Food & drink sector

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Food & Drink

This is the latest update from Santander’s food & drink team on how the coronavirus pandemic is affecting our clients and the sector as a whole.

Food & drink

How the food and drink sector has responded to coronavirus

Santander is continuing to work closely with partners and clients from across the food and drink sector as they confront the challenges of coronavirus. The industry has responded remarkably well, easing consumers’ concerns about shortages. As a result, after the initial spike caused by panic buying, retailers expect demand to return to almost normal levels this week. Some product lines remain under pressure – notably flour and staple goods, as well as some frozen foods – but for the most part, retailers’ stocks are robust.

As the Food & Drink Federation (FDF) has said in recent days, the food supply chain has proved resilient. Not only have stocks been maintained, but manufacturers and retailers have continued to offer broad ranges, rather than restricting product choice by concentrating on key stock keeping units (SKUs).

The sector is also benefitting from improved staffing. Absenteeism rates of 25% at the peak of the crisis have fallen to around 10% - and as low as 5% in many cases. The industry continues to show agility, repurposing out of home supplies to meet the demand of larger customers such as caterers to the NHS workforce.

We’re also impressed by the sector’s efforts to address the labour imbalances that coronavirus has caused, with staff in areas such as hospitality and food-service unable to work at the same time as labour-intensive manufacturers and farmers seek additional resources. The FDF has several initiatives that could help here:

  • A scheme launched with the Association of Labour Providers to match spare workers to sub-sectors where demand for labour has increased, as well to essential worker demand. See here for more information.
  • Support for the Recruitment and Employment Confederation, the recruitment sector’s industry body, which can help with recruitment issues and questions. See here for details.
  • Support for recruitment agencies specialising in food and drink, as well as in temporary and seasonal work, including Syft-Online and Sonic Jobs.


Testing for key workers

The Government’s latest expansion of the coronavirus testing programme, launched in recent days, is aimed at key workers, including those employed in the food and drink sector. The initiative could help staff return to work, if they’re self-isolating because they are showing symptoms or have a family member who is, but test negative for the virus.

Ministers aim to be able to carry out 17,000 tests a day by the end of April; that assumes 12,000 a day taking place in up to 48 drive-through testing centres, with a further 5,000 carried out at home. Testing kits will be delivered and collected by Amazon courier services, with the results provided within 48 hours.

Importantly, employers will be able to book their staff in for a test through an online portal, with the tests also available to key workers’ families. If successful, this ramping up of testing should help the food and drink sector drive down absenteeism even further.


Support for the dairy sector

As we’ve previously discussed in this newsletter, the dairy sector faces specific challenges amid the coronavirus pandemic. With no demand from the food-service market, prices have plunged in the face of surplus stock. 

In this context, it’s encouraging that environment secretary, George Eustice, has announced a relaxation of competition laws to support the sector. However, the National Farmers Union described the industry’s plight as ‘desperate’ ahead of talks last week with Defra and more help is needed. 

Other industries, meanwhile, are getting more direct support. Defra has already, for example, unveiled a £10m package for fishing.


This week in food & drink:

  • Food and drink industry leaders have urged governments to avoid trade bans that impede the flow of critical food supplies. The plea came in an open letter to the UK and other developing nations signed by 32 trade associations including the Food and Drink Federation, the Federation of Wholesale Distributors and the Food and Drink Exporters Association.
  • The coronavirus crisis has increased ‘mindful food shopping, with consumers thinking more carefully about how and when they shop, as well as what they buy.

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