Impact of Coronavirus (Covid-19) Pandemic on the Food Ingredients Industry

Food ingredients are additives, used for performing different functions such as improving the texture, taste, freshness, and nutritional value of food. Some of these food ingredients include natural flavors, natural colors, vegetable oil & fats, and sweeteners, among others.

Food being an essential commodity, the demand for food ingredients is expected to rise during the pandemic and post pandemic conditions, worldwide. Having said that, Coronavirus (Covid-19) has majorly impacted the food & beverages industry and in turn has changed the dynamics of entire ecosystem including raw material suppliers, supplying food ingredients. Lockdown in various nations such as India, China and Spain, among others and cease in the subsequent trade activities has paralyzed the supply chain. Increasing spread of Covid-19 has mandated the manufacturers to deploy precautionary measures in their facilities including labors and plant controllers screening and monitoring, and sanitizing the facilities. Food ingredient giants such as Mondelez International and Tata Consumer Products Limited, among others have witnessed a sudden rise of ~60% in the demand for baking ingredients such as cocoa powder, baking powder, and baking soda. Ardent Mills, a U.S. based flour supplier and grain innovator with 35 operational mills, has also witnessed a sudden rise in demand for flour by four to six times from the retail outlets. In order to cope up with the spike in demand, the production capacities has been increased, and in turn the facilities are running at higher throughput. The flour producers in the U.K. and Spain such as Marriage's Millers and FWP Matthews Ltd, among others have doubled and quadrupled the flour production but are still struggling to meet their country’s demand during Covid-19 lockdown. France has also witnessed a 140% rise in flour sales during April 2020, and the trend is further expected to continue by the end of 2020.

The price for food ingredients, especially sugar and vegetable oil has declined during the pandemic, owing to the logistical issues. As per CMI, the sugar prices have declined by globally by an average of 14% between March 2020 and May 2020.

Kerry Group, a major food ingredient manufacturer witnessed a 3.4% increase in its revenue during Q1 in 2020 and is expecting to witness an uncertain change in its revenue in Q2 owing to the restriction in the movement of goods which has impacted the sales of food ingredients. As per CMI, in 2020, the demand for food ingredients is expected to witness a rapid increase by Q4 in North America and Europe, as compared to the developing markets of Asia.