Food & Beverage Insider is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

COVID-19: Industry Updates
Impact of coronavirus on food market in US and abroad.jpg

Coronavirus impacting food market in US and abroad

The novel coronavirus (COVID-19) outbreak has affected nearly every aspect of international commerce and the global economy, and the global food market is no exception.

At more than 81,000 cases and approaching 3,000 deaths, the scope of coronavirus 2019 (COVID-19) has not yet been declared a pandemic by key global health officials, but the global situation worsens by the day and Americans have been issued dire warnings of “not if, but when.” This escalating outbreak has started to impact the food and beverage market, with no end in sight.

On Jan. 30, 2020, the International Health Regulations Emergency Committee, part of the World Health Organization (WHO), declared the outbreak of this novel coronavirus, now referred to widely as COVID-19, a “public health emergency of international concern.” Though the outbreak began in Wuhan, the capital of China’s Hubei province, the CDC has since confirmed cases in more than 35 countries on five continents.

The disease outbreak has affected nearly every aspect of international commerce and the global economy, and the global food and beverage market is no exception. China is the largest exporter in the world, including nearly US$29 billion worth of foodstuffs and an additional $23.5 billion in fruits and vegetables in 2017, the most recent year such data is available.

With the disease spreading as quickly as it has and originating in a country exporting trillions of dollars of goods annually, it should be no surprise some of the world’s most powerful regulatory bodies have already released statements about COVID-19 and its impact on the global food market.

On Feb. 5, the U.N.'s Food and Agriculture Organization (FAO), the International Fund for Agricultural Development (IFAD) and the World Food Programme (WFP) released a joint statement describing the outbreak as a “health challenge for China and the rest of the world.”

On Feb. 14, FDA released a general statement, saying “The FDA is closely monitoring the outbreak and collaborating with our interagency partners, international partners and medical product developers and manufacturers to help advance response efforts to combat this virus.” The agency also addressed the food supply directly:

“We want to reassure the public that at this time there is no evidence that food or food packaging have been associated with transmission and no reason to be concerned. Further, there is no evidence to support transmission of COVID-19 associated with imported goods, including food and drugs for humans and pets, and there have not been any cases of COVID-19 in the U.S. associated with imported goods.”

Disruptions, closures hurting business

Even with that bit of optimism from FDA, supply chains have already experienced interruption, and businesses in the U.S. and abroad have felt the effects. The New York Times recently reported McDonald’s has closed 3,300 locations in China; Starbucks has closed nearly half of its 4,300 stores in the country, and Yum Brands — operators of KFC, Pizza Hut, Taco Bell and other fast-food chains — said nearly one-third of its restaurants in China have closed, with the remaining open locations seeing major drops in sales.

At the recent Consumer Analyst Group of New York (CAGNY) conference, Coca-Cola cautioned the disease will drag down its first-quarter earnings by 1 to 2 cents per share and reduce case volume by 2% to 3%, according to Food Dive. General Mills CFO Kofi Bruce said at the conference, “the rapidly evolving situation makes it difficult to quantify the full year impact of the outbreak,” but noted nearly half of the company-owned Hagen-Dazs ice cream shops in China have temporarily closed.

On Feb. 26, Reuters reported Danone, the world’s largest yogurt manufacturer, predicted a loss of more than $100 million in sales.

A recent report from Rabobank, a leading food and agricultural bank, noted the food service sectors in Singapore, Thailand and Vietnam are all likely to be affected in the first quarter, largely due to a decrease in Chinese tourists.

Businesses are seeing the economic impact of the disease in the U.S. as well. “There’s been disruptions at the ports,” Tyson Foods Chief Executive Officer Noel White told Reuters recently. “That has skewed shipments, receivals.”

U.S. restaurants are also seeing downturns in business because of COVID-19. One owner of an Asian comfort food restaurant in Houston told USA TODAY that her restaurant, as well as those nearby, are seeing 50% to 75% loss of business across the board. Similar downturns in business for Asian restaurants have been reported in Manhattan’s Chinatown. Business owners have said it’s not just fear that has slowed business, but a lowered customer base as fewer Chinese students and tourists flock the city.

There have also been issues importing to China. According to Reuters, Beijing pledged to increase purchases of U.S. farm goods last month, but “coronavirus has clouded the outlook for Chinese demand,” White said. Several Chinese ports have reported being at or over capacity for refrigerated goods, for example, as fewer receivers are picking them up.

“Things are really getting bad over there,” USA Poultry & Egg Export Council President Jim Sumner added.

Trade has gotten so difficult with Taiwan that USDA released a statement on Feb. 13, 2020, saying, in part, “Agricultural trade with Taiwan is being impacted by new quarantine measures, port closures, vessel delays, and suspended flights as U.S. agribusiness exporters struggle to find available space for cargo.” It went on to say, “systemic delays are impacting overall U.S. agricultural exports bound for Taiwan and the world.”

Business travel, event challenges

As difficult as it has become to transport food and other goods, the biggest impact may be the restriction of travel for people. That, in turn, is hurting all kinds of global business, including the trade show industry.

According to a recent report by MSNBC, “The coronavirus outbreak has caused the cancellation or postponement of more than 24 exhibitions and conferences worldwide, hammering the $2.5 trillion trade show industry and foreshadowing more pain to come.” The report went on to note that grounded airlines, cancellations within China itself and fears of travel to and from the U.S. have all played a part in impacting the industry. According to Informa Chief Commercial Officer Tom Nastos, only about 50% of the listed Chinese vendors were able to attend the recent Sourcing@Magic apparel manufacturing trade show in Las Vegas, for example.

New Hope/Informa also released a statement regarding the upcoming Natural Products Expo West in Anaheim, CA from March 3-7. The statement read, in part:

“The health and safety of the community that gathers at Natural Products Expo West is our top priority and we are following all safety advice and precautions as recommended by the U.S. Department of Health and Human Services, as well as the World Health Organization (WHO). Please rest assured that while we are monitoring the situation as an international business, and staying up to date on official sources of updates and guidance from the government and authorities, it’s entirely business as usual for our events … Be assured in the current climate, the Orange County Health Care Agency and the Natural Products teams have worked together in a strategic, proactive approach to identify any potential risks regarding food preparation and open sampling.  It is the responsibility of all of us to deliver the healthiest and safest event for everyone.”

[Editor's Note: On March 3, Natural Products Expo West was officially postponed, with the intention to announce, by mid-April, a new date.]

Next steps remain clouded

The obvious question on everyone’s mind now is, what’s next? The answer, unfortunately, isn’t very clear. FDA says it “is closely monitoring the outbreak,” with commissioner Stephen M. Hahn, M.D. saying “You have my commitment that we will continue to stay vigilant on all fronts to protect the public health—at home and abroad--during this critical time. We are committed to continuing to update the public as we have further updates on the FDA’s vital work in this area.”

That message of constant vigilance was mirrored by Icon Foods CEO Thom King, who released a statement that read, in part, “It is too soon to give a full assessment on which ingredients will be affected by the situation… We will be in contact with our Asian supply chain partners in the coming days to better understand their individual situations and then assess any potential impact to our supply chain.”

 

 

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish