The Coronavirus’ Effect on the Food & Beverage Industry

The Coronavirus hugely impacted eating and drinking habits worldwide. Shelter-at-home orders during 2020 and early 2021 devastated most restaurants. Many closed their doors permanently, while others managed to stay afloat with takeout/curbside pickup, drive-throughs and delivery. As public spaces slowly began reopening, many restaurants scrambled to provide outdoor seating areas (deemed to be better for social distancing—a significant challenge in cold weather climates).

Much of the restaurant and catering industry is related to travel (as well as special events such as weddings and business conferences.) Since the Coronavirus put the brakes on travel, the segment of the industry that serves the needs of travelers in airports, at convention centers and in hotels, faced terrible financial challenges.

Grocery and other food retailers stepped up to meet unprecedented demand, especially demand for digital orders and curbside pickup and delivery services. The IRI CPG Demand Index reported that packaged food and beverage sales at grocery stores and mass retailers were up about 13% in 2020 compared to 2019. Challenges were also rampant along the food supply chain, especially meat processing. Many workers were unable or unwilling to come to work during the early months of the pandemic. Food processing plants shifted away from restaurant supply to booming grocery store needs, extending worker hours and hiring more personnel. Some food producers reduced the variety of their offerings, focusing instead on best-selling items.

Another shift in grocery sales is the preponderance of ready-made meals, which grew in popularity during the COVID era. These include entrees and sides, appetizers, salads, sandwiches, snack trays, soup and meal kits. Most larger store chains have central food processing centers which produce these items, while smaller stores must rely on outsourced providers.

Sales of alcoholic beverages for at-home consumption skyrocketed. Ecommerce liquor platform Drizly, which serves more than 100 markets in the U.S. and Canada, reported a spike in alcohol sales of 300% in the last week of March of 2020 compared to the same week in 2019. Nielsen reported online sales of spirits up 243%. However, alcoholic beverage sales to bars and restaurants slowed to a trickle.

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