve as an opportunity for the food industry to position itself for the future.

This blog post was written by Anja, who is a Venture Architect in our team.

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Sparrow Ventures

Sparrow Ventures

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Building kick-ass ventures and investing in promising start-ups as part of Migros. Based in Zurich — CH.