Braving global recession forecasts

The economic uncertainty due to Covid-19 remains, even as countries relax movement restrictions, writes RAJESWARI RAMANEE.

Poultry consumption in the region took a hit as restaurants closed-down or operated minimally. Oversupply in domestic markets meant tight margins and losses.

Broiler meat went into storage and production decreased. Imported meats faced high freight charges or slowed down while pork supply is suffering the impact of ASF.

Stimulus packages were announced for both consumers and SMEs as relief aids. Buying behavior changed where the digital economy growth accelerated due to less contact.

The positive Asians

David Hughes, Emeritus Professor of Food Marketing at Imperial College London wrote in an earlier Asian Agribiz article that global recession would likely last through 2021, but will be less felt in Asia.

“Asian economies will recover quicker than those in Europe and North America. But irrespective of household income fluctuations, we will see increasing demand in staple and basic foodstuffs, and decreasing demand for premium foods.”

The report also said that despite the uncertainty and ongoing problems, food producers and consumers will adapt. A recent McKinsey survey on how businesses will be implicated post-Covid-19 highlighted these:

  • Preference for digital now twice than traditional sales interactions; self-serve, digital ordering methods prioritized
  • Remote selling is the norm and perceived to be effective: 96% of B2B companies have shifted their go-to-market model; 64% believe the new model is just as effective or more than before (up from 54% in early April)
  • Sales model changes are expected to stay: 32% are “very likely” to sustain these shifts 12+ months after Covid-19 and another 48% are “somewhat likely” to do so
Singapore’s Trade Minister Mr Chan Chun Sing, Polish  Ambassador Magdalena Bogdziewicz and Non-Resident Ambassador to Poland Dr Loo Choon Yong welcoming the first batch of eggs from Poland into Singapore.

Adaptation of digital models

Online sales, delivery services, e-platforms/payments and app services increased exponentially.

In the wake of criticisms of wet markets, Singapore took ownership to digitize them. The Tekka Online is a great example of how wet market operators went live via Facebook, took orders online and used peer-to-peer pay platforms.

The model was used in Malaysia by the National Fisherman’s Association (Nekmat) on Facebook too, where customers either opted for delivery or were told to pick-up fresh seafood at a center in Kuala Lumpur. The site reported higher sales.

Delivery services and cloud-kitches

Even global food companies such as Jollibee are restructuring their business models gearing up for economic slowdown.

Asian Agribiz interviewed Darin Friedrichs of Intl FC Stone who concurred that delivery services will be crucial in maintaining social distancing. He said China led this with an existing ecosystem of app-based payments and a well-developed delivery infrastructure.

The rest of Asia quickly adapted to or boosted delivery service. Philippines’ Jollibee Foods announced plans to boost its delivery, take-out, and drive-thru services as it restructures its global business.

“2020 is an extremely challenging year for JFC, but out of this transformation, we aim to emerge in 2021 as an even stronger business and organization,” said JFC Chairman Tony Tan Caktiong.

Indonesian company CRP Group has ventured into the cloud kitchen business. Called ‘Pesen Dulu Kitchen’, they will focus on delivery services in Jakarta and Bandung.

Marketing Director, Rex Marindo said the concept syncs with lifestyle changes where consumers demand convenience and speed. CRP Group has four restaurants chains – Upnormal, Bakso Boedjangan, Nasi Goreng Rempah Mafia and Fish Wow Chicken.

Producers adapt

Malaysian integrated poultry producer CAB Cakaran saw a spike in sales of its value-added food. Managing Director Chuah Hoon Phong said: “There is demand for our nuggets, sausages, burger patties and deli meats. So, we will increase our value-added production capacity by 50% to 1,500 tons/month from the current 1,000 tons.”

Leong Hup International is poised to capture a segment of the fast food market in Malaysia. Asian Agribiz was told in 2019 about plans to introduce a chicken rice and roast chicken menu at the Baker’s Cottage outlets.

Leong Hup International meanwhile is rolling-out their new downstream model with roast chicken and chicken rice at the Baker’s Cottage outlets in Malaysia.

During the lockdown, the company went ahead full steam with new outlet launches and budget menus. This was in response to the impact of Covid-19 on spending due to paycuts and job losses in Malaysia. A whole roasted bird sells for USD 2.55.

Investor Relations representative Victor Geh said: “We have plans to expand the range as we continue to roll out more outlets.”

Another Malaysian poultry integrator DBE Gurney also plans to extend their value-added and marinated range. COO Pierre Ding told Asian Agribiz: “We may develop a micro-agent concept to get our broilers out and extend the marinated and frozen sectors. We are looking at novel ways to continue moving our products if food services remain slow for a longer period,” he said.

Canned food has seen an increased interest in Vietnam, Thailand and Singapore.

In Vietnam, frozen food sales increased 121%, canned food 64% and processed food 52%.

Nguyen Quoc Trung, General Director of 3F Viet Food told Asian Agribiz: “These sectors will see sharp growth as they muscle-up to satisfy the safety-nutrition-convenience criteria. Vietnam’s processed meat sector is expected to grow five times to 2.5 million tons by 2025.”