COVID-19 has changed the way people buy and consume food and agricultural products. Consumers are increasingly looking for food with health benefits. There has also been a substantial increase in online food buying. Demand for premium food, usually consumed in restaurants, has fallen. Meanwhile, takeaway food consumption has increased.
Parts of the world are now moving from acute pandemic responses to ongoing disease management. These trends are expected to have lasting implications for Australian agricultural exports to Asia.
Implications for trade
These consumer food trends are likely to affect trade.
- Buying food online is likely to remain above pre‑COVID‑19 levels. This trend will be particularly strong in markets with young populations (such as Indonesia). It will also be strong in markets with high online transactions (such as Korea and China). Advertising and selling products online are essential in these markets.
- Food with credible health claims will continue to attract premium prices, particularly in China, Japan, Taiwan and Korea. Australia’s reputation for safe and sustainably produced food will continue to be an asset.
- Reduced international travel, risk aversion and capacity limits will slow the global hospitality sector’s recovery. This will suppress demand for certain products, such as premium wine and fresh seafood.
Food sales go online
In April 2020, consumers in Asia-Pacific countries reported a 16 to 70% increase in online spending on food (Source: McKinsey 2020, Reimagining food retail in Asia after COVID-19). Markets and food retail stores are reopening in many countries. However, there is evidence that online food purchases will remain at elevated levels.
- China’s leading e-commerce platforms collectively made more than RMB 315 billion (A$68 billion) in sales during this year’s Singles Day event. Singles Day is an online shopping carnival on 11 November. Shoppers from smaller cities outnumbered those from larger cities. “Food and drink” was the eighth largest category (Source: Syntun 2021, The e-commerce platforms sales report).
- Monthly online shopping transactions in Korea reached an all-time high of KRW 16.19 trillion (A$13.8 billion) in July 2021. Agricultural, livestock and fisheries, and food and groceries grew to A$3.1 billion (Source: Statics Korea 2021, Online shopping statistics).
- The number of Southeast Asian consumers who tried online grocery shopping doubled in 2020. More than 75% said they would continue buying groceries online post-COVID (Source: Facebook, Bain and Company 2021, Southeast Asia, the home for digital transformation: A SYNC Southeast Asia report).
- Austrade analysis predicts strong growth in e-commerce, particularly in Indonesia and India (Source: Austrade, 2021, Update on the global e-commerce boom: opportunities for Australian exporters in Indonesia and across Asia).
Exporters that can reach consumers online, either directly or through local online retailers, will be best placed to benefit from the rise of e-commerce.
Figure 1: E-commerce retail index, 2019 to 2025
Increased focus on health and sustainability
COVID-19 has amplified consumer preferences for foods with health, freshness and sustainability credentials. With COVID-19 still affecting many countries, this trend is likely to continue over the coming years.
- Chinese e-commerce platform Tmall registered a 56% rise in sales year-on-year to May 2021 of healthy foods that are packaged to eat on the go (Source: Alibaba, 2021, Online healthcare spending in China surges).
- 87% of Malaysians reported they would choose a brand with environmental, sustainable and governance credentials built into their business. More than three-quarters were willing to pay a 10% premium (Source: Facebook, Bain and Company 2021, Southeast Asia, the home for digital transformation: A SYNC Southeast Asia report).
- Health and environmental concerns are shaping Korean dairy consumption. The organic milk market reached KRW 104 billion (A$122 million) in 2020. This was up from KRW 5 billion in 2008 (Source: USDA 2021, South Korea: Dairy and products annual).
Australian exporters are well placed to leverage and enhance Australia’s reputation for high-quality, clean and sustainably made food products.
COVID-19 restricted physical movement and the availability of goods (particularly fresh produce). This, and changing preferences, led consumers to try new brands.
- Surveys in early 2020 found 68% of Thai and 80% of Filipino consumers tried new brands (Source: McKinsey, 2021, Five areas of growth for digital marketing in ASEAN).
- Sustainability and social responsibly was one of the top 3 most cited reasons for switching brands in Southeast Asia (Source: Facebook, Bain and Company 2021, Southeast Asia, the home for digital transformation: A SYNC Southeast Asia report).
Disruption to regular brand preferences presents opportunities to gain market share and reach new consumers. It also emphasises the importance of ongoing engagement with current customers to maintain their loyalty.
From eating out to eating at home
COVID-19 closed restaurants around the world. Consumers turned to takeaway food, meal kits and home cooking. Persistent outbreaks have prevented venues returning to full capacity. In some countries, consumers may continue to eat at home to reduce their risk of infection.
- In the 3 months to 30 September 2021, Uber’s food delivery business booked a total of US$12.8 billion. This was up 50% from the same period last year (Source: Uber 2021, Uber announces results for third quarter 2021).
- Food delivery grew by 183% in Southeast Asia in 2020, led by Indonesia, Thailand and Singapore (Source: Momentum Works 2021, Food delivery platforms in Southeast Asia).
- In August 2021, the South Korean Government announced it had set aside A$23 million to re-introduce a cash-back scheme for consumers ordering food via delivery apps. The program aims to assist the hospitality industry amidst a fourth COVID-19 wave. It underscores the growing importance of food delivery services (Source: The Korea Herald 2021, Government to bring back cashback scheme for food delivery service amid fourth wave).
Restaurant closures and reduced tourism are an ongoing challenge for premium food exporters. Exporters should consider partnering with local premium food distributors and meal-kit providers. They can also redirect food into the retail sector. Food sold in the retail sector often needs different packaging and may attract lower prices compared to the hospitality sector.