Watch: The current state and future of the food supply chain | 05/17/2021


Keith Daniels, partner with Carl Marks Advisors, tells how the food supply chain – both on the restaurant and grocery side – performed during the pandemic, and what permanent changes the industry is likely to experience in the years to come.

The pandemic is showing signs of slowing and the economy is slowly recovering, but the food supply chain still faces a number of challenges, Daniels says. Demand is high, but exporters and importers are struggling to get enough containers and trailers to bring their products to market. This leads to shortages of basic commodities such as coffee, fruits and vegetables, and the pulp needed to make tissue paper. To make matters worse, ports around the world are experiencing severe congestion, as well as sporadic closures caused by spikes in the COVID-19 virus.

The restaurant industry was hit hard during the pandemic by home orders and the virtual disappearance of its customers. Meanwhile, grocery suppliers and retailers struggled to keep essentials on shelves, as consumers briefly panicked shopping. The result in some cases was a mismatch between supply and demand, leading to the deterioration of perishable products.

The food industry has since rebounded, experiencing unprecedented growth in demand. But it also faces potentially permanent changes in buyer behavior, Daniels said. This includes the continued growth of online ordering. Major grocery chains predict that e-commerce will account for 20% of total revenue in the months and years to come. Many older shoppers, who were reluctant to buy online, changed their minds when they discovered the convenience of having orders delivered to their doorstep. But physical stores will continue to play a dominant role in the grocery industry. “It will be a balance,” Daniels says.


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