Food Industry: The Problems Caused by the Corona Crisis

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Table of Contents

Introduction
Impacts of COVID-19 Pandemic on the Food and Beverage Industry
Conclusion
References

Introduction

The world has plunged into unprecedented health challenges due to the ongoing COVID-19 pandemic. The situation has indiscriminately affected the global economy since the operations of most industries have been impacted as well. Therefore, appropriate solutions should be implemented to address both short and long-term impacts. The food and beverage sector has been significantly affected by the Corona crisis, and the issue should be addressed to alleviate the collapse of the industry, especially in the most affected regions. Therefore, appropriate measures should be implemented to cushion the food and beverage industry during and after the COVID-19 pandemic. However, it can be argued that changes in the restaurant business might be complex due to the nature of interactions. To this end, the study assesses some of the impacts of COVID-19 on the food and beverage industry. It also proposes some of the solutions that can be implemented to tackle the issue affecting the food and beverage industry caused by the Corona pandemic. Lastly, it is concluded whether the changes are necessary or not.

In the December of 2019, a new coronavirus, also known as COVID-19, was identified in the city of Wuhan, China. It was labeled as a contagious disease by the World Health Organization, and within a short time, it spread throughout the world, becoming a pandemic. In September 2020, about 26.9 million COVID-19 cases and 881 thousand deaths were reported globally (Chowdhury et al., 2020). Therefore, the virus has significantly affected the health sector globally. Furthermore, it has dire economic consequences because many factories have been forced to shut down. The global supply chain, including sourcing for raw materials to distribution, has been affected. Among the many sectors affected by the pandemic, the food and beverage industry has been impacted considerably because of the need to exercise social distancing. The imposed lockdowns involved the transportation, packaging, preparation, and selling of food and beverages for different establishments. The field plays a vital role in both national and international economies. The Corona crisis has hit the food and beverage industry, and appropriate strategies should be implemented to save it during and after the Corona pandemic.

Research Questions

How has the COVID-19 impacted the food and beverage industry, especially the restaurants?
What are the most appropriate strategies to prevent the collapse of the food and beverage industry due to the different consequences caused by the ongoing Corona crisis?
Are the changes in the food and beverage industry necessary?

Impacts of COVID-19 Pandemic on the Food and Beverage Industry

The impacts of the COVID-19 pandemic on the food and beverage industry can be classified into either short-, medium-, and long-term effects. Some of the short-term effects experienced at the start of the pandemic included product expiry (Chowdhury et al., 2020). Most counties implemented national wide lockdowns to contain the spread of COVID-19. As a result, most restaurants were closed during this period. Since food and beverage items have a short life, many establishments served losses due to the expiry of the products. The second short-term experience in the food and beverage industry was a considerable decrease in sales volumes. Lockdowns and restrictions on the movement of people resulted in reduced customers, causing a loss of cash inflow for most restaurants (Chowdhury et al., 2020). This specific short-term has ripple effects, such as difficulties to run entire operations due to utility bills, rent fees, and salaries (Chowdhury et al., 2020). Overall, the food and beverage industry has significantly severed short-term impacts due to the ongoing COVID-19 pandemic.

Apart from the short-term impacts, the food and beverage industry has experienced other consequences grouped into either medium or long-term effects. One of the medium-to-long-term impacts is reducing the return on investment (ROI) (Chowdhury et al., 2020). Most of the restaurants operating in regions that are under lockdown are mostly making losses or slight margins. Therefore, they will suffer a reduction in ROI in the medium or long-term run. COVID-19 has disrupted the supply chain structures of the food and beverage industry because many distributors have closed businesses (Chowdhury et al., 2020). Some of them might not open in the long run and the ones that start operations might be forced to restructure or rebuild their supply chain relationships. Most employees in this field are at risk of losing their jobs. Firms and restaurants are struggling to cater to operational costs. As a result, most of them are opting for job cuts to minimize expenses. Lastly, the closure and disruption of the operation of many food and beverage companies have resulted in a loss of sales and revenues. The industry is a significant contributor to Gross Domestic Product (GDP); hence, reducing payments will result in a decrease in the contribution to GDP. Overall, the COVID-19 pandemic will have significant long-term consequences on the food and beverage industry that will affect the economy of many countries and should be addressed.

Should the Conventional Practices of the Food and Beverage Industry Change During and After the Corona Pandemic?

Conventionally, restaurants are social places where people meet. The need for social distancing has challenged this norm during the Corona crisis. Therefore, it is a question of whether this establishment should continue operating normally or whether new strategies should be implemented as dictated by the current situation.

Suitable strategies should be implemented to address the short-, medium-, and long terms associated with the Corona pandemic. The issue of product expiry can be tackled through product rotation which allows old items to be sold before getting spoilt (Chowdhury et al., 2020). The revenues for the food and beverage industries have decreased, and the future is uncertain. Most restaurants have resulted in job cuts to reduce expenses in salaries. However, companies should not resort to retrenchment strategies. Instead, it is recommended that a partial reduction of remuneration (Chowdhury et al., 2020). Overall, companies should aim to cushion the employees because human resource is one of the most crucial factors for the success of any business.

The solution is for the government and other concerned authorities to implement policies that cushion food and beverage businesses from collapsing due to accrued losses and operating costs. The relevant institutions should issue incentives to food and beverage players to ensure the survival of the distribution chain during and after the pandemic (Chowdhury et al., 2020). In summary, government and other associated institutions have a crucial role to play in protecting food and beverage companies from the adverse impacts caused by the COVID-19 situation.

Another strategy to cushion the food and beverage companies from the impacts of the crisis includes decreasing operational costs. Examples of cost reduction strategies include decreasing trade promotion expenses and employee remuneration expenses (Chowdhury et al., 2020). Food and beverage companies should implement suitable strategies that reduce operating costs to sail through this turbulent period.

Lastly, companies should consider developing resilient digital systems. The stakeholders should restructure their supply chain systems to favor the new norm (Chowdhury et al., 2020). For instance, companies can build online sales platforms to replace the convention systems that require contact engagement. Other digital technologies, such as Big Data, the Internet of Things, Cloud Computing, and automation, should be integrated into the information systems for food and beverage companies to improve resilience during these challenging times (Telukdarie et al., 2020). Overall, COVID-19 has negatively impacted the food and beverage sector with some suitable digital strategies that can be implemented to rescue this industry during and after the crisis.

Conclusion

The food and beverage industry has been adversely affected by the COVID-19 pandemic. Some products are at risk of expiring, and the industry has suffered losses in revenues, difficulty to operate, reduction in ROI, and job cuts to reduce expenses. The impacts can be grouped into short-, medium-, and long-term effects, but they all have unwanted consequences, especially on the national and international economies. Therefore, it is imperative to implement suitable strategies to address the problems caused by the Corona crisis in the food and beverage industries. The study proposes the use of product rotation to tackle the issue of item expiry.

Furthermore, companies should reduce remuneration instead of job cuts. The government should provide incentives to boost businesses, and firms should implement new strategies such as online sales and other digital platforms that ensure resiliency. Overall, the world is experiencing unprecedented times with new norms being adopted. Therefore, companies should implement different strategies that favor the new dispensation. The food and beverage industry, which has been adversely affected by the Corona pandemic, should execute suitable solutions to cushion it from the impacts of COVID-19 during and post the crisis.

References

Chowdhury, M. T., Sarkar, A., Paul, S. K., & Moktadir, M. A. (2020). A case study on strategies to deal with the impacts of COVID-19 pandemic in the food and beverage industry.Operations Management Research, 10(9), 1-13. Web.

Telukdarie, A., Munsamy, M., & Mohlala, P. (2020). Analysis of the Impact of COVID-19 on the Food and Beverages Manufacturing Sector.Sustainability, 12(22), 1-22. Web.

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Food Industry: The Problems Caused by the Corona Crisis

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