Covid 19 Impact Analysis Food Thickeners Market

The COVID-19 outbreak gave rise to a significant global economic turmoil as it posed some crippling challenges on numerous industries across the world. The varying degrees of the nationwide lockdowns put to effect by various governments led to alarming disruptions in supply chains, alongside bringing trade barriers

Lower out-of-home consumption caused by COVID-19 lockdown measures negatively impacted flavors and textured plant-based protein volumes, especially in the food service channel

The global COVID-19 pandemic outbreak resulted in the closure of various processing plants across countries due to the implementation of lockdown to contain the spread of the virus. Various supply chain disruptions were observed during the pandemic as transportation and logistics remained non-functional due to the shortage of labor and border lockdowns. The travel curbs leading to restrictions on cattle movements and shutting down abattoirs have negatively impacted hydrocolloids production 

Plants that process meat has become a hotspot for COVID-19 infections, bringing attention to the health and safety of traditional meat and resulted in a decrease in meat consumption. During 2020, the CDC (Centers for Disease Control and Prevention) had received data on COVID-19 cases from 19 of the 23 states that had reported at least one case related to this industry; there were 115 meat or poultry processing facilities with COVID-19 cases, with 4,913 workers diagnosed. This resulted in a decrease in demand and consumption of Gelatin and other hydrocolloids in the meat industry

The sales of bakery products were above average, even though the supply of bakery was insufficient, as many bakeries had to close due to labor shortages. Additionally, the disruption in logistics facilities and scarcity of raw materials as a result of the lockdown has caused additional issues in the market

But as the time passed, government started allowing reopening of the shops, the demand for the bakery products took hike especially bread and others as these are the essential products which are used in daily diet, majorly as breakfast and evening snacks. Therefore, the demand from house hold sector for bakery products has increased on the other hand the food services sector has faced decline in the market for bakery products that were considered to be one of the demanding products in food service sector

In bakery industry, where one sector i.e. food service is plummeting due to lockdown, another sector i.e. household sector is making an increase in sales of bakery products. 

Overall, there has been a -8% drop in European bakery consumption in 2020. Packaged products have experienced over 5% growth in 2020 compared to 2019, while the consumption of fresh products has decreased by -13%. In many countries, packaged bakery products have also been favored by supermarkets, as fresh bakery counter staff have often been assigned to other departments and many in-store laboratories have closed, at least temporarily

Retail stores also saw their sales of fresh bakery products falling over 2020, but less dramatically than foodservice sectors: modern retailers were favored as consumer preferred one-stop shopping and small retail stores have benefited from consumers’ preference of neighborhood outlets.

At European level there has been a drop of -7% in fresh bakery retail sales in 2020, and down to -28% for the foodservice sectors. During 2021, under the base case scenario the foodservice sector is expected to gradually recover back to 2019 levels owing to progressive reopening’s. The situation is expected to be almost close to normal by 4Q2021 and should recover in 2022

However, as a staple food in the majority of the countries, bread and bread products have faced a lower impact as compared to other bakery products such as cakes, pastries, and croissants. Household consumption of bread has increased during the lockdown period reducing the consumption of bread products in the foodservice outlets. With foodservice representing approximately 70% of the sales of bakery products, the market for frozen bakery products players has hindered as food consumption has changed from restaurants to home kitchens

Moreover, the demand for cocoa grindings has reduced because of the reduction in global chocolate consumption. Cocoa grinding is a major ingredient used in chocolate production. Association of German Confectionery Industry (BDSI) members and eleven German companies working in the cocoa grinding industry reported that cocoa grinding in the second quarter of 2020, their production facilities produced 78,825.2 tonnes of cocoa which is 16.3% less than the corresponding quarter of the previous year.

Various other countries across the world the confectionery manufacturers faced a downturn owing to the disruptions in the supply chain. The sales channel such as confectionery stores and department stores have been closed from the previous few months. The European Cocoa organization (ECA) also reported the reduction in the cocoa grounding which is valued at 314, 108 tonnes in Europe, this value is 8.9% less than the previous year

The closure of sugar and chocolate products manufacturing facilities significantly affected commodity production in the initial months. For instance, in the U.S., The Hershey Company temporarily closed all its production facilities from 16-29th March 2020 in response to the COVID-19 outbreak. According to the CEO of the National Confectioners’ Association (NCA), the consumers during the quarantine period were eating more meals at home, lowered their store visits, and increasing their comfort levels with online purchasing affected the retail confectionery sector

Similarly, in May 2020, Indonesia’s Tropical Seaweed Innovation Network (TSIN) stated that the virus outbreak has directly impacted the country’s seaweed farmers. The demand for raw materials has decreased, which has led to a fall in its price. Agar Agar is a jelly-like substance, derived from seaweed, with many uses. It's most common use is as a vegan gelatin substitute, but can be used as a thickener or stabilizer for fruit preserves, ice cream, custards, or even soups. Hence, decrease in demand for seaweed is expected to impact the food thickeners market

However, the global economy is slowly overcoming the shortfalls and regaining its normal pace, which is assumed to boost the market growth in the forthcoming years

After taking back the lockdown regulations by governments bakery products are increasing in demand. With the manufacturing facilities re-opening in various economies and the market players working towards reinstating the supply chain disruptions, it is anticipated to improve the market situation. 

As bakery & confectionery items are considered comfort food and consumers find unique ways to celebrate with more at-home activities such as baking, it is expected to impact the market positively

Ingredion, one of the key manufacturer of food ingredients, stated that their operations were considered “essential” under most COVID-19 government regulations, and their facilities were operating globally. They did not experience any material supply chain interruptions during the twelve months ended December 31, 2020 and were able to continue to operate and ship products from their global network of manufacturing facilities without material interruptions. They experienced sales volume decline in the second and third quarters of 2020 due to COVID-19 impacts on consumer mobility and consumption

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