Coronavirus Commodities: Avocado Diets (Prices) Climb, Pork Is Out
(Bloomberg) — The pandemic has totally transformed the way the world eats.
There is no trend, exactly, other than this: People want comfort. They also want to eat their way to stronger immune systems. They’re stress baking, but they’re also eating healthier than they would have at restaurants. Avocados are in. Pork belly out. Frozen pizzas and instant noodles are selling out.
Any way you cut it, the coronavirus has “completely changed everything,” said Sylvain Charlebois, a professor and senior director of the agri-food analytics lab at Dalhousie University in Halifax, Canada.
“People are more concerned about putting food on the table than anything else,” he said. “That really changes the mindset of a consumer.”
Some of these trends could be here to stay, experts say. Now that some people have gone back to packaged foods, they may be surprised to see the quality improvements for these products and keep buying them even in the post-quarantine world. Cooking more at home might also continue well after the lockdowns end.
Avocados are one of the foods that have seen a surprising price surge in the last few weeks. When lockdown measures first went into effect, farmers in Mexico, the world’s top producer, started slowing harvest activities, anticipating a demand drop-off.
But it turns out avocado toast and guacamole are proving to be stay-at-home favorites. Demand has been much higher than the growers were expecting, and that’s sent prices surging. A box of Hass avocados from the state of Michoacan, Mexico’s biggest producer, cost about 480 pesos ($19) on April 24, according to the government. That’s up about 60% from 300 in early March.
Other produce items have been flying off grocery shelves. U.S. retail sales of citrus were a standout, gaining about 50% from year-earlier levels in March, according to data from researcher IRI.
“There is a general health-halo over all fresh produce items,” said Roland Fumasi, analyst for RaboResearch, in Fresno California.
It might be the vitamin C content in citrus that prompted the buying as consumers look to boost their immune systems. Orange juice, once a breakfast staple that had fallen out of favor because of its high sugar content, also got a boost. Futures traded in New York are up about 13% since the end of February.
In Asia, consumers are turning to traditional remedies to safeguard themselves from the virus, according to Tan Heng Hong, APAC food and drink analyst at market research company Mintel. In Vietnam, people are eating more black garlic and Indonesians are stocking up on jamu, a traditional medicine made from natural ingredients.
For a lot of people, eating has become an escape from boredom and stress these days. Consumers are picking up items at the grocery store they had been shunning just a few months ago — packaged foods in particular have been given new life.
“Traditionally, food has a comforting role,” Tan of Mintel said.
Nestle SA, the world’s largest food and beverage company, is seeing very strong demand for essential food and drink items, Chief Executive Officer Mark Schneider said earlier this month. The company makes DiGiorno frozen pizzas and Maggi instant noodles.
Conagra Brands Inc., which includes Duncan Hines, Chef Boyardee and Birds Eye in its portfolio, is seeing a lift across all the categories, Chief Executive Officer Sean Connolly said late last month.
“It moved in waves, but everything is moving,” he said.
Snack consumption is also going up. That’s partly because people are stuck at home, but also because they’re spending more time doing activities that lend to munching, like binge-watching “Tiger King” on Netflix.
The case of South Korea is instructive for other markets, according to researcher Euromonitor International Ltd. Snack sales at a popular convenience store in the country were up 9% from a year earlier in the first part of March.
Even with the huge spike for grocery store buying, the blow from the closure of restaurants is just too big to overcome in some markets. That’s why there’s been things like milk dumping. Farmers are being forced to dispose of excess supplies because demand from cheese and butter makers has dried up.
Price moves illuminate that pain. Butter futures in Chicago have tumbled to the lowest in a decade, and cheese has also crashed.
Belgium’s storied pomme frite purveyors are another victim. The country is the world’s top shipper of frozen potato products, hawking fries, crisps and mash to more than 160 countries, said Romain Cools, secretary general of industry group Belgapom. The vast majority is exported and demand dried up as the food-service industry grinds to a halt. European processing-potato futures are down almost 90% this year, trading at an all-time low.
Even if restaurants are still doing take-away orders, many have reduced their menu offerings while home cooks in general are not using as many ingredients as they might eat at a sit-down meal.
But consumers will also be pleased to see that $20 goes a lot more at the grocery store than it does at a fine-dining or quick-serve restaurant, said Nicholas Fereday, a consumer goods senior analyst at RaboResearch in New York. And the revival of packaged foods might have some longer-term impacts on buying habits.
“There’s a simplification going on,” Fereday said. Packaged foods are “certainly more available because there’s more output, and people will remember that. When there was nothing left to eat, these companies delivered.”