The Grocery Cart | Goodfood, crab and lobster

The start of the pandemic severely affected the agri-food industry, but the post-COVID market will give many of our companies a hard time.

Many companies are suffering from a violent change in consumer trends these days. Since the “psychological end” of the pandemic, the market has become completely domesticated. We are slowly adapting to new customs and a new balance between our professional obligations and our personal life. In the middle of it all is food or, so to speak, our relationship with food.

Take the example of the Quebec company Marché Goodfood. In 2021, the company was making very good profits hitting its peak while its stock was worth over $13 and its follower count was exploding. The meal kit market was worth approximately $1.5 billion in Canada.

People were looking for meal solutions for home, in full containment. The virtual food market was still underdeveloped since the main business model of the agri-food sector had been based for decades on the desire to invite consumers to live a unique experience, whether in the store or in the restaurant. Restaurants and meal kit providers had a monopoly on the internet.

Now, just 12 months later, Goodfood’s stock is trading around $0.60 and the meal kit market has collapsed, worth little more than $700 million in Canada, less half than in 2021.

With food inflation and less money in the consumer’s pockets, every food dollar counts. Meal kits, this “IKEA” formula in food that allows you to “assemble ingredients” at home, must reinvent themselves or adjust to a new market.

The options available online are increasing almost every month. In the majority of markets in Canada, someone can deliver groceries to you within 60 minutes, and in some cases even within 15 minutes. Expectations have changed enormously and so have our habits. In the United States, 16% of food sales are now made online. Before the pandemic, this proportion was barely close to 7%. In Canada, we estimate that the proportion has gone from 1.7% to 8% in two years. A spectacular leap.

Service to consumers is changing and the products they consume are also changing. Snow crab and lobster are good examples. The price of Canada’s two most coveted seafood products is plummeting this year as consumers recoil from the impact of rising inflation and spending more time at home.

The price of snow crab fell in 2022 by just over 60% and that of lobster plummeted by around 35%, while in 2021 it was a windfall.

Sales of crab and lobster then reached 2.5 billion dollars, a record. Consumers clung to recreating a restaurant-at-home experience during lockdown. This is quite a shift that is happening everywhere, not just in Canada.

Global financial uncertainty precipitated by Russia’s invasion of Ukraine, the end of COVID-19-related economic stimulus packages in the West and rising interest rates are prompting consumers to cross off priced seafood high on their grocery lists. There was too much money in the economy for too long and borrowing money was almost free for over a decade. Younger generations will have to deal with the value of money and credit, possibly for the first time in their lives.

Many products that used to be eaten in restaurants, such as snow crab, are now shunned by a market that treats restaurants differently, either because of inflation or because customers are adopting new, more domestic lifestyles.

We expect other companies to feel the effects of a market in transition. Post-COVID will be as brutal as the start of the pandemic, but the changes will have repercussions for several years.

Few people know what shape the food industry will take in a few years. But expect to see other casualties like Goodfood, crab and lobster…the perils of a post-COVID market.