ASEAN's consumer demand to pick up as F&B reopens

Hardest-hit companies are expected to recover the fastest.

Sell-through and demand should gradually pick up for ASEAN’s consumer sector on the back of the reopening of F&B food services, as the region comes out of lockdown and operations gradually normalise, according to a report from DBS Group Research.

The region’s consumer upstream and midstream players have seen a fall in demand in Q1 as social distancing and lockdowns disrupted production and consumption patterns. Still, the essential nature of their products meant that most companies remained operational during the regional lockdown in Q2.

The quarter is projected to be the worst quarter for the sector, as the regional lockdown was in full swing. Although there were logistical challenges, most have since been resolved.

“Nonetheless, the sector has remained resilient, with moderate earnings cuts across the universe compared to other sectors such as tourism and F&B food service. Operations relating to essential items have been largely intact,” the report stated.

Sell-through to F&B food services is expected to improve, although social distancing measures may still be in place.

Recovery in the sector is expected to be gradual and in phases, with different stocks poised to benefit from improving demand at different stages. The companies most affected by the pandemic in particular are expected to see the fastest demand recovery.

As markets and F&B food service businesses reopen, demand for meat should improve. After the lockdowns, volume sales of beverages and snacks are expected to go back up.