NCFIL Director’s Perspective: June 2020
June 30, 2020
The North Carolina Food Innovation Lab has resumed limited operations. After 87 days of working from home, our staff has returned to finalize equipment installation, train on selected equipment, and commission the entire pilot plant. Our Product Development Laboratory has resumed activity on a couple of projects we had delayed due to the pandemic.
Outside contractors and clients will not be allowed into our facility until mid-July at the earliest. In adherence with North Carolina’s decision to remain in Phase 2 for 3 additional weeks, we will not allow visitors to our facility until sometime in August. Like many of you, we are anxious to return to normal and begin collaborating to develop and manufacture plant-based foods.
Food Supply Chain Remains Disrupted
Has the food industry begun recovery from this pandemic? We are nearing six months into this global pandemic, and we continue to see supply chain impacts. Many food companies across all categories continue to run their operations at capacity to meet consumer demand, but a few plants have ceased operations because of multiple COVID-19 cases in their facilities. In some cases, they had to shut their doors because many employees were sick, employees needed testing, or facilities required deep cleanings. Additionally, farm workers have been impacted by this virus, further complicating supply chain entry points. The situation has not improved, and disruption may last through the remainder of the calendar year.
Consumer Behavior + Spending Patterns in Flux
During the past few months, consumer behavior and spending patterns have been influenced by the pandemic and social unrest, and they will continue to be influenced by the upcoming United States’ presidential election. Consumers are stressed, and their anxiety levels are creating unusual consumer demand. This has caused challenges for many consumer-packaged goods companies as they try to provide consumers with the products they demand.
Interestingly, consumers purchased many foods considered important to healthier eating, but they also splurge-purchased comfort foods like soft drinks, alcoholic beverages, cheeses, and refrigerated and frozen foods. Other food categories typically associated with anxious consumer behavior, for example confectionery, cookies, and baked goods, have not been as impacted. Some believe confectionery sales were lower because many consumers did not buy Easter candy this year. Baked goods and cookies were prepared by consumers in their own kitchens as they found more time on their hands while practicing social isolation.
These anxious behaviors created supply chain shortages that impacted basic ingredients like flour, sugar, spices, carbon dioxide, frozen fruits, and certain plastics and subsequently packaging. Alcoholic beverages also saw reduced availability as distillers tried to meet consumer demand and also change their lines to make hand sanitizers.
Food Manufacturers Should Upgrade Facilities
This unexpected demand has a positive side: food manufacturers are seeing increased profitability for their products. Now is a good time for food manufacturers to learn from the supply chain disruption. Processors should take advantage of current profits to upgrade and renovate facilities, investing in technology that will ease future supply chain disruptions—with an intent to increase packaging flexibility to more readily meet consumer demand. Manufacturers should also look at increased automation and digitization across all components of their supply chain. With digitization, manufacturers will be able to more easily pivot as consumer demand rapidly changes.
The Food Landscape Moving Forward?
Fortunately for consumers, the predicted mass food shortages did little to disrupt their lives. The buyer may have had to buy items not on their “list,” but there has been plenty of food available as food companies responded to supply chain challenges. The food landscape has changed during COVID-19 as consumers sought alternative products and prices increased. Plant-based and other nutritious foods benefitted from their halo effect, and consumers eagerly purchased these alternatives.
Consumers have changed in many ways, and the food industry should take note. Online shopping, a preference for simple, healthy products, and less reliance on food service will continue to exemplify the direction consumers follow. As the pandemic winds down and consumers find more customary products on shelves, the surge in sales of the above options has started to level out and slightly pull back, but several companies are betting consumers will maintain healthier eating lifestyles going forward.
Thank you for reading this month’s perspective. These are the views and opinions of the NCFIL Executive Director and may not reflect the opinion of others at NC State University. We welcome your feedback and perspectives.
Plant-based food innovation will maintain its momentum after COVID-19, so let’s talk about how NCFIL can collaborate with you, using jobs-to-be-done theory and design thinking for new ideas. We can help you bring ideas to market!