Understanding the Sector Impact of COVID-19

By Deloitte

Consumer Products: Food & Beverage

As the effects of COVID-19 are felt around the world, Consumer Products food & beverage companies are facing significantly reduced consumption and supply chain disruption challenges. While at-home consumption has been showing a spike over the last two weeks, out-of-home consumption has come to a standstill. As out-of-home has historically generated the highest margin, this will have immediate impact on the P&L, albeit some suppliers are looking to mitigate this by diverting their supplies to retail stores. Agricultural output is depressed, supply chains are disrupted, largely due to rapidly changing consumer behavior and demand.

Potential long-term impact on Food and Beverage companies

Once the situation begins to normalize out-of-home consumption will pick up again, but it is unlikely to be enough to cover lost sales in the coming weeks/months. With an economic recession looming food & beverage revenues are likely under pressure. Food & beverage companies should revisit their sourcing strategies, rationalize their product ranges, and assess the resilience and agility of their supply chains as well as their route-to-market channels. E-commerce and distribution networks should be optimized and streamlined. Considering the impact of changing commodity prices and other costs-to-serve, as well as ways to increase demand, companies will be forced to revisit their pricing and promotion strategies.

Key questions executives and boards should be asking

• How do we guarantee/safeguard safety of our own people first?
• How do we best manage working capital and ensure access to cash in a prolonged period of disruption?
• How do we conduct and maintain supply chain risk mitigation assessment and interventions?
• How can we rapidly move supply to alternative route-to-market channels to safeguard revenues?
• How do we support our key customers/suppliers to fulfill demand in current high-peaks as well as partner to sustain their relations?Practical next stepsConsumer Products leaders will be defined by what they do along the three dimensions to managing a crisis: Respond, Recover, and Thrive. While in the Respond phase these are some key next steps:
  • Optimize flexible work arrangements for talent, including mitigating cyber risks as a result of working remotely
  • Develop contingency plans for operational disruption in route-to-markets and supply chains
  • Engage with key customers and suppliers to support business continuity

Leon Pieters

Global Consumer Products Leader

+318 8288 2517 LeonPieters@deloitte.nl

“It can be difficult to know which trends are most likely to rise above the noise over the next 12 months as the situation is still very much in flux,” she said. “It can be even more confusing trying to decide which will resonate most with your brand and customers.”

Consumers may behave more conservatively and cautiously in the months to come, relying on food and beverages that provide comfort and familiarity. Such behavior does not bode well for plant-based meat alternatives, Ms. Badaracco noted.

“It is clear from research that faux plant-based meats are consumed by meat eaters, not vegetarians, with curiosity being their driver,” she said. “As sales numbers on these products continue to slide, COVID-19 will push meat eaters back to animal protein at an accelerated pace, while vegetarians will celebrate plants being plants.”

The dairy category, with its “winning combination of health attributes and comfort,” also may benefit from changing consumer attitudes, Ms. Badaracco said.

“A newer, more promising direction, which supports the current mood, is to hybridize the categories —­ an alliance between animal and vegetable protein, with vegetables maintaining their natural integrity and voice,” she added.

“When times are difficult, consumers drink.” — Suzy Badaracco, Culinary Tides

The sober-curious movement, another leading trend gaining ground months ago, will give way to a rise in classic cocktails, global ciders, wine and beer, Ms. Badaracco predicted. Hard seltzer also will remain popular.

“When times are difficult, consumers drink,” she said. “Overall, alcohol consumption is expected to rise — and the balance of which type of alcohol is consumed will shift between categories.”

Baby boomers, Gen X and older millennials will lead the shift back to booze, while younger millennials and Gen Z are more likely to remain steadfastly sober.

A third trend reversal expected to occur in a post-pandemic world is a de-escalation of sustainability spending while consumers regain financial footing. No- or low-cost sustainability solutions, such as composting or embracing ugly fruits and vegetables, may still continue, but purchases of organic food and beverages are expected to slide in the meantime.

“Sustainability spending will bounce back; however, its return will be linked directly to economic health and consumer confidence,” Ms. Badaracco said.

https://www.foodbusinessnews.net/articles/15762-how-covid-19-will-affect-2020-food-trends

How COVID-19 is affecting marijuana legalization efforts across the US

Published April 15, 2020

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The coronavirus crisis has hurt marijuana legalization efforts in the short term, with state legislatures pivoting to focus on more pressing issues and citizen groups struggling to collect enough signatures to place initiatives on November ballots.

However, several recreational and medical marijuana initiatives already had qualified for the November election before the coronavirus outbreak.

Looking ahead, some experts believe legalization could accelerate once the coronavirus is contained.

Click on the video below for a status report on marijuana legalization efforts by Marijuana Business Daily’s Jeff Smith.

Cannabidiol (CBD) Market 2020 COVID-19 Impact Analysis

Share, Size, Revenue, Developing Technologies, Business Boosting Strategies, CAGR Status, Growth, Opportunities and Forecast 2026

Published: April 16, 2020 at 7:21 a.m. ET0

The MarketWatch News Department was not involved in the creation of this content.

Apr 16, 2020 (Heraldkeepers) — Summary: 

A new market study, titled “Discover Global Cannabidiol (CBD) Market Upcoming Trends, Growth Drivers and Challenges” has been featured on WiseGuyReports.

Introduction 

Global Cannabidiol (CBD) Market

A recent report on WiseGuy Reports (WGR) has provided a brief overview of the industry with an insightful explanation. This overview mentions the definition of the product/service along with several applications of such a product or service in different end-user industries. It also includes the analysis of the production and management technology employed for the same. The report on global Cannabidiol (CBD) Market has given an in-depth study in some new and prominent industry trends, competitive analysis, and detailed regional analysis for the review period of 2019-2025.

Get Free Sample Report athttps://www.wiseguyreports.com/sample-request/3792113-global-cannabidiol-cbd-market-2018-2025

Key Players

• CW Hemp 
• Plus CBD Oil 
• Mary’s Medicinals 
• Bluebird Botanicals 
• TertraLabs 
• HempMeds 
• Medical Marijuana 
• CBD Naturals 
• Gaia Botanicals 
• ENDOCA 

The report found on WiseGuy Reports (WGR) has also inculcated detailed profiling of numerous distinguished vendors prevalent in the global Cannabidiol (CBD) Market. This analysis also talks about different strategies adopted by various market players to gain a competitive edge over their peers, build unique product portfolios, and expand their reach in the global market.

Market Dynamics

This report mentions various factors that are causative of fast-paced expansion of the Cannabidiol (CBD) Market. This includes a detailed study of the pricing history of the product/service, the value of the product/service, and numerous volume trends. Some principal factors studied in the report include the influence of mounting population on a global level, burgeoning technological advancements, and the dynamics of demand and supply noted in the Cannabidiol (CBD) Market. Additionally, it also studies the impact of various government initiatives and the competitive landscape existing in the Cannabidiol (CBD) Market through the forecast period.

The key factors driving the market include growing demand for CBD globally as it is used to cure various human diseases. CBD products have several benefits like protection from Alzheimer’s disease, anti-inflammatory properties and helps to treat epilepsy and mental health disorders. The Cannabidiol is widely adopted as it helps in drug withdrawal and highly recommended for cancer cases.

Segmental Analysis

The global market for Cannabidiol (CBD) is broadly segmented by product type as – Hemp-derived and Marijuana-derived. According to the Hemp Business Journal, the CBD Oils from marijuana-based sources are expected to reach USD 1.6 billion i.e. around 80% of the total CBD market. Marijuana-derived CBD products are extensively used globally for numerous medical purposes. Cannabis sativa is the source plant for extracting marijuana, that contains over 80 compounds of cannabinoids. The demand for Marijuana-derived CBD products is increasing as they contain high concentrations of THC in comparison to hemp-derived CBD products. The Industrial Hemp Farming Act of 2015 excluded hemp from the Drug Enforcement Administration’s controlled substances list, which effectively legalized hemp-derived CBDs. Many other countries around the world have similarly permitted the importation of hemp-based CBD products. The market is highly competitive with continuous product and technological developments. The players are also focusing on strategic collaborations and agreements to expand their geographic footprint and to intensify market competitiveness. The report includes segmentation of the Cannabidiol (CBD) Market on the basis of different aspects, along with a regional segmentation. Such segmentation has been carried out with the perspective of attaining detailed and accurate insights into the Cannabidiol (CBD) Market. The report studies the regional segments of Latin America, North America, Asia Pacific, Europe, and the Middle East & Africa.

Global Cannabidiol (CBD) Market – Geographical Analysis 

The global CBD market is segmented into North America, Europe, Asia Pacific, South America and ROW. CBD oil products are highly preferred by the US consumers. Also, countries such as South American countries, including Uruguay, Peru, Chile, Colombia, Brazil, and Argentina have legalized the application of marijuana products for medical purposes. These factors are leading North America to be largest market of the global CBD market. Major market players of CBD oil production are present in North America. It is estimated that in 2020 industry sales of marijuana-derived CBD will total around USD 417 million

Research Methodology

The market research team has analyzed the global Cannabidiol (CBD) Market by adopting Porter’s Five Force Model for the assessment period of 2019-2025. Furthermore, an in-depth SWOT analysis is carried out to enable faster decision making of the reader about the Cannabidiol (CBD) Market. North America is leading the global CBD market due to increasing demand for CBD products by consumers and large number of players are US-based. The overall market for CBD will be especially driven by high demand for CBD products because of its several health benefits. Marijuana-derived CBD have largest market segment due to rising preference by consumers because of their high concentrations of THC in comparison to hemp-derived CBD products.

Get Detailed Report athttps://www.wiseguyreports.com/reports/3792113-global-cannabidiol-cbd-market-2018-2025

Major Key Points of Global Cannabidiol (CBD) Market

• Chapter 1. Methodology and Scope 
• Chapter 2 Key Trends and developments 
• Chapter 3. Industry Analysis 
• Chapter 4 Segmentation 
• Chapter 5 Geographical Analysis 
• Chapter 6. Competitive Landscape 
• Chapter 7 Company Profiles* 
• Chapter 8 Appendix 

NOTE : Our team is studying Covid-19 and its impact on various industry verticals and wherever required we will be considering Covid-19 footprints for a better analysis of markets and industries. Cordially get in touch for more details.

About Us:

Wise Guy Reports is part of the Wise Guy Research Consultants Pvt. Ltd. and offers premium progressive statistical surveying, market research reports, analysis & forecast data for industries and governments around the globe.

Contact Us: 

NORAH TRENT 

sales@wiseguyreports.com

Ph: +1-646-845-9349 (US) 

Ph: +44 208 133 9349 (UK)

Own an S&P 500 Index Fund? Coronavirus Could Transform It.

By Reshma KapadiaMay 12, 2020 2:20 pm ET

BARRON’S NEWSLETTER

Even the S&P 500 index is likely to be transformed by Covid-19—and that may mean the portfolios of passive investors who are sitting put will look notably different coming out of the pandemic.

The companies that make up the S&P 500 change frequently, in response to events such as acquisitions, or corporate profitability or market capitalizations falling below required thresholds. But the recent economic disruption and market volatility could mean that the committee overseeing the index could have to replace more than 30 companies this year, according to Nicholas Colas, co-founder of DataTrek Research.

In mid-March, S&P Dow Jones Indices postponed the quarterly rebalancing of its equity indexes, citing “extreme global market volatility, market wide circuit breaker events and exchange closures.” It has since rebalanced some of the indexes and said it would rebalance many index families, including the S&P 500, in June.

READ MORE 

• Stocks Slide in Another Late Selloff
• Fauci Warns Against States Reopening Too Quickly
• Moderna Vaccine Gets Fast-Track Status

The committee also makes changes to the S&P 500 on a rolling basis. A spokeswoman for S&P Dow Jones Indices said the company hasn’t made any disclosures on how it will assess the impact of the pandemic. 

Indexing isn’t as passive a decision as it might seem. Index providers wield considerable power over what is included in an index. And what companies go into the S&P 500 is just as important as which ones come out.

A rule that requires businesses to post profits for four straight quarters to be included could mean companies like Tesla (ticker: TSLA) don’t make the cut. While Tesla’s market cap of some $150 billion is far beyond the $8.2 billion required for initial inclusion, it won’t be profitable now for several quarters—and Colas argues that could matter for investors. 

“Based on existing financial requirements (profitability) and an already top-heavy (with technology) portfolio, there is a good chance important disruptive companies won’t make it in,” he wrote in a Tuesday research note. “How that changes the S&P’s long run return potential remains to be seen, but history is clear on the fact that returns come from disruptive companies first and everything else a very distant second.”

Without disruptive companies like Apple (AAPL), Microsoft (MSFT) and Alphabet’sGoogle (GOOG), the S&P 500’s returns over the past decade would have been 23% lower, Colas wrote. He noted that Apple’s market cap has risen by $1 trillion since 2010, while those of Microsoft and Google have gained by $1.2 trillion and $800 billion, respectively. 

“The S & P 500 needs large, scalable and disruptive businesses to both reflect American economic reality and provide reasonable returns to index investors,” Colas wrote. “Their performance is what made the S&P 500 compound over the last decade at 13.4% instead of 10.4%.”

A decade ago, those three companies had market caps similar to what Tesla has today. Getting Tesla into the S&P 500 would transform the auto slice of the index, shifting it away from sales of pickup trucks, which dominate earnings at General Motors (GM) andFord Motor (F), to electric vehicles, Colas said. If Tesla was allowed in, its weight would be about 0.66%—much bigger than the 0.12% allocation to GM and 0.08% allocation to Ford—putting it between Salesforce, com (CRM) and Comcast (CMCSA), he added.

But with the pandemic likely denting demand for luxury electric vehicles for the next year or two, Tesla isn’t likely to make it into the index for a while. Colas said that while he isn’t making a judgment on whether Tesla is as good a business as Apple, Google, and Microsoft, not including the electric-vehicle company could prevent investors from accessing a stock that could “make an outsize difference to long run returns.”

The issue isn’t just about Tesla’s inclusion. The types of companies that can generate a four-quarter profit streak coming out of the pandemic are likely to be different than those that could pre-Covid. And that, Colas wrote, will change the profile of the companies in the index. 

For example, Colas says travel, leisure and sharing-economy companies—including Uber and Lyft—will be unprofitable for years to come. “As S&P considers what to add to the 500 this year, it may well use the opportunity to add non-Tech names and nibble away at that sector’s pre-eminence, he said. “Finding profitable firms, however, will be more challenging than any time since 2008-09.”

Technology has been a star so far this year, with many companies in the sector less affected by Covid-19, or even benefiting. While the S&P 500 is down 9% so far this year, the tech-heavy Nasdaq Composite is up 2%.

The question, Colas wrote, is how long the S&P committee waits before dropping Covid-damaged companies from the index and how that will remake the index—and many investors’ portfolios.

Write to Reshma Kapadia at reshma.kapadia@barrons.com

https://www.barrons.com/articles/s-p-500-index-fund-coronavirus-rebalancing-tesla-apple-market-cap-profits-51589307519?mod=hp_LEAD_1