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Area Development - Site Selection, Facility Planning and Workforce Development

How Is the Pandemic Affecting Location Decisions in the Food & Beverage Industry?

Unpredictable supply chain, labor shortages, and changes in consumer preferences are just some of the trends brought about by the COVID-19 crisis.

Q2 2020
I've been fortunate to have some great conversations with economic developers over the past few weeks, with many questions on the pandemic's impact on site location decisions for the food and beverage Industry. While nothing is certain, I've read and attached links to some important insights which I would like to share with those who currently or plan to target this industry. Be very aware that:

  • Disruption of reliable demand and labor shortages have resulted in huge supply chain inefficiencies, leaving too much food in the wrong places. New facility locations that process products that heavily rely on predictable supply chain will no doubt consider how any new location could hedge this risk.
  • “Big Food” has seen a surge in demand and may be underestimating sales of trusted brands available through grocery and e-commerce channels, which could result in new line and capacity expansions at existing facilities.
    • Consumers have shown a willingness to try new brands, prioritizing product availability over brand loyalty.
  • Consumers have shown a willingness to try new brands, prioritizing product availability over brand loyalty, both in store and through e-commerce distribution channels. This could be an opportunity for new brands that have gained traction via new retail channels during the pandemic to continue to thrive. Ordering frozen meat/poultry/pork/vegetables directly from a manufacturer or even direct from the farm is one example of an emerging trend that might continue.
  • As was the case before the pandemic, locations and facilities that can contribute to product innovation and the ability to quickly change what is being produced, adopt new supply chain strategies, and successfully meet changeable consumer demand are becoming even more vital, as reflected in this story about General Mills. Economic developers should continue to identify resources and examples of operating success that reflect a history of innovation, in its broadest definition, in their region.

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