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BIA-Brukerstyrt innovasjonsarena

The Coronavirus Crisis: Development of Capabilities on Measuring and Managing Its Effects in the Norwegian Service and Food Industries

Alternative title: Korona-effekter for næringsliv og forbrukere

Awarded: NOK 4.9 mill.

It is well known that consumers demand for goods and services depend on economic factors like price of the good, prices of other goods, and income. It is also well known that promotion efforts contribute to increase demand. Last, but not least, there is some knowledge on how societal conditions affect demand. For example, during the global financial crisis (GFC) in 2008 the spending on luxury and investment goods was considerably more volatile than consumption of non-durable essentials. In Norway, the the food industry was the only sector that didn't dismiss employees during and after the GFC. In 2020 another global crisis started; the corona pandemic. This research project aims at investigate to what degree the consumption pattern of households change during the pandemic. We do this at two levels: 1) a statistical analysis of Norwegian households demand for various categories of meat and fish during the first year of the pandemic, and 2) a panel survey among consumers in Norway and the most important countries for export of fish about how people perceive the threat of the pandemic on their own health and finances and how their willingness to pay is affected. The panel survey is repeated three times with one year between. The results so far shows that aggregate demand for meat is positively correlated with the intensity of the pandemic. This means that the more people infected, hospitalized and that dies from corona the higher is the demand for meat. Although we do control for several potential explanatory variables, we cannot claim a causal relationship between the two. What we can demonstrate statistically is that when the pandemic becomes more intense consumers become less price sensitive for meat types like beef and pork. Hence, when the price on these meat-types increase the effects in terms of reduced demand is lower when the pandemic is more intense compared to when the pandemic is less intense. Or in other words; for a given increase in prices on beef and pork, and all other constant, people will buy more of these meat types when the pandemic is intense compared to when it is less intense. In the first panel survey implemented in Germany, France and Italy, with a focus on Norwegian salmon and cod, we find that effects of the corona pandemic vary across countries. Among the results we find that reduced disposable income for the households due to the pandemic leads to lower willingness to pay for salmon and cod in France, whereas the health threat due to the pandemic leads to higher willingness to pay for cod and salmon in Germany. In general, Norwegian cod and salmon are relatively highly ranked when it comes to quality, especially in Germany and Italy. Taste is the most important variable to standardise market communication across the three markets as a driver for attitudes and willingness to pay. For cod, emphasizing sustainability of Norwegian seafood can also be used across the three markets.

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The negative effects of the coronavirus crisis on the Norwegian economy as a whole and the Norwegian service and seafood exports industries have been significant. The restaurant, fast food as well as travel sectors experienced fall in turnover of up to 90% due to the reduced consumer spending. Also, sales in physical stores, bank branches, training centres, etc. have been negatively affected by the fallout of this unprecedented event. Furthermore, exports of Norwegian seafood fell by 8% in April 2020 relative to 2019, as a result of the coronavirus crisis. The value of exported salmon fell by 13% in April 2020 relative to 2019. On the consumer level, the coronavirus crisis triggered the phenomena of increased consumption of less healthful products and services, nationalism and materialism. Another significant consequence of the crisis is increased consumer resistance to service innovations. This fallout of the crisis presents considerable threats for companies in the Norwegian service and seafood exports industries. More importantly, due the extraordinary nature of this crisis many companies in these industries lack the necessary competence to measure and manage its effects on their operations. In order to meet these challenges and to protect and manage the strategically important for Norway industries – food, services and seafood exports, this project focuses on the development of economic analysis and market intelligence capabilities of the industry partners in the project – Virke, the Norwegian Seafood Council and their member companies. Each of the partners´ industries will be subject to case studies that will form the foundation for research in this investigation and the development of corporate capabilities.

Funding scheme:

BIA-Brukerstyrt innovasjonsarena