Covid continues to overshadow the food market

How will the next phase of the pandemic impact demand for food?

The pandemic has highlighted the importance of eating out to the food chain.


Sales did increase after restaurants, pubs and cafes were able to reopen in July, helped by the Eat Out to Help Out scheme in August and special discounts from many outlets in September.

There are now fears that national limits on opening hours, local lockdowns and economic hardship could stifle any recovery.

In June nearly 90 per cent of people said they had reduced out-of-home food spending as a way of saving money and as households budgets get squeezed spending on eating out could reduce again.

The most affected segment of the foodservice sector continues to be coffee shops and food-to-go outlets in city centres, stations and airports. Market analysts IGD expect a 43 per cent drop in food-to-go sales in 2020 to £10.8 billion, with the market still only 88 per cent of 2019 levels by 2022.

Takeaway sales were back to pre-Covid levels by July, but came under pressure as they were excluded from the Eat Out to Help Out scheme.

They may increase again because of new restrictions on restaurants, according to Kim Malley, senior consumer analyst at AHDB.


The 2008 recession hints at what might happen to out-of-home sales over the next few years and there is evidence that sales could be impacted for a limited period.

Figures from the Office for National Statistics show that catering sales were down 3.1 per cent between 2008 and 2009 but were back into growth by 2010.

There was a drop of nearly five per cent in alcohol sales (in and out of home) in 2009, but a small recovery in 2010.

Total retail food sales were up 2.5 per cent in 2009, with sales in retail, catering and alcohol up 18.4 per cent to £165.5 billion between 2009 and 2013, although catering sales had only grown 13.9 per cent to £53 billion.

A Euromonitor report from 2009 said there was still a desire among consumers to eat out, but tight budgets meant they opted for takeaways or lower-priced outlets, including fast food restaurants, while higher end places need to incentivise diners with offers and discounts to win trade.

That desire to eat out is repeated this time around, but fear of catching the virus, restrictions on opening times and the closure of outlets could mean the recovery in sales takes longer.


Growth in retail sales look like picking up after being muted in August and September as more people ate out.

UK grocery sales were up by 8.0 per cent in the four weeks to September 6 compared to 2019, according to researchers Kantar.

Although impressive, that was the slowest monthly growth since April, while sales in the 12 weeks to early September were up 10.8 per cent on 2019.

Online sales in the four weeks to 6 September were up 77 per cent on last year, with a £3.2 billion increase in the category since lockdown. Online retailer Ocado experienced 41.2 per cent growth in the year.

There was also a desire to shop more locally, with sales in independent and chain local stores up 31 per cent.

Of the conventional retailers, frozen specialists Iceland saw a jump in sales of a fifth in the 12 weeks to 6 September, Co-op was next at 13.4 per cent growth, Morrisons at 12.9 per cent, Lidl at 11.4 per cent, Tesco at 10.5 per cent, Aldi at 10.0 per cent, Sainsbury’s 8.0 per cent and Asda 6.3 per cent.

“We can expect growth in retail sales to start increasing at a faster rate,” said Kim Malley, senior consumer analyst at AHDB.

“With more time at home and a need to watch budgets, people are cooking from scratch more with comfort foods involving meat, dairy and potato products popular. However, there is also demand for the occasional treat to cheer people up.”


Source: FG Insights