The advent of the global pandemic, COVID-19, resulted in a global crisis. Impacting over 213 countries, the pandemic has created an economic backdrop worldwide and is deemed to create a chaotic environment, thereby resulting in the advent of global rescission. Few impacts of the outbreak of COVID-19 on the global ice cream market have been discussed below.
The outbreak of COVID-19 across the globe has restricted the production of various agricultural commodities, including cocoa beans and fruits. A major impact of the pandemic has been seen in the agricultural industry, as most of the laborers working in the fields migrated back to their native place. The lockdown restricted the availability of labor for planting and harvesting cocoa, fruits, and nuts, as well as in dairy plants. The restriction on harvesting will likely affect the shortage of supply of cocoa, nuts, milk/cream, and fruits. Moreover, harvesting fruits, nuts, and cocoa require agrochemicals such as fertilizers and crop protection chemicals. The majority of the raw materials required for the production of agrochemicals are imported from China, as the country is a key producer of agrochemicals. This has disrupted the cultivation of fruits, nuts, and cocoa, thereby creating a shortage in the production of ice cream.
Transportation
Transportation is a crucial factor in the supply chain of any market, as it is responsible for transferring goods from the farmers to the end users. In the current scenario, though the vaccination rate is steadily increasing across many regions in the world, the transportation of goods still faces interruption in terms of cross-border restrictions. Trucking has emerged as a significant chokepoint in the supply chain for everything from food to medical supplies as governments are taking stringent steps to contain the pandemic, restricting the movement of vehicles and people to drive them. Though the governments in various countries have allowed the transportation of both essential and non-essential goods within the countries, the situation is vastly different at ground levels.
Workforce
The availability of the workforce seems to be disrupting the supply chain of the global ice cream market as the lockdown, with the spread of the virus forcing people to stay indoors. The performance of the producers of fruits, nuts, milk/cream, and cocoa, along with the transportation of the goods, are interdependent. If manufacturing is brought to a halt, then transportation and, by extension, the supply chain also come to a halt. The loading and unloading of the agricultural products, i.e., cocoa, nuts, and fruits, and downstream transportation, which requires a lot of manpower, is also heavily impacted due to the pandemic. From the production farmland to the warehouse or from the warehouse to the end users, i.e., farmers, the entire supply chain has been severely disrupted due to the COVID-19 outbreak.
Trade
With countries across the globe locking down their borders, there have been minimum export-import movements, which has disrupted the logistics space. Nationwide lockdowns and trade restrictions are expected to significantly impact various countries, which are highly dependent on the import of fertilizers and crop protection products from China to meet domestic demand.
The outbreak of COVID-19 created a panic situation among the consumers due to the temporary closures of retail stores in an attempt to slow the spread of the virus. This led to panic purchasing among the consumers as they focused on pantry stockpiling of longer shelf-life food products such as ice cream. The urgent measures taken by various countries and the increasing population working from home created an upward trend in ice cream sales. However, as the restrictions started easing among various countries, customers had easy access to daily essentials, stopping panic buying.
The COVID-19 pandemic has disrupted the global supply chain and interrupted the entire value chain, from raw material procurement to manufacturing, packaging, and distribution. With several manufacturers having the required raw material and end-product stock, the impact does not seem to be high for a brief time. However, if the pandemic prolongs and trade restrictions are extended, the impact is expected to rise.
The potential impact of the COVID-19 pandemic is as follows:
Decline in Production Activities Shutdown/Reduced Activity of Production & Processing Facilities Negative Impact on Money Flow Disrupted Supply Chain Demand-Supply Imbalance
The prices of ice cream are not impacted by the COVID-19 outbreak, but it is likely that the prices will spike post lockdown. The manufacturers are anticipated to increase the prices of ice cream due to the increase in operational and raw material costs, as well as to overcome the losses caused due to the pandemic. Furthermore, many manufacturing companies have been promoted to shut down due to the pandemic's unpredictable nature. This has resulted in fewer manufacturing companies operating in the ice cream market, further increasing the prices of ice creams.
With the closure of store-based distribution channels such as supermarkets, hypermarkets, and specialty stores, consumers are turning their focus towards non-store-based distribution channels such as online\e-commerce channels. The manufacturers of ice cream with inventories and shipment operations are selling their products through their websites directly to consumers. Moreover, during COVID-19, some online channels also faced problems. Brands had to either rely on their own online shop or serve the online channels themselves. As a result, a direct-to-consumer channel experienced notable growth. As per the electronic banking company ACI Worldwide, the average value of online transactions experienced a growth of 74% compared to the previous year. Thus, COVID-19 has shown a positive impact on sales of direct-to-consumer distribution channels.
