The resiliency of the agri-food value chain is being stress-tested in the wake of the global COVID-19 pandemic. The United States food system has so far responded adequately with an abundance of food supply to meet the needs of consumers.

In our Next Gen Consumer research study, we analyzed global dynamics, consumer and industry trends and conducted our own propriety research on consumer preferences. In this study, we highlight food security and logistics as two of five primary drivers leading to a more food conscious consumer. This increase in food consciousness is evolving consumer behavior and leading to a new set of emerging needs and values that are transforming the agri-food value chain. 

In the wake of consumers being faced with a perceived potential threat to their food security and supply, there’s been a short-term shift away from the food consciousness we outlined in the Next Gen Consumer. We view this as a short-term reaction to the current pandemic. We expect the agri-food value chain’s response to COVID-19 to spur further advancements in food security and logistics, two of the primary drivers of food consciousness, leading to an overall increase in the food consciousness we’ve outlined in the Next Gen Consumer research.

Consumers have been loading up on pantry staples in recent weeks to secure their food supply while many fresh food purchases have slightly declined. According to Nielsen data, produce sales were down, with apple sales falling 3.2% compared to last year and celery sales dropping 18.7% in the first week of March while dried milk sales are up 126.3%.

Retailers Move to Consolidate Supply Chains

As our food system continues to minimize any threat of food insecurity, we expect new levels of logistical capabilities to accelerate to meet the emerging needs and values of the food conscious consumer. With the future of the food industry already moving toward regional supply chains, retailers have already been stocking up on inventory to fulfill localized areas. This is in contrast with the normal practice of trying to maintain optimal low inventory levels. 

Just last summer, Kroger broke ground on its first fulfillment center near Cincinnati, Ohio, and has announced plans for locations in Florida, Georgia, Texas and other areas. Large fulfillment centers are growing as they look to supply urban areas through food delivery, ecommerce and frictionless shopping experiences. The warehousing real estate market has generally secured long-term occupancy contracts which has minimized the risk of short-term disruption during this time. 

While we’re facing a short-term disruption, we expect the pressures of this current pandemic will only accelerate the drivers of food consciousness we’ve identified. We expect the push for self-sufficiency by major retailers to accelerate. 

  • Dollar General, for example, announced on an earnings call it will be doubling the scale of its DG Fresh distribution program by the end of the year. Dollar General’s Fresh initiative is part of an effort to be less dependent on third-party carriers. 
  • Kroger is currently piloting in-store, hydroponic produce farms. With a large supply of fresh foods, coming from outside of the U.S., securing localized production and distribution will help insulate grocery retailers from future supply chain risks. 
  • Fresh food delivery, vertical farming, and increases in automation with remote working capabilities are solutions that address some of the challenges created by the current COVID-19 pandemic. 

As consumers move past concerns of food insecurity in quarantine, efforts to reinforce supply chains will lead to efficiencies that will continue to drive the growth of food consciousness for the next generation consumer. 


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