The COVID-19 pandemic has seen significant supply and demand challenges and a definitive shift in customer buying trends Australia-wide.
Here, Richard Clayton, CEO of Mackays Marketing provides some consumer insights on the new reality that’s affecting customer demand for bananas and other fresh produce.
2020 started with Australia impacted by the double whammy of drought and bushfires, which was very visually brought to life for those of us living in urban areas of Australia.
Sydney consumers saw a lot of items at higher than usual prices, due to drought impacting supply. Vegetables were particularly hard hit, yet demand remained, due to sentiment towards supporting the bush.
We were thinking the banana crop might have been bigger than 2019 and with what was happening in other fruit lines we were not daunted by this sales challenge, and the year looked promising for bananas.
I was overseas the first week of March and was being sent clips of empty shelves due to COVID panic buying. On the transit back through America I did not see any community or government concern, and I was unsure of what I was coming back to.
On my first day back in the office, I clearly saw the results of the unprecedented panic buying frenzy.
Most supply chains – for the vast majority of products in the supermarkets – were being broken, to the point it took months for them to recover.
At the time of writing this, that scramble had stopped, and we were able to reflect on how we thought the situation unfolded.
We are forever challenging ourselves to predict what lies in front of us. It appears to us that the consumer has reacted to this ever-evolving situation, and there are new consequences that will continue to influence sales and consumer behaviour.
In our office in NSW we have regular discussions around COVID and this is what we believe are key changes.
1. As a healthy snack, banana consumption has been affected by gyms being closed and no weekend sport. (There is an associated habit between exercising and eating bananas which has affected banana snacking occasions.)
2. Fruit can be an impulse purchase and working from home has also changed snacking habits. For city office workers, the regular trip to the local metro supermarket provided an opportunity to regularly buy
fresh bananas for a snack/breakfast. Working from home means less bananas ‘within easy reach’ and therefore either less consumption or more local consumption within walking distance, ie the local fruit
shop or IGA.
3. People are cooking more at home and missing the convenience food close to their workplace. Food waste is lower due to using up what is at home and being more conscious of meal planning to create
efficiency and/or reduce household stress.
4. People are shopping less at majors and more locally, most likely at independent IGAs and green grocers. Average weight of purchase (AWOP) at the majors has not increased remarkably. This begs the
question. Are we struggling to be available to consumers when they need bananas or are they choosing longer-life snacks?
5. Many consumers are out of work, also affecting household budgets.
The quicker we get control of the virus in our community, the quicker we can return to normality.
However, being able to maintain the disciplines required in the community to keep the spread at bay is unpredictable. On the positive, health will always be important (particularly during the pandemic) and bananas are well positioned to ride the well-being wave into the future.
But let’s consider for bananas;
• How mindful will we need to be of consumers’ willingness and ability to increase their AWOP on a tight budget?
• During times of banana oversupply what are the substitutes that consumers will opt out of to buy additional bananas instead.
• Will retailers need to offer deeper discounts to attract purchases in times of oversupply?
In 2021 what will “value” look like?
• The cheapest price?
• The healthiest product that gets eaten by the household?
• Less chance of ending up as food waste ie flexible, multiple uses?
• Portion size that suits the consumer?
Financial confidence is low:
• Australians are in two camps, either still financially ‘insulated’ (56%) or now financially ‘constrained’ 44% (Source: Nielsen).
• 20% of the working population have either lost their job or had their hours/pay cut. This and the approaching recession is driving a ‘shift to thrift’.
• Couples and families are key groups impacted financially, which impacts banana sales as they are key purchasers.
• Charities are seeing huge increases in requests for financial and food assistance.
• Consumers have been shopping more locally (IGA, independent green grocer) and online sales are increasing.
• Convenience is key as people are avoiding crowded areas where possible. This might mean one to two big shops at a big retailer and ‘top-up’ shops either not happening at all, or happening close to home.
• Shopping days have changed to include more mid-week shops, thanks to the flexibility of working from home.
Health trends and eating out:
• People are looking to increase consumption of fresh fruit and veg to boost immunity and health.
• Households are eating out less and cooking at home more regularly which is expected to continue for health and budget reasons. More affluent households have gone back to eating out more.
• Food service is making a comeback but still impacted (no events, cruise ships, etc)
• Mental health is suffering and services are oversubscribed. $500 million has been injected by the Government already this year.
Lockdowns have removed control of shopping habits (i.e. Victoria at time of writing) and COVID
cases have created supply chain issues (eg. there have been cases in stores and Distribution Centres).
WATCH THIS SPACE
Australia eats about one third of the horticulture we produce. Amid COVID, uncertainty surrounds the future of export markets – and we also lack freight options. General uncertainty remains with the strength of overseas markets. For example, large volumes of table grapes and citrus are usually
exported and if some of this stock were to end up on the domestic market (due to low export demand) there would be additional competition for sales.