Thursday, November 30, 2023

Covid not all bad for food firms

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Despite the chaos and uncertainty during the covid-19 lockdown most food and beverage firms are optimistic about the next year.
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Food innovation hub FoodHQ surveyed nearly 300 firms in early May on their confidence levels.

“What was the really positive message from it was that over two-thirds were very or somewhat positive about their business over the coming 12 months,” chief executive Dr Abby Thompson said.

They are representative of the food and beverage sector with two-thirds having fewer than 20 employees and about a quarter more than 50 employees.

Their rapid response to shifts in consumer buying behaviour was particularly encouraging, she said.

“We had 23% of the businesses change the types of products they made and 50% changing how and where they sell their products.”

Despite the lockdown shockwave 72% kept all their staff with almost two-thirds claiming the wage subsidy. 

Most businesses reported a drop in turnover with 60% expecting it to stay lower than their pre-covid predictions.

“However, 18% feel their turnover will exceed levels they had projected pre-covid over the next six months, suggesting they had been able to take advantage of the opportunities offered by the new environment.”

The main message from the survey has been firms pivoting to a direct-to-consumer approach and a targeted digital strategy have come out in good shape.

“For many of those firms what covid-19 has done is to speed up the process to get there. It’s something they would have otherwise just put off.”

There are many examples of firms that successfully moved into a more digital space, she said.

Christchurch firm Trickett’s Grove, a walnut grower co-operative, had a 500% increase in online sales. 

General manager Shane McKenzie said it felt like there was a movement to support smaller producers selling online.

“People have the time and interest to look for local businesses when they may not have previously.”

Thompson said the challenge from now is to ensure consumers’ behaviour remains close to what it was in the lockdown.

The quality of courier delivery services, particularly to rural users, will influence that.

“There is an issue over the time of delivery for some chilled and perishable products and the restriction that puts on being able to make rural customers, in particular. It is possible that we do see a niche courier delivery service evolve to serve this part of the market.”

She expects there will be slippage back to conventional retail buying as life resumes a new normal.

“A quarter of businesses we surveyed changed their products over lockdown so they may have to do that after lockdown too.”

The advantage of more direct sales and digital ordering is that feedback will come quickly on consumer behaviour, making response from firms more informed and timely.

Thompson cautions food producers might not want to make too much of this country’s near covid-free status in marketing.

“At the moment that has strength but in another six months you have other places like Tasmania getting close to where we are at also. It is a nice add-on claim.”

Food producers must first and foremost ensure they produce products consumers love and the brand NZ/covid-free label is only a useful aside.

Given the fragmentation of food markets to reflect a wide range of consumer tastes Thompson believes the time has never been better for small to medium Kiwi food companies armed with the agility of digital platforms to find their tribe around the world.

But given their relative small size few firms have access to the marketing, information technology and research support sometimes needed and that is where a New Zealand Inc approach is of value.

She agrees it could start from an overarching ministry for food but is cautious about adding another layer of bureaucracy.

“That said, there does need to be more of a cohesive approach.”

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