FnB SECTOR

IMPACT OF
COVID-19 ON
GLOBAL INDUSTRY
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 WE ENVISAGE THREE POSSIBLE SCENARIOS IN TERMS OF IMPACT ON THE GLOBAL ECONOMY
MILD PROGRESSION WITH SHORT-TERM IMPACT
Effective public health response resulting in low
mortality
Good response and compliance within the
general population to health and hygiene
standards
Working population able to carry on normal
routine with some restrictions
Severe, short-lived downturn in China, where GDP
growth falls below 5% in 2020 (6.1% in 2019),
but it is expected to recover to 6.4% by 2021
Global economic impact limited only to Q1
Initial dip in worldwide consumer demand to
bounce back quickly and stabilize over time
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GLOBAL ECONOMIC SLOWDOWN
Public health action in other severely impacted
countries is not as effective as China
Higher mortality than anticipated; greater than
that for common flu
Wider and more uncontrolled spread of the virus
in Europe, Asia, and Africa
China recovers, but not completely by Q2;
unemployment in China at a record 6.2% stays in
Q2, Q3
Global economic impact broader—affecting Asia,
Africa, and the Middle East. The EU proposes
increasing liquidity to at least 10% of GDP
Moderate impact on other economies; drop in
confidence and supply chain disruption to
intensify impact
WILD PROGRESSION AND GLOBAL RECESSION
Public health action in other severely impacted
countries is not effective, leading to longer
periods of lockdowns
Virus not contained seasonally, with re-
emergence of cases in China and possibly other
countries
Mortality higher than common flu, largely due to
the failure of the healthcare system
Re-emergence of cases in various countries will
increase transmission; growth could further slow
down
Global recession due to the pandemic affecting
all major economies globally
Severe impact stays through Q3 of 2020 in most
economies, recovery expected to be gradual by
2021
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 COVID-19 HAS A DIFFERENTIAL IMPACT ON DIFFERENT STAGES OF THE FOOD VALUE CHAIN

The COVID-19 outbreak is severely impacting global markets and different sectors across the F&B industry, forcing companies to actively plan for procurement, production, and
market supply. This outbreak is also forcing companies to realize the significance of alternative sourcing, advanced planning , and market adjacencies for their business continuity

HIGH IMPACT OF COVID-19 ON DIFFERENT STAKEHOLDERS OF THE FOOD VALUE CHAIN LOW
HOW DIFFERENT STAKEHOLDERS IN THE INDUSTRY VALUE CHAIN ARE IMPACTED

FOOD SERVICE OUTLETS FOOD RETAIL MANUFACTURING TRADE & LOGISTICS CONSUMERS DISTRIBUTION AGRICULTURE
• Food service outlets • Challenge is to • Meat & poultry product • Restrictions on • Amidst lockdown • Restrictions on • Affected agricultural
are experiencing deal with the manufacturers are public movement across countries, public movement output can be a
potentially the lowest possibility of the experiencing a sharp and slowing down consumers are and transportation potential source of
level of consumer irregular consumer decline in product sales of the inclined toward have led to bottleneck for the
footfall due to food footfalls • Processed food manufacturing stockpiling raw as well constraints in food food & beverage
safety concerns and • Retailers to assess manufacturers are sector have as processed food distribution industry
potentially high risk the possibility of experiencing unexpected directly affected products • Food distributors to • Countries importing
of COVID stockpiling food & rise in sales and food trade and • Consumer inclination experience supply- agrochemicals and
transmission through beverage products consumer demand logistics toward plant-based demand pressures active ingredients
social interaction to ensure • Sales of plant-based • Tightening of food products to grow from immediate from countries such
• Low level of continuity in product manufacturers transportation and significantly due to suppliers and as China (accounting
workforce due to consumer’s access can grow significantly port capacities negative publicity of consumers for 30% global
severe outbreak of to essential F&B • Delays in raw material have led to an animal-based • E-commerce and e- share) can have a
COVID across products, and to procurement to affect increase in products, influenced shopping are likely significant impact on
different deal with the production volumes and shipping and by social media experience short- agricultural output
geographies poses a challenge of cause supply shortages freight costs • Government initiatives term boosts
challenge in food possible supply preventing mass
service outlets shortages gathering have fuelled
the home dining trend

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 F&B SECTORS (PLANT-BASED FOOD, FOOD SAFETY, NUTRACEUTICAL) WILL GAIN; OTHERS WILL EXPERIENCE SLOWER
GROWTH
HIGH IMPACT MEDIUM IMPACT LOW IMPACT

PLANT-BASED FOOD MEAT & POULTRY FOOD & BEVERAGE FOOD SAFETY TESTING AND NUTRACEUTICAL PRODUCTS FREE-FROM AND CLEAN- F&B LOGISTICS &
PRODUCTS PRODUCTS TECHNOLOGY TEST KITS & INGREDIENTS LABEL PRODUCTS COLD CHAIN
▪ The plant-based food ▪ Negative publicity by ▪ Current outbreak of ▪ Food safety in terms of ▪ Growing consumer ▪ Current consumer ▪ As consumers are
market is experiencing social media on the COVID has further microbial testing and health consciousness perception against increasingly demanding
growth of more than health risks associated emphasized the other contaminants will along with the animal-based food is less processed food,
10% year-on-year. The with the consumption of significance of hygiene attain higher association of COVID likely to boost consumer cold chain will gain a
current outbreak of animal-based products and disinfection of significance as with immunity will fuel inclination towards higher level of
COVID and negative has significantly packaging, processing consumer safety gains the demand for ‘Free-from’ products significance due to
associations with affected consumer equipment, and surface paramount importance nutraceutical products preservation and food
animal-based food will demand for meat & through UV radiation, and ingredients ▪ In the long-term, it will safety
further boost the poultry products ozonation, and ▪ Evolution in testing encourage consumers
market in the next five chemicals, such as technology, especially ▪ Consumers are more toward ‘clean-eating’ ▪ Increasing stringency of
to ten years. ▪ Companies offering chlorine compounds. test kits for microbial likely to be inclined and can also influence regulations to ensure
meat & processed meat testing, can evolve toward not just consumer opposition to disinfection and
▪ Sustainability, low products are ▪ The current pandemic significantly to achieve nutraceutical food but a greater magnitude temperature sensitivity
carbon footprint, and experiencing a can positively influence food safety from the also nutraceutical toward products, such to microbial growth,
positive health effects significant dip in current regulatory changes in farm-to-fork level supplements as GM-based foods, especially in perishable
are factors that will sales. Livestock terms of disinfection which are perceived to food products, during
enable plant-based manufacturers are measures to be part of ▪ On-field testing is also have ill-effects on logistics & transport to
food take further lowering their price by a each stage in the food expected to experience consumer health and ensure safety will play a
precedence over significant margin to supply chain and Good high growth, thereby safety pivotal role
animal-based food recover the cost of Manufacturing driving its adoption in
production Practices (GMP) to the industry ▪ Consumers will become
▪ Both in short term and attain higher stringency even more demanding
long term, greater ▪ In the long term, and cautious of ‘What
consumer shift toward consumer shift toward ▪ Consumer shift toward they are eating,’ ‘How it
plant-based food can plant-based food and plant-based food can is produced,’ and ‘What
occur, thereby driving the environmental lower the demand for goes in it’
revenues and impact is expected to meat & poultry
investments in this cause revenue loss for processing
sector this sector equipment/technology

Positive Impact Negative Impact

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 COVID IMPACT AND DISRUPTION IN FNB SECTOR

DISRUPTION %
Favorable Impact on F&B Sectors
End Consumers
25%+ • Plant-based Alternatives/Ingredients
High
• Food Safety & TIC
Retail, Ecommerce, Food Service 25-30%
• Consumer Foods
• Free From and Clean Label
Testing, Traceability, Certification 20-25%
• Proteins, Vitamins and Minerals
• Nutraceutical & Dietary Supplements Medium
Food & Beverage Product 10-15%
• Logistics, Cold chain
Manufacturers
• Packaging
• F&B Ingredients
Ingredient 7-10%
Manufacturers • F&B Additives
• Flavors, Colors, Fragrances
• Processing & Technology Low

Note: Percentage in the above figure represents disruption level across different stages of food & beverage industry value chain

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COVID IMPACT ON GLOBAL FOOD & BEVERAGE COMPANIES

LONG-TERM IMPACT
(1-2 YEARS+)

MID-TERM IMPACT
(6 MONTHS TO 1 YEAR)

IMMEDIATE IMPACT
(0-6 MONTHS)
FAVORABLE IMPACT NON-FAVORABLE IMPACT

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IMPACT SCENARIO: SUBSECTORS OF THE FOOD & BEVERAGE INDUSTRY

▪ Meat & Poultry Processing Equipment ▪ Nutraceutical Products ▪ Food Safety Testing ▪ Plant-based Meat
LONG-TERM IMPACT ▪ Meat & Poultry Products ▪ Non-thermal Processing ▪ Food Test Kits ▪ Plant-based Beverages
(1-2 YEARS+) ▪ Animal-based Ingredients ▪ F&V Processing Equipment ▪ Plant Protein ▪ Food Packaging
▪ Animal-based Protein ▪ Plant Protein ▪ Food & Beverage Disinfection ▪ Dairy Alternatives

▪ Food Processing & Handling Equipment ▪ Botanical Ingredients

▪ Certified Food Products ▪ Plant Extracts
MID-TERM IMPACT ▪ Food Ultrasound ▪ Health Products
(6 MONTHS TO 1 YEAR) ▪ UHT Processing ▪ Hemp-based Food

▪ Cold Chain
▪ Refrigerated Transport
▪ Refrigerated Warehousing
▪ Frozen Food
▪ Food Irradiation

IMMEDIATE IMPACT
(0-6 MONTHS)
FAVORABILITY

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