"Explore supply gaps in the retail channel" - Rabobank's advice
US meat and poultry producers are advised to look closely at the retail channel to cover the supply gaps that appeared in these times of crisis if it is to partially offset revenue losses from foodservice. In the last month, school closures, event and conference cancellations, increased telecommuting, and reduced travel have shrunk foodservice activity, limiting food away from home to only takeout and delivery ordering, for an unknown period.
With so many Americans staying home, demand for home consumption items has suddenly surged, and food availability in the retail channel has become a concern for consumers, authorities, food processors, and retailers.
“In this environment, players with high exposure to foodservice are the ones to feel more pressure,” says JP Frossard, analyst consumer foods at Rabobank. “Exploring supply gaps in the retail channel remains as an opportunity to offset – at least partially – revenue losses from foodservice. However, pressure may still be felt, as some products are mostly consumed outside the home, such as prime meat cuts, seafood, difficult-to-prepare dishes, and frozen baked goods, and don’t translate into retail in a one-to-one conversion. In addition, some players may face limited availability of retail-size packaging, different specifications, and distribution constraints, as well as working capital restrictions during these turbulent times.”
For the moment and to a limited extent, foodservice production has already been converted to retail sizes, brands, and specifications. It is a less problematic task for players that supply both segments, although dedicated lines and availability of retail-size packaging and labels may represent a constraint, warns the team of analysts involved in this research.
Several supply lines in retail have already been impacted by the COVID-19 crisis due to infections reported among workers in several meat processing plants, which increases the chances for other producers to cover supply gaps in several areas in the US. Currently, the USA is the epicenter of coronavirus pandemic due to a large number of infections and deaths reported over the last couple of weeks. The consumption and purchase habits have suddenly changed even though there is no clear image of what may result in the future for the food industry from this unexpected challenge.
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