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How is Coronavirus impacting the food industry?

March 11, 2020
Food & Drink

Coronavirus is affecting businesses across industries and across the globe, and the food industry is no exception. In light of the outbreak, food companies are having to make difficult decisions like shutting down operations and instituting travel bans — and the impact doesn’t stop there.

Here’s how the food industry is responding to coronavirus.

Consumers are stockpiling canned goods
Consumers in areas where coronavirus has hit — particularly Washington, California, and Colorado — are filling their cupboards with shelf-stable foods like canned goods, dried beans and rice, powdered milk, and oat milk. Campbell Soup announced on March 4 that it would increase soup production to keep up with increasing demand.

Companies are anticipating supply chain interruptions
Only a small percentage of ingredients are sourced from China, but processors are still bracing for impact. For example, Campbell Soup gets less than 2% of their ingredients from China, and they’re currently working to find alternative sources to prevent supply chain interruptions. Coca-Cola has had to find new sources for some sweeteners, but the company doesn’t expect its contingency plans to impact consumers, at least not in the short term.

Imports and exports are being disrupted
The U.S. imports and exports billions of dollars worth of food to and from China every year, and the COVID-19 outbreak is having an impact. For example, in February, Tyson Foods and U.S. agricultural groups said that coronavirus is disrupting meat shipments to China.

The FDA issued a statement that they are “not aware of any reports at this time of human illnesses that suggest COVID-19 can be transmitted by food or food packaging.” Still, Matthew Wadiak, the co-founder of Blue Apron, suggests coronavirus will prompt companies to source more of their grains and other commodities domestically.

Some production in China has been shut down
Several companies have shut operations in China, including Danone and McCormick. The food industry giants both closed factories in Wuhan — the epicenter of the coronavirus outbreak.

Many companies are instituting international travel bans
Both Cargill and Nestlé have restricted international business travel. Both companies said they’re taking cues from public health organizations. A Nestlé spokesperson commented, “We take our responsibility for our employees and to the communities in which we operate seriously and continue to follow the advice of public health organizations.”

Some companies have reduced their financial forecasts
Consumption is dropping in Asia, causing companies to rethink their financial forecasts. Diageo expects a loss of up to $259 million in sales. Coca-Cola is “currently estimating an approximate 2- to 3-point impact to unit case volume, 1- to 2-point impact to organic revenue and 1- to 2-penny impact to earnings per share for the first quarter.” Other companies, including General Mills and Mondelez, say it’s too soon to tell how severe the financial impacts will be.

A major trade show was canceled
Natural Products Expo West, one of the biggest food shows of the year, was canceled at the 11th hour.

Coronavirus resources
For more information on Coronavirus and how it’s impacting the food industry, refer to these resources:

FDA: Press announcements
FMI, the Food Industry Association: Coronavirus and Pandemic Preparedness for the Food Industry
David Acheson: Coronavirus’ impact on the food industry

By Krista Garver

Source: Food Industry Executive

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