Food industry to face shocking blow due to second lockdown

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The Prime Minister announced a second national lockdown in England on Saturday, where we will see closures across the retail sector, including food and drink distribution such as bakeries and food-to-go businesses. Many businesses used the first lockdown to open delivery services to stay afloat, however with closures during the busiest shopping period of the year, it is predicted a further loss is to be made for those having to shut up shop during this month-long lockdown.

Responding to the Prime Minister’s announcement of a national lockdown, Helen Dickinson, Chief Executive of the British Retail Consortium, said: “Retail faces a nightmare before Christmas as the government proposes to close thousands of retail premises under this new national lockdown, denying customers access to many of their favourites shops and brands. It will cause untold damage to the high street in the run up to Christmas, cost countless jobs, and permanently set back the recovery of the wider economy, with only a minimal effect on the transmission of the virus.

“A recent Sage paper reported that closing ‘non-essential’ retail would have minimal impact on the transmission of Covid. This is thanks to the hundreds of millions of pounds retailers have spent making their stores Covid-secure and safe for customers and colleagues.

“The announced closure will have a significant economic impact on the viability of thousands of shops and hundreds of thousands of jobs across the country. The previous lockdown cost ‘non-essential’ shops £1.6 billion a week in lost sales; now that we are entering the all-important Christmas shopping period, these losses are certain to be much bigger.

“We have no doubt that retailers will comply with the rules and play their part to ensure the British public can remain safe and have access to the goods they need. Nonetheless, government must also play its part, providing support to businesses that will be forced to close, otherwise the consequences for local retail will be dire.”

Commenting on the latest lockdown measures striking another blow to the food to go and hospitality industry, Mark Lynch, Partner at Oghma Partners, said: “The second lockdown is another blow for the food to go and hospitality industry. With another four to six week break in prospect and the potential for a further lockdown in the New Year. As we approach Easter, the fear will be that this will not only impact current trading but will also lead to further business closures. Furthermore the overall damage to the economy could weaken demand on a medium term not just a short term basis. The lockdown will be a particularly bitter pill to swallow in areas such as the South East, South West and London, where Covid cases remain currently low and where hospitality and food to go demand was recovering from the initial lockdown.

“For the food service suppliers a tough year has just got tougher and the prospects look difficult until perhaps next spring when increased outdoor activity should reduce the disease’s prevalence.  For the industry supply bases, we would expect the second lockdown to lead to more distressed M&A activity and cost saving driven deal flow. In contrast, recent results from the likes of Kraft Heinz, Unilever and Nestle highlight the winners remain the suppliers to the supermarkets thanks to the switch in spend to home consumption as well as those offering food direct to consumer e.g. Gousto. Fortunately for the food retailers, unlike the general retailers – Amazon has, as of yet, not got enough critical mass in food supply to grab the share up for grabs from the government’s lockdown actions.”

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