The CEO of dairy processor Lakeland has said that, despite market conditions improving recently compared to the height of Covid-19, it will still be the late spring of next year before there is a full return to pre-pandemic sales volumes.
Speaking to AgriLand after the release of the processor’s annual results for 2019 yesterday (Wednesday, August 26), Michael Hanley said: “The first quarter of the year was solid, but then Covid struck and there was a collapse in the food service business, as lockdowns were put in place across the world.
“We sell to 80 countries across the world, so our food business was affected from every corner of the globe. So the second quarter [Q2] was a difficult quarter,” Hanley explained.
Not alone did food service volumes collapse, [but] there was an impact on powder markets and butter markets.
“As we’ve come out of Q2 and into Q3 [quarter three], the volume for food service has picked up. We’re up now to about 50% or 60% of pre-Covid volumes, as more countries come out of lockdown across the globe.”
However, the Lakeland CEO highlighted that there is no great deal of certainty in any of this, saying: “Having said that, it’s ebbing and flowing… Lockdowns have been lifted and then reimposed in certain areas.”
Notwithstanding this, Hanley believes things are “moving in the right direction”.
We’re optimistic that, by year end, as more confidence returns to consumers and more people eat out of home, we’ll get back to a figure of 75% to 80% volume hopefully before year-end.
“From a market point of view, this story roles from lockdowns being lifted to reimposed, so this is going to ebb and flow out to year-end and, really, [it will be] until we get a vaccine that works, and people are confident, that we will see a full return to pre-Covid levels, and in my view that will be at least the late spring of 2021,” Hanley noted.
The hit to demand from the food services sector has been offset somewhat by demand from other sectors, Hanley explained, particularly with demand from the health sector and the consumer food and retail sector, with people eating out less and spending more on retail products.
“There’s been some positives, but the major negative has been the worldwide effect on food services,” he added.
Covid safety
On the health aspect of dealing with Covid-19, Hanley said: “We put a lot of work into the business from a Covid point of view, keeping Covid out of the business.
“We started on this in January, and to date we have had zero Covid-19 cases in our eight factories,” he noted.
Hanley added: “Having said that, there is the ongoing risk, and we have our systems and protocols in place in our aim to keep all our staff, our farmers and our lorry drivers safe from Covid.”