When we began 2020, nobody could have predicted how our lives would change as a result of COVID-19, let alone how tumultuous the food and beverage sector has been over the past nine months.

Starting with the retail grocery industry, business owners have had to adapt quickly – even more so than over the past several years where change has been the norm. New technology, industry disruptors, and changes in customer tastes have impacted independently-owned supermarkets especially hard. These shifts set the stage as we delved into this pandemic and allowed business owners to adapt to change much quicker.  From increased PPE usage, deeper cleaning processes, enforcing social distancing, limiting the store occupancy, reducing hours, staffing concerns, and supply chain issues, this industry has been extremely challenged despite the fact that sales growth in many cases are well ahead of 2019 figures.

Additionally, grocers have had to figure out how to take advantage of their on-line shopping and grocery pick-up platforms to keep up with customer demand, as well as fend off both new entrants into the market and existing competitors and non-traditional foes who have focused their efforts on these COVID-19 influenced platforms. While revenue growth has been strong, these additional costs of doing business, as well as increased cost of products, has not been helpful for the bottom line. As we look now to what could be a difficult winter with further quarantine orders, the industry turns its attention to keeping adequate inventory on hand and continuing to implement safety measures to ensure customers can continue to keep their pantries stocked for the months to come.

Other industries have also been significantly affected, both positively and negatively. 

Turning our attention to the restaurant industry, we have all seen the drastic effect the pandemic has had on these businesses. Many customers are still deeply averse to going into a restaurant or bar, while outdoor facilities have provided some solace to those looking to get out of the house for a meal. Typically, restaurants make much of their profit on alcohol and desserts, which are two items that most patrons are not able to enjoy because of limited dining time at many eateries. The weather is also going to be detrimental to this industry in this part of the country as we get into the colder months. Restaurant goers are not going to want to “enjoy” a meal in frigid temperatures, no matter how comfortable restaurant and bar owners can make their outdoor accommodations.

These obstacles can be further felt all the way up the supply chain to liquor and beer distributors. While liquor stores continue to hold their own with more individuals stocking their cabinets (and if you are like me, draining said cabinet much more quickly!), with bars and restaurants not operating at the levels they were, there has been an overall decrease in the distribution industry.  This decline impacts other revenue streams that these businesses also cater to, including bar taps, sporting venues, etc. On top of the decreasing need at restaurants and bars, the country is being hit with an aluminum can shortage during the year which also made it difficult to maintain inventory on hand during some of the busiest months of demand in the industry. This was partially due to the higher demand for people drinking at home as well as an overall increase in consumer tastes for canned over bottled beer.

The next several months will likely present new issues and concerns for the food and beverage industry. With such a high degree of uncertainty regarding the containment of COVID-19, it is difficult if not fool hardy to attempt to predict what’s coming.

However, some key lessons have emerged that will continue into the years ahead.

  • The first is that those leaders who were most willing to make changes quickly, forgoing more traditional initiatives in favor of new and innovative approaches, fared best.  Those having a vision and a comfort level that enabled them to embrace a ‘new normal’, adapted best.
  • The second lesson is that listening and responding to employees, customers and vendors, as well as other trusted outside advisors, enabled businesses to be more responsive and to remain more relevant even as the environment shifted rapidly around them.
  • Finally, leaders must always be poised for change. Whether brought on suddenly by an unforeseen pandemic, or fueled by a slow industry trend, change is always just around the corner. The more prepared the company is and more strategic its approach, the more likely it is that they will be setting the pace rather than struggling to keep up.