KBRA Releases Research – Coronavirus (COVID-19): Winners and Losers in the Food and Beverage Industry

NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) publishes sector-specific research on the varying macroeconomic impacts of the coronavirus (COVID-19) across the food and beverage industry.

KBRA continues to engage with our rated issuers within the food and beverage industry to react in real-time to the shifts in credit quality brought on by the pandemic. While it is too early to predict the coronavirus-related impact on the macroeconomic environment, KBRA does note some recurring themes across the restaurant, groceries and processing/distribution segments of the food and beverage industry. The ramifications observed so far in these sectors continue to be disparate, with retail grocery stores experiencing an unprecedented positive credit impact that stands in stark contrast to the severely negative impact that restaurants, especially dine-in restaurants, are experiencing. Notwithstanding these early themes, KBRA notes that, as the U.S. government moves toward implementing a fiscal rescue package to stabilize affected industries, these themes are subject to change.

Key Takeaways

• As social distancing remains the primary weapon to combat the spread of the virus, restaurants will be negatively impacted by reduced foot traffic. Those restaurants that have been previously situated for off-premises food consumption and delivery may offset some of the declines, but the overall restaurant segment will be impaired as a result of the pandemic.
• Grocers are in an excellent position to manage through the crisis, although the process of retooling their supply chains for the current accelerated demand remains a challenge. Those companies that can effectively handle the transition stand to bolster their competitive positioning within the industry and their credit quality.
• Food processors and distributors should see an uptick in demand as these companies focus on their retail customers at the expense of their foodservice customers. Those companies that can remain nimble and work to meet the demands of their retail customer stand to benefit.
• Capital and liquidity position will continue to be crucial during the crisis. Meanwhile, the potential of a fiscal policy rescue could still change the calculus of the pandemic’s impact on the food and beverage industry.

As events surrounding the crisis unfold, our thoughts are with the individuals and families who have been exposed to the virus.

Click here to view the report.

Related Publications

• KBRA’s Coronavirus Corporate Credit Playbook
• U.S. Corporates 2020 Outlook: How Long Will This Go On?
• Corporates/Sovereigns: KBRA Zooms in on Canadian Energy

About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA. Kroll Bond Rating Agency Europe Limited is located at 6-8 College Green, Dublin 2, Ireland.