The devastating SARS-CoV-2 (coronavirus) pandemic has had a huge impact on the frozen food industry in the United Kingdom and around the world. Now that remaining government-imposed restrictions to battle the contagious Covid-19 respiratory disease are easing in England – where up to 73% of the population had been vaccinated against the bug by June 5 – suppliers, producers and foodservice operators are preparing to make up for lost time and sales.
In Wales the inoculation rate is reportedly more than 84% of persons aged 18 and older, while in Scotland and Northern Ireland the rate is said to be 72% and 71%, respectively.
The mandated closure of restaurants and other foodservice outlets across Britain has had a phenomenal knock-on effect on businesses supplying the out-of-home market, which have experienced a staggering drop in sales over the last year. Although consumer facing food businesses received support in the form of Business Rates Relief, there was minimal support for the wider foodservice supply chain, which Richard Harrow, chief executive of the British Frozen Food Federation (BFFF), refers to as the “Squeezed Middle.”
Retail frozen food sales went through the roof during the pandemic as more shoppers bought in bulk to weather the health crisis which under quarantine or subjected to restricted movement dictates. However, it has been a far bleaker story for the foodservice sector, where pubs, bars, restaurants and other hospitality venues have traded very little during each lockdown.
“Recent figures from The Office of National Statistics reveal how the industry has continued to be disproportionately hit by the coronavirus pandemic, with 355,000 fewer employees on the job than a year before, accounting for 43% of the national unemployed,” said Gordon Lauder, managing director of frozen food distributor Central Foods. “Demand has continued from hospitals, care homes, prisons and schools open for key worker children, but no one can deny the foodservice sector has been hit significantly by the lockdowns and restrictions.”
Companies like Pan’Artisan, whose customer base is dominated by these sectors, saw sales growth go from being in double digits up to March 2020 to being in decline by 80% year-on-year – all within a space of three months.
The stats were similar for Paramount 21, suppliers to the foodservice market, which saw sales drop by -92% in May 2020, -88% in June 2020 and -67% in July 2020. During the 2021 lockdown, sales compared with the same months in 2019 were down by over -84% in January and February, and fell almost 88% in March.
“With both lockdowns, stock was an issue,” explained Ali Hannaford, executive chairman at Paramount 21. “The first lockdown came at the beginning of the summer, when we traditionally start to build stocks to cope with demand. This led to massively high stocks and no sales at the point of lockdown and the pressure on cash flow was immense. As things slowly started to open up we were able to sell through some stocks. Most customers were helpful with Best Before End dates being shorter than normal, some were not. Bad debt was an issue, we were caught when one company in particular used a “pay when paid” clause, that we were unaware of, to evade paying for goods they had bought.”
Preparing for the reopening of venues in terms of supply presented a significant challenge for many frozen food suppliers who were trying to predict the unknown and had to work closely with customers to create the right balance. However, foodservice outlets were also unclear given the uncertainty around whether they would be allowed to reopen, and if so what restrictions would be in place that would impact on their services.
“We didn’t want to be in a situation where customers were coming to us for stock and us not being able to meet their needs,” said David Jones, sales and marketing director at Pan’Artisan. “Therefore, we built up to four to six weeks’ stock across all our range to help support the industry once it did have the green light to reopen. However, even that was not enough as we received the highest amount of orders we have ever experienced in such a short space of time due to customers re-stocking from zero.”
Many distributors have been forced to write off stock that went out of date, but tried to maintain stock levels of popular lines in anticipation of the sector reopening.
“This has not been easy due to various factors, including new Brexit legislative requirements, capacity reduction due to implementation of Covid-19 factory shift patterns and the short supply of ingredients from suppliers with their own Covid-19 issues – but we are doing the best we can,” said Lauder. “However, while the hospitality industry continues to operate under social distancing restrictions – both back and front of house – demand from operators is likely to be reduced for a while.”
Delivery Business Surge
Although times have also been tough in the foodservice sector, operators have evolved their businesses to stay afloat during lockdown, as Darren Simpson, owner of Nanny Bill’s in BoxPark, Wembley explained:
“The main way we adapted our business during lockdown originally was bolstering the delivery business, working up our relationship with all of our partners. One of our most popular dishes is our loaded fries, called Aggy Fries – comprising rosemary salt fries, dressed in hot sauce, parmesan and spring onion, served with NB’s garlic buttermilk mayo.”
Nanny Bill’s Aggy offerings have been making deliveries memorable for all the right reasons, using McCain fries, featuring SureCrisp batter.
“It stays crisp, it’s not too flowery, they are consistently good, and cook in literally two minutes,” said Simpson. “I’m really looking forward to getting back open fully, which is so important, especially for independent businesses like us.”
With consumers remaining cautious about going out to eat in public places, and venues operating at around 50% capacity, the volumes of food required will remain lower than pre-Covid times until the sector reopens fully.
“Producers need an extended period of steady demand in order to recover from the long-term effects of the pandemic, and whilst there is a great deal of optimism, a number of challenges remain. These include the potential for reopening to be delayed, reluctance by some consumers to return to eating out, and the possibility of further regional lockdowns,” said Harrow. “On the plus side, staycations are likely to drive demand for eating out during the summer, and hopefully an ending of restrictions will mean demand continues all the way through to Christmas.” – Reported by Sarah Welsh