As the current pandemic increases polarisation in the food sector, the middle class is about to disappear, Danone CEO Emmanuel Faber said in an interview. The divide between rich and poor grows, also in the way they eat, and everyone in the middle class will either move up or down to an extreme.
Economy versus health
The coronavirus crisis is a catalyst that speeds up current trends, and the food sector is fully aware of that hard truth. Those who can, will be paying more attention to what they eat and will be ready to pay more for quality food. On the other hand, the crisis will also mean that a part of the middle class will be hit hard economically: they will have to settle for lower-priced products. That is Danone’s conclusion from its own results since the pandemic struck, which saw its plant-based sales explode and bottled water sales implode.
The ‘new normal’ will start to settle in from next year, Faber tells FoodNavigator, and polarisation will only increase. The food giant sees two contrasting trends: an economic and social crisis on one hand, and a growing interest in healthy foods on the other.
“There won’t be a middle class any more in a way, the food medium quotes Faber: “Some of that middle class is going to go down and have to make trade-offs… downtrading…” Conversely, many people “are going to be very demanding on health and quality. The relationship between food and health has never been as clear now for this generation”.
As the expected beginning of that “new normal” is just months away, Faber wants to use that time to look for opportunities for his FMCG group. That may mean making difficult choices: the CEO has already said his company may need to sell or end certain brands and look for new ways of working – meaning that costs will have to be cut in certain areas.
The food giant also sees the sudden boom in e-commerce and direct-to-consumer sales as trends that will stay with us for some time. The same is true for sustainability: Danone has been focusing on that for a while now – signing a biodiversity pact last September, announcing an investment of two billion euros in agriculture, circular packagings and digitisation last February and launching a ‘Plant-Based Acceleration Unit’ to double its plant-based sales last May.