The Covid-19 crisis calls for a new food ecosystem
The Covid-19 crisis has made evident that food innovation, timely information and response to consumers’ needs are critical assets for food companies
The Covid-19 pandemic has disrupted the demand and supply chain of the food industry. At the time of writing, it was not yet clear as to what extent the crisis would impact the food industry in the long term. Many international markets have been learning to survive the crisis as it happens, and Chile is not the exception.
Chile is an export-oriented economy and a large exporter of food, notably salmon, fresh fruits, and wine. The country has seen a drastic change in consumers’ behaviour, notably the demand for protein.
The country has many similar features to other international markets, which have also experienced changes in consumers’ behaviour. So, what Chile’s food industry can tell us about the global food ecosystem in a Covid-19 world?
In Chile, the supply chain was the first to struggle. As one of the world’s largest salmon exporters, Chile saw the air traffic collapsed within weeks. Frozen salmon, while cheaper than fresh, is stored and shipped to overseas markets.
At the same time, processing problems at slaughterhouses in the US caused beef prices to soar, pushing consumers to swap beef consumption for fish-based food products.
“It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change.” The words of Charles Darwin set the tone to understand the success that some companies are experiencing in the wake of the Covid-19 crisis: the pandemic has made evident that food innovation, timely information and response to consumers’ needs are critical operational factors.
A change in consumers’ behaviour
What we see in Chile mirrors the ‘new normal’ in other countries. The domestic market in Chile seems to have further polarised the two ends of the population, expanding the gap between poor and affluent populations.
The UN’s Food and Agriculture Organisation (FAO) estimates that Chile will see an increase in the food-insecure population from 600 thousand to a million. These food security issues are directly related to the higher unemployment rate in the country, and the closing of small and medium enterprises.
The impact in Chile’s affluent population has led to increasing awareness of sustainability issues, and people in this group have started to buy locally. They also prefer reusable packaging and products made sustainably.
As a result, we are likely to see an increase in income disparities and two consumer segments demanding a different type of food products.
Demand for protein during Covid-19 pandemic
Prices of legumes and eggs in Chile have soared following an increasing demand for these pantry staples.
Land in the south of Chile that used to produced chickpeas and lentils, for example, is now a fertile ground for berry trees; the change in land use was driven by market conditions and the booming demand for berry fruits from global markets.
Consequently, Chile’s leading position as an export country of berries forced the country to rely on the import of chickpeas and lentils, which has skyrocketed to 97%.
Prices of eggs have also significantly increased, but this spike is associated with a bulk purchase by JUNAEB, the Chilean lunch school programme.
The change in consumer’s behaviour during the Covid-19 crisis is likely to lead to health problems in the long term, too. People have turned to sugar-added products and salty food as a means to deal with anxiety.
The move to comfort food combined with the lack of exercise inevitably leads people to gain weight. It shouldn’t be surprising to see a higher prevalence of obesity-related diseases in the coming months.
Moreover, since healthcare facilities are focused on dealing with patients affected by the Covid-19 virus, the population find it difficult to keep track of their chronic diseases.
Food and health
The silver lining in this crisis that many believe that Chile post-Covid-19 will see consumers increase their intake of healthier food.
Data from the market research company Nielsen, for example, show that consumers are already starting to increase the demand for immune-boosting products.
The crisis triggered by the Covid-19 pandemic has forced several changes in food consumption patterns, and companies should see them as an opportunity to develop new products.
The raising awareness of sustainability and health issues are likely to remain at the forefront in people’s minds and will be reinforced in a post-Covid-19 world.
This Covid-19 pandemic has laid out many uncertainties for food companies to deal with, but one thing is clear: the change in consumers’ behaviour.
Whatever the market you’re operating, the Covid-19 crisis is bringing beef consumption down and accelerating the increasing trend for plant-based protein.
What we see Chile’s food market is a testament to the need for a new food ecosystem, and companies have a unique opportunity to become a driver of change.