Beth Ford, CEO of Land O' Lakes (LOL) recently commented on the effects of COVID on her company and projected future trends in a post-COVID market environment. As with many food companies Land O'Lakes, the world's largest co-operative, was faced with a collapse of the food service sector. Many of Land O' Lakes farmer members producing hogs have been impacted by plant shutdowns and reduced capacity. Concurrently dairy-producing members have had to dump milk and others have destroyed produce as a result of disruption in supply chains.
Ms. Ford commented on the upsurge in retail buying compensating in part for the decline in food service sales. In common with other food industry leaders, Ford noted a restoration in food service commenting that at the end of May, LOL was back to approximately 90 percent of pre-COVID sales. This is reinforced by the statement by Joe F. Sanderson Jnr. addressing analysts last week stating that Sanderson Farms food service business is approaching 80 percent of the volume prior to COVID-19. Beth Ford questions whether the upsurge in sales reflects actual increased demand or is only a temporary phase of "filling the pipeline".
As with many food processors and manufacturers Land O' Lakes encountered difficulty in converting plants configured for food service products to supply the retail market. Although possible, conversion is both expensive and time-consuming and neither Ford nor Sanderson see any significant change in relative production capacity for these markets.
In predicting the future of food, Ford emphasized the move to home cooking. This is reflected in increased demand for butter and similar products used for baking. Recent IRI data and observations in club stores and supermarkets confirmed increased sales of flour. Ford noted that current consumer purchases are reminiscent of the patterns before Mother's Day, Thanksgiving and Christmas.
It is questioned whether home cooking will persist after consumers emerge from COVID confinement. This commentator believes that rediscovering the benefits of home preparation of meals both in terms of cost and a sense of fulfillment will outweigh the advantages of convenience from consuming QSR and restaurant meals. This will be especially evident among Boomers but there will be differences among age demographics in the U.S. There are obviously new opportunities for prepared meals and meal kits providing they deliver quality and variety at appropriate cost. Traditional TV dinners that resemble airplane food will certainly not displace restaurant dining in the context of eating at home. The cost of home-delivery over the intermediate term will also be a disincentive to purchasing restaurant meals.
In the context of changes in U.S. preferences for eating there is obviously a place for eggs in the post-COVID diet. Initiatives established by the American Egg Board to position eggs as an every-meal ingredient should be extended emphasizing both convenience and nutritional value. In a post-recession period following COVID-19 the cost per unit of protein compared to red meat and vegetable substitutes should be advanced as a consumer benefit.