Coronavirus: Supply chains under scrutiny22 Mar 2020
Covid-19 will reveal holes in the relative resilience of companies’ supply chains, as the global and interlinked nature of the food industry is laid bare.
It is still too early to tell which manufacturers are likely to be hardest hit, but one big surprise was The Coca-Cola Company’s warning that its supply of non-nutritive sweeteners was so heavily reliant on Chinese suppliers that it expected to see shortages. If the world’s biggest beverage company is so concerned about its ingredient supply chain, is everyone else likely to be similarly stuck?
Compared with other industries, many in the food industry are in a relatively strong position financially during the crisis, particularly manufacturers of goods with long shelf life and those that can be frozen. Demand for packaged and fresh foods and drinks is high, not only because of widespread stockpiling, but also as an increasing number of consumers work from home and change their eating habits as a result.
Transportation and logistics solutions are not working as usual, however, and foodservice suppliers are suffering as restaurants have closed in many countries. In the EU, the European Commission has said food freight should be prioritised, meaning it can cross borders that are otherwise closed, but industry has said this doesn’t go far enough to ensure food security.
Manufacturers also have been affected as employees have fallen ill or need to look after ill family members, school closures have meant many workers have been forced to stay home to take care of their children, and seasonal farm workers are staying put due to travel restrictions.
At the end of February, Danone was among the first multinationals to warn that its profits would be hit as a result of the outbreak, to the tune of about €100 million in the first quarter alone. The company generates about 10% of its overall sales in China, and about 30% of its infant nutrition sales. The British alcoholic drinks company Diageo also warned that the situation in China would cost it about £325 million (€388 million) this year.
The problem for these companies – and what will likely affect many others – is not necessarily related to changing demand as the crisis unfolds, but about the logistics needed to transport ingredients and finished products from A to B. The world’s biggest dairy company, New Zealand’s Fonterra, has also warned of potential significant risks to its business, partly due to a slowdown in the processing of its containers at ports.
For years, the food industry has sought to outsource its ingredient supplies to keep costs down – but if supplies are concentrated in one geographic region, this strategy could become a weakness.
For many in the food industry, the road to recovery from the COVID-19 outbreak is likely to be long –and it may also force companies to take a closer look at what constitutes a resilient supply chain. One approach may be to combine local and global production and manufacture, including greater investment in domestic supply chains – an approach that also could hold significant appeal for many consumers.
Targeting the sustainable consumer in Latin America
8 Oct 2021
Latin Americans are among the most concerned about climate change and the most interested in sustainable actions but they are also highly price sensitive, according to Euromonitor. How can brands strike the right balance?Read more
Researchers find traditional rice varieties with strong ‘anti-cancer’ properties
4 Oct 2021
Filipino-led researchers have discovered rare, traditional rice varieties that exhibit ‘anti-cancer’ properties with the genetic traits for more catechins and flavonoids - paving the way for healthier rice, they say.Read more
Can some sugars actually be healthy? FDA asks, industry responds
27 Sep 2021
In 2019, the Food and Drug Authority (FDA) allowed allulose to be exempt from the added and total sugar labelling requirement thanks to the way it is metabolised in the body. Could other non-traditional sugars be eligible for such an exemption?Read more
How Korean food conquered Asia
20 Sep 2021
Fuelled by the popularity of Korean pop music and television shows, Korean food is on-trend among Asian consumers, spurring new product development and e-commerce platforms specialised in ‘K-Food’.Read more
‘Exciting, flavourful and adventurous’: Latin American flavours are on-trend in the US
20 Aug 2021
Seen as exciting, flavourful and adventurous, Latino flavours are popular in the US, according to Mintel research. Does this open up export opportunities for healthy Latin American food brands?Read more
EU approves stevia produced via enzymatic conversion
16 Aug 2021
The European Commission has approved use of the enzymatically converted stevia molecule, Reb M, for use in the EU.Read more
Punk health: Why young Chinese are fuelling health supplement sales
9 Aug 2021
Around the world, the health supplement market’s biggest consumers tend to be older people. In China, however, it is the younger generation of ‘punk health’ aficionados who are fuelling supplement sales.Read more
Brazilian Geographical Indication looks to elevate Robusta to specialty coffee status
2 Aug 2021
Specialty coffee makers in Brazil are celebrating after a Robusta variety grown in the Amazon rainforest has received a protected Geographical Indication (GI).Read more
Saudi start-up Red Sea Farms raises $10m to grow food in saltwater
26 Jul 2021
Red Sea Farms, which grows organic, pesticide-free tomatoes using saltwater in Saudi Arabia, has received a $10 million venture capital investment.Read more
C3 on its recent MENA expansion: ‘The region is a hub of tech and culinary innovation’
16 Jul 2021
Omnichannel food tech platform Creating Culinary Communities (C3) is bringing its cloud kitchen and food delivery tech to the Middle East North Africa (MENA) region, announcing a $100 million joint venture in Saudi Arabia just months after expanding to...Read more
Are you a supplier?
Here's what we can do for you
- Generate quality leads for your business
- Stay visible for 365 days of the year
- Receive product inquiries and respond to meeting requests directly
- Improve company online presence through Search Engine Optimisation