What does the second lockdown mean for the fine food industry?

Over the weekend, Prime Minister Boris Johnson announced that a second national lockdown would shutter all non-essential businesses from 5th November until at least 2nd December.

The rules mean that once again consumers will be told to stay home, non-essential retailers will shut their doors and pubs, bars and restaurants will close down. With uncertainty around what a second lockdown will bring for the food and drink sector, Ian Wright, chief executive of the Food and Drink Federation, said “further clarity” would be needed to ensure the food and drink supply chain will be “supported sufficiently”.

“Without further reassurance, thousands of jobs will be under threat as businesses consider closing their doors for good. The economic impacts of this decision threaten calamity unless we see further details of a rescue package in the next 72 hours,” he said.

Mike Cherry, national chairman of the Federation of Small Businesses (FSB), echoed this sentiment, saying that the government needed to “match [the] scale of ambition” of the first national lockdown by offering a second wave support package.

Small business grants, an extension of emergency loans and a 100% suspension of business rates are just some of the measures the FSB has called for. “This will help the country’s small businesses to make it through to the spring and be able to drive the recovery,” he said.

The government has confirmed that the furlough scheme, which was set to expire at the end of October, will be extended, and Ian said this was “extremely welcome news for food and drink businesses who continue to feed the nation”.

Lockdown opportunity for local food shops

For the food-to-go and hospitality industries, the latest lockdown measures will strike yet another blow, according to Mark Lynch, partner at Oghma Partners. “For the food service suppliers, a tough year has just got tougher, and the prospects look difficult until perhaps next spring when increased outdoor activity should reduce the disease’s prevalence.”

The overall economic damage caused by the lockdown is not only a short-term concern, but Mark says it will continue to impact trading and weaken demand in the medium term. Helen Dickinson, chief executive of the British Retail Consortium, said the lockdown will cause “untold damage” to the high street, cost “countless” jobs and “permanently set back the recovery of the wider economy, with only a minimal effect on the transmission of the virus”.

However, Mark said that supermarkets and their suppliers, as well as direct-to-consumer food businesses, will remain the winners of the Covid-19 crisis due to the “switch in spend to home consumption”. In fact, the move to local shopping that was spurred by the first national lockdown is likely to benefit fine food shops.

Indeed, while retail intelligence experts at Springboard predict that over the six weeks to 26th December, footfall across all UK retail destinations will be down by 62% compared to 2019, the group also found that 62.8% of respondents said they plan to spend more in smaller and local stores this year, and 35.9% said they will spend more on food and groceries this Christmas.

“Fortunately for the food retailers, unlike the general retailers – Amazon has, as of yet, not got enough critical mass in food supply to grab the share up for grabs from the government’s lockdown actions,” said Mark. While the fresh restrictions will cause uncertainty for many retailers, for independent food shops, it could prove fruitful ahead of the key Christmas period.