HRI Sales Plunging

WASHINGTON - Apr 6/20 - SNS -- The impact of the coronavirus lockdowns on restaurants, airlines, and caterers is becoming more clear, with the industry association in Germany saying March's sales were half of what they were in 2019 and predicting sales in April will plunge 90%.

By contrast, while initial hoarding and panic buying depleted the shelves of stores and supermarkets, those are now largely restocked, with the food industry confident demand moving forward can be filled despite some lingering logistical problems.

Discussing the situation in Germany, the U.S. agricultural attache for the country noted that "while the food industry successfully deals with the COVID-19 pandemic on food retail level, there is another challenge: the collapse in demand from the food service sector."

* There has already been a precipitous drop in demand for products such as pre-cut vegetables and fruits, sauces, condiments, dried products, certain cuts of meat, or fresh fish, and alcoholic beverages.

This has affected exporters in the United States. The agricultural attache added, "Export losses may last longer than the duration of the restricted movements as many restaurants may go out of business and the loss of income may reduce consumers’ ability to dine out. The restaurant sector will not recover quickly."

Besides the closure of restaurants, business is now nearly non-existent with caterers of airlines, trains, universities, schools, and daycares, although supply to hospitals and nursing homes continues.

The agricultural attache noted that it is not easy to convert all products from the food service to retail sector.

"There is less impact of the collapse of the food service market for bigger companies, as they can more easily switch production lines since they often supply both retailers and food service. However, small companies are more affected since they are often specialized on single products and the different needs of the food service sector in terms of packaging, size and product specifics."

According to industry sources the main challenge for the food industry besides the collapse of the food service sector is sourcing agricultural commodities. Starting March 25, German borders were closed to seasonal agricultural workers from key countries including Bulgaria and Romania. Germany relies on close to 300,000 seasonal agricultural workers, which make up nearly 30% of the agricultural workforce.

This will primarily impact Germany's fruit and vegetable sectors, especially asparagus, strawberries, lettuce, various cabbages and cucumbers. Major suppliers of the German market like the Netherlands, Spain, or Italy face the same problems. Therefore, the outlook for sourcing of agricultural commodities and especially fruits and vegetables is worrisome for the food industry.