COVID-19 Impact, April 2020
The short-term challenges to the food and beverage (F&B) sector are real and severe, however, we are seeing a surge in demand from grocery channels across Asia as consumers stay at home and eat in.
Most Southeast Asian markets are in some form of lockdown. For example, in Singapore, which recently experienced a ‘second wave of infection’ everyone except essential services are required to work from home and, as expected, we have seen a massive spike in online grocery sales, to the point where some services have had to suspended orders due to overload.
Grocery buyers are under a lot of pressure to keep their shelves stocked and their online platforms are under heavy strain. Many have set limits on the quantity people can buy of essential items like meat, eggs, rice and cooking oil in an effort to mitigate panic buying.
In the Philippines, lock down, referred to as enhanced community quarantine (ECQ) has led to the grocery retailers effectively putting a freeze on all new listings opportunities until 1 May when the is ECQ is set to be lifted.
Restrictions on movement, as well as a surge in demand for F&B grocery items, has caused supply chain constraints in most of our markets and everyone is having to be patient when it comes to getting orders fulfilled. There is a lot of congestion at the ports and air freight prices have shot through the roof.
The demand is especially significant for frozen and shelf stable items. One exporter we work with has sold the equivalent of 12 months of export sales into Thailand grocery in the space of 6 weeks.
Many of our partner distributors are using this hiatus to review their portfolio, pulling back from food service and shifting gears to focus on their grocery brands in order to keep pace with rising demand.
Some of the more boutique distributors we know have put a hold on all new business development for the remainder of the year, in order to keep their business afloat. We’ve lost one distribution partnership deal for this reason, but we were lucky to have other options in the market and have engaged a larger player.
Indeed, many of the larger distributors we work have an eye on the future and are using this time to look for new opportunities that meet the rising demand for grocery brands. Brands that strike the right chord between novelty and commercial pragmatism are in demand.
In fact, we’ve been pleasantly surprised by the enthusiastic responses we are receiving from distributors in our markets to new partnership opportunities we’ve put in front of them over the past four weeks.
Looking at the other side of the import-export relationship and the impact F&B band owners and exporters are facing is a wild shift in priorities and budgets. One winning strategy that we have seen is brands that commit to driving short term sales while also planning on a much longer term, multi-year, basis to build strength in export markets, diversifying their risk of being reliant on a single market to deliver enduring results.
Ultimately, the decisions that are made today will have a lasting effect on business when the situation stabilises. While the short-term challenges are real and severe, it’s important to continue to keep an eye on the future and what it will bring for our businesses and people after the virus has been defeated.