Since Food & Drink Business’ first COVID-19 industry briefing on 12 February, the food and beverage landscape in Australia has altered faster and more dramatically than anyone predicted.
The latest figures from CBA’s Household Spending Intentions Series reveal the true impact social isolation, industry closures and other restrictions put in place to try and mitigate the potentially devastating impacts of COVID-19 have had.
CBA chief economist Stephen Halmarick told Food & Drink Business that its data sets show what is happening across the economy, and the figures are astounding.
In the week ending 27 March, the average consumer spend on groceries was up 40 per cent on the previous year. It was up 24 per cent for the week ending 3 April; 28 per cent for 10 April and 12 per cent, 17 April.
For alcohol spend at bottle shops, in the week ending 27 March, the average spend was up 86 per cent. The following week (3 April) 28 per cent; 23 per cent, 10 April; and 4 per cent in the week ending 17 April.
Halmarick said: “Grocery shopping and alcohol purchasing spiked due to the hoarding phase, but that is calming down. You can see from April a big shunt down and we’re seeing it stabilising at those lower levels.”
But looking at its data on consumer spend overall, that is down 18 per cent compared to the same period last year.
“Every economic forecast can see that spending is down dramatically. The assumption is the worst period will be April, May, June and that things will pick up after that, but that is wholly dependent on decisions by the government as to when businesses and industries can start operating again."
Crisis carb-loading
In March figures from Nielsen Homescan, volume sales for long-life meals, bread mix, rice, flour and pasta more than doubled in the four weeks ending 22 March.
Nielsen Connect - Pacific director Sarah Deas said it shows consumer behaviour we can expect to see over the next four months.
Deas said: “More time at home will give rise to more cooking and baking from scratch as consumers find creative ways to use up their pantry staples; but an increase in sales for convenient meal options also cater to smaller person households or those that are juggling the various demands of working from home and home schooling.
“The average Australian household has enough rice to see them through 65 days, pasta to last 63 days and enough noodles to last 55 days,” said Deas.
It appears that in a bid to stave off a global viral pandemic, consumers are now in the grip of a carb-loaded one. Deas said Nielsen research in China has shown heightened consumer attitudes towards health and wellness even after restrictions started to be relaxed.
The empty flour shelves are indicative of a significant uptake in baking. In March, Australians stockpiled enough flour to last approximately 65 days, while bread mix volume sales more than doubled (+170 per cent). Volume sales of flour were up 156 per cent and sugar 64 per cent.
Eat your greens, from the freezer
But it’s not all bread and pasta. In the four weeks to 22 March, overall growth in the fresh produce category reached a two-year high, up 5.1 per cent on the same period last year. Riding off the back of recent flat sales growth and higher prices due to supply chain challenges from bushfires and drought, Nielsen fresh industry lead Melanie Norris said the increase in sales was “well above expectations”.
In the stockpiling frenzy that was March 2020, Nielsen recorded “unprecedented sales growth” in shelf-stable and frozen produce categories.
Norris said it is clear consumers are gravitating to produce that lasts weeks not days. Fresh vegetable sales increased 15 per cent in the four weeks to 22 March, but that was mainly contributed to by sales of potatoes, onions and carrots.
In comparison, frozen fruit recorded an all-time high for volume growth (+39.3 per cent) and canned fruit jumped 73.0 per cent. Similarly, the sales of frozen vegetables were up by 59.8 per cent and canned vegetables by 118.5 per cent.
It’s going to be the job of brands to find ways to inspire consumers with the produce they are purchasing. “Recipe ideas using longer-lasting vegetables with stockpiled pantry items, or creative ways to use frozen and canned produce could help to drive consumption,” Norris said.
What is clear is there is much more transformation in the industry to come.
