Pivoting production at a time of crisis

This is the first weekly update from our Food & Drink team on how the Covid-19 pandemic is affecting our clients and the sector as a whole.

Elgood's Brewery

One of the key messages for businesses looking to overcome the challenges presented by the Covid-19 crisis, has been the importance of reacting and adapting to changing market conditions as quickly and effectively as possible. Among the leading examples are the number of drinks producers who have updated their processes to manufacture hand sanitiser for use by the NHS, as well as other organisations and the general public.

In the last few days we've been able to support one of our gin producer customers who was seeking additional ethanol in order to satisfy demand for the sanitiser it's making. 

Thanks to our continuing collaboration with the Scotch Whiskey Association, which represents more than 70 distillers in Scotland, we were able to connect the customer to distillers who are holding large volumes of ethanol not currently being used.

At present, the UK government’s guidelines on safe working practices mean that many of these distillers are operating with severely restricted workforces – as such, production levels are considerably lower than in normal circumstances. As these distillers hold large volumes of ethanol which is not currently needed for whisky production, it makes sense to connect these businesses with other producers that have an immediate need for that ethanol. To this end, the SWA has set up an online portal designed to bring distillers together with sanitiser makers, as well as distributors and packagers.

Through this portal, our gin-producing customer has now been able to contact three distillers which will help it replenish its ethanol supplies.

The SWA portal can be found here, and can be used by companies to request supplies or advertise their availability. It is also open to organisations that have a need for hand sanitiser, such as care homes or other at-risk workplaces.

Compensating for falling foodservice sales


With thousands of food outlets currently unable to operate due to government restrictions, food & drink companies need to seek new channels to compensate for low foodservice demand. But there may be some major opportunities opening up among Britain’s biggest food retailers.

We have seen both Marks & Spencer and Ocado ask producers for new lines over the past week – in many cases these are high-volume opportunities, with M&S in particular looking for own-label suppliers. While retailers’ immediate priority is to meet the increased demand that the Covid-19 lockdown has created, these businesses are also planning for product lines over the medium-term, including autumn and winter 2020.

As ever, we’re well placed to facilitate introductions as necessary. The British Frozen Food Federation has also set up a platform allowing producers to list the chilled and/or frozen lines they have overstocked so that these can be sold off or even given to charity.

This week in food & drink:

  • UK supermarkets had their best month on record in March, with spending up £1.9bn on the same month last year. Demand is expected to ease in the weeks ahead, during which period producers expect to see absenteeism rise as a result of the virus.
  • Sales of chocolate and other luxury food items have soared as consumers seek comfort during the crisis.
  • Alcohol producers have also benefited, with supermarket alcohol sales up £160m last month.
  • UK flour producers are milling round-the-clock to meet soaring consumer as well as wholesale demand during the lockdown. This could lead to higher prices.

 

Protecting your money - Financial Services Compensation Scheme (Opens in a new window)