Pandemic Pricing
Doing business in a pandemic requires a whole new set of rules and expectations. Predictability is no longer the norm as sales forecasts that were carefully assembled pre-pandemic are no longer relevant.
For many of our clients in the grocery sector the situation has led to a massive increase in demand and a swift shift in gears in order to increase production and keep pace with demand.
It appears that consumers in markets like Singapore, Malaysia and Hong Kong are not only staying at home to stay safe, but they are also busy filling their kitchens with food purchased online.
As a result, many of our clients have enjoyed a surge in orders. Demand for shelf stable food, in particular, has increased so significantly that some have sold a year’s supply in a matter of weeks.
This surge in demand amidst a pandemic has led to serious strain on the supply chain with pricing for airfreight spiking significantly. With commercial flights all but grounded, chilled air freight has seen a quadrupling of the price per kilo. Sea freight routes have been significantly disrupted.
For those in the midst of entering new export markets, this has led to some difficult decisions having to be made regarding pricing and timing for activation of their export plans.
One strategy that we have seen is to work on a non-pandemic pricing structure and adjust timelines so that product launch occurs when the global situation stabilises. Alternatively, launching in the current environment would mean that brand owners and distributors need to flex on their margin requirements taking into consideration increased supply chain costs.