Coronavirus (COVID-19) Executive Briefing - GlobalData7 April 2020
Coronavirus (COVID-19) Executive Briefing - GlobalData
Understand the COVID-19 outbreak, its impact on the global economy, and initial implications for specific sectors.
As of 6th April
Three new countries and 229,736 new cases since Thursday; total confirmed cases pass 1.27 million
The virus has now spread to 183 countries/regions with over 1.27 million confirmed cases; its spread outpacing previous epidemics.
Cause for optimism as Italy records its lowest daily death toll in over two weeks. China risks a second wave of COVID-19 infection from transmission through asymptomatic and imported cases
China has reported 149 new asymptomatic cases of COVID-19 since the last update on Thursday.
Besides the asymptomatic cases, China reported 105 new imported cases and 9 domestic infections since Thursday’s update. The US records the highest number of infections; 5 countries have now reported more cases than China
US, Spain, Italy, Germany and France surpassed China in terms of confirmed cases, although testing rates in China are low.
The number of confirmed cases in the US has reached nearly 340,000, with deaths increasing to over 9,500 since the last update on Thursday. No therapeutic or preventative options are available but the pipeline is crowded
Currently there are 549 clinical trials for COVID-19. Despite massive efforts, the first vaccine will take at least a year to develop. In the short-term, unemployment rates will rise in all major economies
For the week ending March 28, 2020, US unemployment claims reached a record high of 6,648,000, doubling the previous week’s 3,283,000 claims. GDP growth forecast to fall
The OECD cut its expectation for global growth to 2.4% from 2.9%, and warned that it could fall as low as 1.5%. Wall Street firms lower the estimate of real GDP growth to (-)1.7% for 2020, and expect major economies to enter recession.
A GlobalData poll shows increasing concern, but views on businesses’ growth prospects are improving
There continues to be an upward trend in clinical trial delays and at least 198 trials and 98 Pharma/Biotech companies and CROs have publicly announced delays in recent days
Across the industry, ongoing trials, irrespective of indication, will likely be impacted not just in terms of trial enrollment and patient care but also data collection and analysis
Sector Impact: Consumer
Demand for online delivery is high – for example in the UK, Tesco expanded its home delivery and click and collect services by nearly 20%, increasing the number of delivery slots available from 660,000 to 780,000.
Although online grocery shopping is vital in GlobalData’s view, our survey shows that the time consumers spend doing this is falling in most countries. Consumers are shopping online as efficiently as possible – making availability and brand awareness critical for share of online shopping baskets
GlobalData Analyst View E-Commerce is likely to be key in the coming months, but this is not automatically an easy win. In the last week, consumers are typically spending less time online grocery shopping – so being top of mind and having products available for consumers is vital.
The knock-on effects for those becoming unemployed will be significant. With places like the US reporting record numbers filing for unemployment benefits and double digit unemployment forecast in some economies – weekly budgets for many will be squeezed.
This squeeze will likely reinforce trends away from smaller, more premium or on-the-go pack size choices; and for the affected consumer groups may see leading, or more expensive, brands lose out to lower-priced competition and private labels.
Social and corporate responsibility continues to be spotlighted, with recent studies highlighting that large majorities of consumers believe brands should help consumers in their daily lives and not exploit the present situation.
Criticism of moves to help is perhaps impossible to completely avoid, but examples such as Kao in Japan re-releasing hygiene advice (a hand washing video originally released in 2013) and donations to government sources, such as with Cargill’s provision of disinfecting alcohol to the Dutch government, point the way for those who can afford it.
Longer-term impacts beyond the immediate changes to consumer shopping habits are also emerging. For instance, there is evidence in the UK that where retailers are limiting their offerings and consumer purchases are narrowing, pressure is being put on prices for other cuts of meat that typically balance out the profitability of each animal slaughtered.
Analyst View New knock-on effects of retail changes are beginning to emerge. Reduction of SKUs is causing further issues with suppliers further up the supply chain – particularly the meat industry. It’s suffering from not being able to effectively sell all cuts of meat, damaging profitability
Sector Impact: Packaging
Anxiety about the transmission of COVID-19 via packaging surfaces provides opportunities to champion certain sterile formats now and drive innovation in antiviral and antibacterial “active” packaging research. (Analyst View)
Tamper-proof packaging is likely to be extremely popular in the near future as consumers will seek more trustworthy brands that can guarantee the safety of the product. This is particularly likely in regions in Asia where previous food scares mean consumers’ have heightened awareness of this topic.
That consumer perceptions can have an immediate impact is clear. For example, Boise Paper’s parent company Packaging Corporation of America (PCA) has decided to temporarily suspend key operations at its Jackson Mill in Alabama as the outbreak has reduced demand, citing unprecedented market conditions.
In contrast, Pro Carton, the European Association of Carton and Cartonboard manufacturers, reports that short-term demand for cartonboard has risen by 30%.
Demand for single-use plastics is again rising in the COVID-19 era, contradicting the recent trend towards protecting the environment. While multinationals like Nestle and Mondelez have signed the European Plastics Pact to make 100% of packaging recyclable or reusable, reducing the use of virgin plastic by one third by 2025, the immediate threat of the pandemic is forcing short-term forgiveness.
However, criticism will likely need addressing. Campaign organizations like A Plastic Planet accuse the plastics industry of jumping on the COVID-19 bandwagon for their own benefit. As such, there is notable potential for public criticism that should be addressed by the industry. Producing more “eco” versions of products will help with this.
Low oil prices are likely to make it easier to develop plastic products and packaging. In March, oil prices fell to their lowest level in 17 years, dropping below US$25 a barrel, as demand for fuel was hit by work and travel lockdowns caused by the pandemic.