Impact of COVID-19 outbreak on the Cake Mix Market
The coronavirus disease has been declared as a worldwide epidemic by the World Health Organization (WHO). The global pandemic, COVID-19, is deemed to create a chaotic environment, thereby resulting in the advent of a global recession. The pandemic has been affecting the commodity market in many ways. The demand for essential commodities such as groceries has been witnessing a rapid rise. Due to the coronavirus outbreak, people are forced to be at home with ample time, which is mainly invested in cooking, especially baking. It has been witnessed that there is a surge in demand for flour, cake mixes, and other baking ingredients, along with an increase in the number of Google searches for the term “baking.”
Though there is a high demand for cake mixes among consumers, there are various factors affecting the market. The outbreak of COVID-19 has created panic among the consumers with temporary closures of retail stores in an attempt to curb the spread of the virus. This led to panic purchasing among the consumers with stockpiling of essential items such as convenience foods. Stockpiling by the consumers has also resulted in creating immense pressure upon supermarkets, hypermarkets, and convenience stores as they are running out of stocks, and the grocery shelves for popular items sit empty. However, this erodes the consumer brand preference, which is increasing the sale and consumption of products manufactured by small regional players in the market.
Moreover, in response to the coronavirus pandemic, consumers have been put under lockdown with several countries imposing stay-at-home orders. This is rapidly accelerating the transition to e-commerce. Online shopping has been experiencing substantial growth over the past few years all across the globe, with groceries to be the least contributing category. However, in this current situation, the grocery category accounts for the largest share in the e-commerce orders. A surge in the average daily downloads for popular digital grocery apps has been observed within a single month. Households that are currently relying on home delivery through online grocery shopping are likely to continue with the service after the pandemic subsides. Thus, the non-store-based distribution channel is expected to witness the highest growth for the consumption of cake mixes in the coming years.
Although the demand for cake mixes is anticipated to increase, disrupted supply chains and logistics, low availability of raw materials and labor, and many more issues are anticipated to cripple the growth of the cake mix market up to some extent. The manufacturers are facing production issues in meeting the increasing market demand as they have either shut down production to ease employee concerns or are running production under-staffed. With barriers to the cross-border transportation of commodities, the manufacturers are highly dependent on local raw material suppliers, which increases the bargaining power of the suppliers during the coronavirus pandemic. Low availability of raw materials and low production capacities of the manufacturers are anticipated to create a demand and supply gap, thereby resulting in increased retail prices of the products for the next couple of months.
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