COVID-19 Impact on Potato Chips in Food and Beverages Industry
Countries worldwide have faced numerous consequences due to the COVID-19 outbreak. Most of the industries have been affected due to the COVID-19 pandemic, both in positive and negative ways. The pandemic has disrupted the economy of the U.S., which is considered one of the major economies in the world, by disrupting all the businesses. Government restrictions, shutdown of the businesses, and income losses are some of the reasons behind the disruption of the economy. However, the demand for some products grew even at the time of COVID-19 pandemic. Snacks, such as potato chips, tortilla chips, and others, have grown in demand during the COVID-19 as people were more concerned about stocking up food edibles. Consumers shifted to budget spending on ready-to-eat products with long shelf life products such as potato chips, tortilla chips, and others. Key players in the market have acquired small companies during the pandemic as the demand for potato chips was high.
• In January 2020, J.R. Simplot Company acquired Pinnacle Agriculture. This acquisition represents a significant and important milestone for the J.R. Simplot Company, and it will help the company reach new heights.
However, disruption in supply chain has directly affected the production of various small potato chips companies, further decreasing the growth rate during COVID-19.
STRATEGIC DECISION BY GOVERNMENT TO BOOST THE MARKET
The step that the government is planning to take towards the comeback of the food industry is to make the industry less dependent on imports. Most of the manufacturers have decided to reduce their dependence on China for supplies. Many companies are trying to shift their supplies from China to other countries. This is one of the steps suggested by the government in discussion with the potato chips manufacturing companies to keep the supply chain unhindered. The new rules and mandates were introduced and implemented for the people's safety such as social distancing, utilization of masks and sanitizers, and many others.
STRATEGIC DECISIONS FOR MANUFACTURERS AFTER COVID-19 TO GAIN COMPETITIVE MARKET SHARE
In 2020, the global potato chips market witnessed positive growth. However, the manufacturers of potato chips faced significant challenges during COVID-19 due to lack of transportation and disruption in the supply chain. To gain a competitive market share after COVID-19, the manufacturers have taken certain strategic decisions.
• PRODUCTION OF PREMIUM QUALITY PRODUCTS:
Several manufacturers are focusing on producing high-quality products with innovative features to improve the demand among the customers. The premium potato chips are chips that are made with high-quality materials. Many manufactures have currently launched many new products during the COVID-19.
• In February 2021, Sietefoods.com introduced a new line of kettle-cooked potato chips. This launch will increase the customer base of the company.
Thus, the following instances show that the global potato chips market in countries U.S. and many others are expected to grow drastically. Furthermore, with the impact of COVID-19, the market for e-commerce and online shopping is likely to grow and lead the market in the coming years.
IMPACT ON SUPPLY CHAIN
As potato chips ingredients are derived from vegetables such as potatoes, the fluctuation in supply of these materials directly impacted the potato chips supply. Due to the outbreak of COVID-19, the supply chain suffered drastically. Manufacturers of raw materials had stock, but they were not getting enough demand. Moreover, companies faced several issues with the supply of raw materials as most of the country was completely shut down. In this situation, manufacturers faced untimely availability of raw materials.
Labor availability was another factor that affected the supply chain of potato chips. At several parts, the manufacturers were struggling for raw material reach, and at the same time, some were struggling to deliver the product. For a few manufacturers, the end-product was ready but could not reach their customers due to restrictions on transportation and thus losing revenue. Thus, the impact on supply is not due to one factor but was from multiple points.
IMPACT ON PRICE
The prices of potato varieties such as russet, yellow, red, white, fingerling, and purple or blue potatoes witnessed a decline due to outbreak of the COVID-19. The U.S. has significant demand for raw materials such as potatoes and this demand is generally fulfilled with local production.
• In May 2021, Frito-Lay North America is the convenient foods division of PepsiCo, Inc., they issued a voluntary recall of select 16 1/8 oz. bags of Ruffles All DressedPotato Chips because they may contain undeclared milk ingredients, because People who have an allergy or severe sensitivity to milk run the risk of a serious or life-threatening allergic reaction if they consume the product contained inside the recalled bags, this announcement was published by the FDA as a public service.
• In August 2021, Ballreich Snack Food Co. Tiffin, Ohio, recalls its 1.5oz, 2.75oz, and 7oz packages of BAR-B-Q Potato Chips due to a potential contamination Salmonella. An organism which can cause serious and sometimes fatal infections in young children, frail or elderly people, and others with weakened immune systems.
Therefore, case of such recalls of products, containing allergenic ingredients and contamination of the products hampers the company popularity and revenue. T
IMPACT ON DEMAND
The demand for potato chips faced an incline due to the COVID-19 outbreak across the U.S. As most of the countries were under lockdown, the consumption of potato chips increased as it comes under ready-to-eat food items, which witnessed a significant demand in the lockdown period.
Thus, the potato chips industry witnessed an incline in the fiscal year 2020 due to the breakout of COVID-19. As the consumption of the potato chips and other type of snacks increased, major players in the food experienced an increase in revenue in fiscal year 2020-2021. In addition, there have been changes in the budgetary support from the government. Another application of potato chips is in confectionery products, convenience food product, and other industries and households. Since these industries have registered high sales during this pandemic, the demand for potato chips has also grown.
The potato chips is mainly used as a snack food. Owing to COVID-19 induced lockdown, the sales of potato chips increased as consumers resorted to filling their shelves with adequate food supplies.
Few manufacturers faced issues with supply of raw materials. At the same time, the manufacturers struggled to maintain the supply as per the demand. Also, the gap in supply chain hampered timely availability of end-product in the potato chips market. However, the situation has recovered, and the potato chips market is likely to see normalized growth as compared to 2020 levels as panic buying has disappeared owing to recovery of COVID-19 cases.