Rising retail sales helped the pasta market overcome reduced demand from the foodservice industry during 2020, reports Jonathan Thomas.
The past year has been an eventful one for the global pasta industry, to say the least. Prior to 2020, there were signs that consumption was starting to recover after pasta took a sizeable hit from the growing popularity of gluten-free and low-carbohydrate diets. Consumer interest in the sector had been rekindled, for reasons such as the emergence of healthier forms of pasta (e.g., products made from legumes or ancient grains), as well as the rising demand for fresh pasta prepared in a more artisanal manner and the continued popularity of Italian cuisine across much of the globe, especially amongst younger consumers. The situation changed drastically in 2020 as Covid-19 hit. Authorities throughout the world closed large sections of the foodservice industry, thereby severely reducing demand for pasta sold via restaurants, cafes, pubs, etc. On a more positive note, however, evidence suggests that pasta-based dishes were one of the main beneficiaries of the increased number of in-home meals.
The Global Economic Situation
The performance of the pasta market within the next year or so is likely to be heavily influenced by how well the global economy recovers from the damage caused by Covid-19 and the lockdowns introduced throughout the world to curb its spread. As the global economy has contracted, job losses have caused unemployment levels to increase in parts of the world, a trend which has serious implications for consumer spending and business confidence.
The IMF expects the global economy to recover during 2021 as vaccines to combat the virus become more widely available. It has forecast global economic growth of 5.5% for the present year, falling to 4.2% in 2022. It is worth noting, however, that the economic recovery is likely to be very uneven throughout the world, displaying significant variations according to country and region. The IMF expects the economy for the Euro area to grow by 4.2% in 2021, a figure which compares with 4.5% for the UK, 5.1% for the US and 8.1% for China.
The Impact of Covid-19
Across much of the world, sales of dried pasta received a significant boost from Covid-19, a trend apparent in both western markets (e.g., the UK) and emerging economies such as India. Dried pasta was one of the items most likely to be stockpiled by consumers as the pandemic struck – this was chiefly because people viewed pasta-based meals as affordable, convenient, simple to cook and versatile. During the lockdown period in the spring of 2020, 21% of UK consumers claimed to be preparing exotic pasta dishes more regularly, since they had more time to experiment with their cooking. A quarter of the UK population claimed to be eating more pasta during lockdown. Consumption of pasta increased by an estimated 40% during the first half of 2020 in markets such as the US, Canada, Ireland and Australia, while a 30% jump was witnessed in the UK, the Netherlands and Saudi Arabia. Other countries which experienced strong growth in pasta consumption during this time included France, China and South Korea. According to Kantar data, UK sales of dried pasta increased by more than 15% to GBP534m in the year ending September 2020. During this time, volume sales rose by more than 71 million packs. Some of the best performing varieties included spaghetti (up by almost 31%), dry fusilli (up by almost 28%), lasagne (up by more than 22%) and pasta shapes (up by 21.5%). This growth was accompanied by a rise in the sales of associated products, of which pasta sauces represents the best example. Within the UK market, value growth was more apparent within the branded sector, which increased by almost 23% to GBP165m. Elsewhere, sales of own-label dried pasta rose by around 12% to GBP369m. Branded suppliers appeared to be better equipped to deal with the surging levels of demand – sales of the Barilla brand, for example, grew by almost 52%, while a 32% increase was reported for Napolina. With demand for dried pasta remaining at high levels throughout much of the second quarter, a new premium brand named Le Stagioni d’Italia was launched in the UK during the spring of 2020, priced at GBP1.50 per pack. This brand places a strong emphasis upon its Italian provenance, while the range includes varieties such as fusilli, spaghetti, farfalle, penne, linguine and rigatoni. Evidence suggests that pasta was also one of the main beneficiaries of the pandemic elsewhere in the world. In the US, a 2020 survey of 1,770 adults by Grain Foods Foundation found that 36% of respondents named pasta as a comforting food ideally suited to stressful times. During the pandemic, more US consumers have moved towards traditional and classic pasta-based meals, examples of which included lasagne, spaghetti bolognaise, carbonara and fettucine alfredo. Prior to 2020, US consumers were more inclined to show greater interest in what might be termed ‘comfort foods with a twist’, whereby experimentation levels with pasta-based dishes were higher.
One trend which Covid-19 has accelerated in the UK market has been the move towards buying pasta directly from manufacturers, rather than via grocery retailers. This direct-to-consumer (DTC) trend had already become apparent in certain industries prior to the arrival of the pandemic – one example from the food market is NatureBox, a US-based company which supplies health-oriented snacks directly to consumers via a delivery model. Having food such as pasta delivered carries obvious implications for consumers who might have been forced by the virus to self-isolate, or for those keen to keep social interactions to a minimum. Within Europe, the UK appears to be one of the leaders in the DTC sector, for reasons such as its comparatively large and well-developed e-commerce industry and the fact that subscription boxes were already proving popular. A leading UK supplier of pasta via the DTC route is Pasta Evangelists, a London-based company which offers consumers next-day delivery of restaurant-quality pasta (together with pasta sauce and garnishes). In addition to its DTC channel, Pasta Evangelists also supplies its products via Marks & Spencer, Ocado and Amazon. In 2020, the company sold over 1 million portions of pasta, during which time its sales rose by around 300% as more people switched to online grocery shopping. According to the company, its business also increased due to the shutdown of much of the UK foodservice industry, thereby opening up opportunities for suppliers such as Pasta Evangelists to provide restaurant-quality meals to consumers seeking to treat themselves in the home. The potential scope for further expansion was illustrated by Barilla’s decision early in 2021 to acquire a majority stake in Pasta Evangelists. This marked Barilla’s first entrance into the fresh pasta market. Another of the UK’s leading suppliers of DTC pasta is La Tua Pasta, which delivers artisanal fresh pasta to consumer. Its fresh pasta, which is hand made at its London premises, is supplied to consumers in formats such as supper boxes (i.e., combining pasta with meal items such as sauces and desserts) and a la carte. As Covid-19 struck the UK, La Tua Pasta was forced to look elsewhere to replace the revenue lost from the falling demand amongst its customers in the foodservice industry.
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