Coronavirus has now officially been declared a global emergency by the WHO; it has spread to every Chinese region and 15 other countries, infecting more than 8,000 people at the time of writing. In addition to the human cost, the effects of a new contagion on food and drink could be far-reaching.
In the short term, the combination of quarantine protocols and fear of contagion has led to food shortages and panic buying. There have been temporary shop closures and ‘disaster capitalism’ – the practice of buying up vital resources to sell off later at inflated prices. Outside of the main quarantine zones in China, concern over short-term and medium-term shortages will drive consumers to purchase low-cost canned items with long ambient shelf lives, whereas all luxury brands are expected to take a hit as they drop in priority.
The hospitality industry that caters to Chinese tourists and visitors to China will obviously be damaged as travel is curtailed. Examples of this include casino, cruise and hotel operators in east Asia. Kraft Heinz introduced an employee travel ban to China to reduce risks of exposure, and other international companies are likely to follow suit. Starbucks and McDonald’s have also temporarily closed stores in China.
Chinese e-commerce giant Alibaba sells MREs (meal, ready-to-eat), which are expected to receive a short-term boost to sales. MREs are self-contained, military-derived food rations that are easy to store and can be heated with boiling water. MREs may also see a boost in the US, where the relatively small ‘prepper’ phenomenon will respond to widespread fear in the media following Coronavirus developments. This group will also purchase canned goods and MREs, with the aim of waiting out the apocalypse.
These products are typically positioned as convenience items for busy people who would otherwise miss a meal. If food supply chains in western countries start to see disruption, it’s possible that these products may see increased short-term demand. As these products are not considered by consumers to be emergency rations, it is unlikely that they’ll see a substantial growth from the current crisis.
In the future, China’s Government may be likely to crack down on the notorious ‘wet markets’ in which live and dead livestock intermingle and share pathogens. Wet markets are a favourite of rural consumers who are not experienced with refrigeration. These consumers prefer meat from animals slaughtered in front of them, or still living in some cases, as it is seen as fresher. These attitudes are translating into vectors for new diseases that jump from animal to human hosts. These wet markets clearly pose a threat to the global and Chinese populations, as well as the Chinese state. If the state intervenes in wet markets, there would be a substantial substitution over the following years for packaged meat products.