Germany has been affected by the pandemic in a very similar way to the rest of the world. Hoarding and empty shelves due to delayed deliveries were some of the phenomenon witnessed during the early phase of the lockdown.
The German CPG industry has tried its best to stay calm and react pragmatically to these new challenges. The logistical challenges were, for example, described as “just like Christmas only without lead time”. One of the consequences was that many retailers decided to put a halt to promotions, which led to an increase in average grocery prices.
Another effect was that online grocery buying increased by 30%. Non-food online purchases increased by even more than 30% and have kept freight forwarders very busy.
Most shoppers have reduced the frequency in which they go to the stores, relying on one main retailer for their weekly grocery shopping. Because of this, people are tending to choose supermarkets over discounters as their primary shopping location as supermarkets provide the wider selection and ability to get all their products in one visit. Consumer surveys are showing that price is less important during COVID-19 and that this could stay the case post-virus. It is also observed that regional products are becoming more popular, and these are generally not available from discounters.
Suppliers with a significant share of sales in the restaurant and out-of-home channel are facing a significant loss of revenue.
The meat industry in Germany was negatively affected as many workers were infected with COVID-19. Thus, many factories had to shut down their production. Price increases are predicted as one of the consequences of this.
Retailers and suppliers are still facing challenges in daily business, but they are recovering slowly from the worst of the situation. Demand volatility and availability of specific goods are still challenging.
Some suppliers and retailers are dealing with period revenue loss of up to 40%, but most of them are optimistic that this will be made up by the end of the year.
Overall, while presenting challenges, the pandemic has had a positive impact on the German CPG industry as its image has improved in various ways. Grocery store employees have gained a lot of respect and appreciation from the public, and companies in the industry have increased their reputation as responsible employers.