Introduction
The Covid-19 pandemic has drastically affected the world. It has not only put the life of the people at stake but also has crashed down the world’s economy. Every industry, either supporting industry in terms of supply chain or directly involved in manufacturing, has been adversely affected by this pandemic. The food industry was allowed to resume the operations earlier. According to retailers such as Future Group and Metro, there is an increase in the demand for packaged food products such as biscuits, snacks and noodles during the lockdown but it’s not true in every product category.
Earlier, the baking industry had a good growth curve and was expected to increase by the growth rate of 9-10% this year. It was mainly due to the higher consumption rate of bread and biscuits among Indian consumers. According to various economic reports, around 1.3 million tonne of baked products are accounted for only in the organised sector. Since there are many small-scale bakeries in the country as an unorganised sector, total baked goods production is extremely high. The majority of products preferred by consumers are bread, biscuits, and cakes whose market was about to increase by the growth rate of 12% but unfortunately, due to the Covid-19 pandemic, the growth has become stagnant. Beside bakery products, other industries including beverages and ready-to-cook are also affected by this pandemic. The growth rate has fallen and many of the small scale start-ups are even struggling for their survival.
Current Scenario
Presently, the bread and bakery product market is expected to grow at a compound annual growth rate (CAGR) of 1% due to the economic slowdown and lockdown effects. Although the market is expected to recover from 2021 by the growth rate of 4-5%, it is still less than the growth rate expected before Covid-19 pandemic. Soft drinks and ice cream industries are also suffering great loss as there sales have decreased in the peak season.
There are various reasons behind the low production rate in the food and beverage industry:
? Unorganised sector: Most of the grain mills and bakeries are under the unorganised sector. Majority of the operations in small-scale manufacturing units are manual and require a lot of labour. Due to nationwide lockdown and stringent hygiene measures to be adopted along with social distancing during the production of food items, there is a shortage of labour in the industries as most of the workers have migrated to their hometown or villages. George Angelo, chief executive of Bisleri, said, “Reverse migration will create shortage of trained labour in industrial centres and put stress on logistics and local distribution. Moreover, because of the implementation of stringent hygiene measures, many businesses are dubious to start because of district authorities’ inspection and subsequent sealing of facilities further, if measures are not properly followed.
? Slow supply chain: Due to nationwide lockdown, the movement of vehicles is restricted which has caused the impact on the supply chain of the products. Although essential food supplies are allowed to be transported, there are restrictions in inter-state transportation at places with higher Corona virus affected people. Moreover, people are declining to work in logistics due to the fear of Corona virus infection which has decreased the number of transport vehicles for the supply of finished goods to the market.
? Less availability of raw material: Due to limited workforce, prioritisation and limited shipment clearance at the port, many companies are facing the scarcity of raw materials. For milling and baking industry, lack of logistic services has caused slow movement of grains from farms to the milling industry which ultimately leads to a decrease in the supply of flour to the baking industry.
As per FAO 2018, the total potato production was 368MT of which 189MT alone was produced in Asia. This year, Asia may witness the shortage of fries if lockdown persists for next few months because suppliers are bringing potato directly from cold storage to the customers, creating a shortage of potatoes for processing purpose.
? A decrease in purchasing power: There are many products which come under the category of premium products. Due to the pay-cut situation and loss of jobs, the purchasing power of people has decreased which has reduced the demand for these gourmet products.
? Decrease in exports: As per the report published in 2019, India has exported the flour worth $103.7 million but due to Corona virus pandemic, the export has been halted for some time. According to Commerce Minister Piyush Goyal, there is 12- 15% decline in the export of meat products. Also, the orders for non-Basmati rice have been decreased.
? Shut down of restaurants: Since social distancing is the possible way to fight with the Covid-19 situation, restaurants are asked to shut-down in various cities of India to prevent the social gathering of people. These restaurants are operating only for home-deliveries that have reduced their sales to 30-40% of pre-Covid sale. Since many baked products are needed by restaurants for food preparation such as buns, pizza dough and wafers, the shut-down of restaurants has decreased the demand for the baking industry. Similarly, demand for soft drinks and frozen desserts has also been reduced due to non-functioning of restaurants.
Future Challenges
? Automation cost: Major challenges that the small-scale manufacturing units will face include the problem of automation. Since most of the work is being done manually, it’s important to go for technology transformation and automation to maintain hygiene level in the manufacturing process which requires huge investment on machinery as well as skilled manpower.
? Permanent hygiene measures: Already there is set of GHPs for industry and now it is crucial to practice strictly to avoid the spread of virus again in future. Capped manpower, regular sanitisation must be in habit. Such measures require a lot of changes in manufacturing protocols and personal training of whole staff.
? Cash flow crisis: Due to low production and less sale of products in the market, there is a situation of cash flow shortage among companies, especially at small-scale level. This situation may cause many small scale companies to shut down their operations.
There are other routine level challenges also which food and beverage industry are facing due to Covid-19. But as generally said, everything has both positive and negative sides. Despite all the challenges which industries are facing nowadays, Covid-19 pandemic has opened the door for various innovations in this field.
Potential Opportunities for Milling Industry
? Milling of underutilised grain crops: To add value to the flour, the biggest scope for milling industry is to promote the use of flour blended with underutilised crops (e.g., millets, quinoa) which will be of good taste as well as has better nutrient properties. There is a requirement to search for such grains which will help in the early healing of recovered people by providing sufficient nutrients as well as helps in boosting their immunity. Such ingredients can be milled with wheat to increase the nutritional value of flour.
? Fortification in flours: Since wheat flour is the staple diet of India, fortification of flour will help in fulfilling the nutrient requirement of people at mass level. Already, flour fortified with micro-nutrient is available in the market. As the need of the hour, there is a need of fortifying the flour with various antioxidants and plant bioactive compounds which will enhance the immunity level of people.
Potential Opportunities for Baking Industry
? Scope of new start-ups: Due to the Covid-19 pandemic, many existing start-ups have been crashed down due to financial crisis and resource unavailability but it has opened the door for new start-ups to come up with innovative products. Under the Aatmanirbhar Bharat initiative, there is a scope for new start-ups to capture the market with their innovative products.
? Therapeutic baked goods: India is a country that houses the majority of therapeutic herbs. Many herbs are known to boost immunity and cure diseases. Baking Industry can take advantage of such crops by fortifying baked products with these herbs. Various researches have been conducted by researchers in this field and have proved that the incorporation of herbs in baked products is a success.
The Covid-19 pandemic will not be eradicated soon. We have to start living with this pandemic while taking precautionary measures. Since good immunity is one of the biggest weapons against this pandemic, food industry can play a vital role in formulating novel food products which can help customers in boosting their immunity.
(The authors are food technologists, CSIR-CFTRI)