Coronavirus (COVID-19): impacts on health and wealth

James Walton
Chief Economist

Date : 30 June 2020

With the UK on the brink of a deep recession and many households facing increasing financial pressure as a consequence of coronavirus, IGD’s Chief Economist James Walton explores the relationship between health and wealth and highlights some key considerations for food businesses.

The post-Coronavirus landscape

IGD has created hypotheses describing possible long-term effects of Coronavirus on business, health and sustainability. The six hypotheses connected to health and wellness are, briefly:

  • Interest in holistic health will increase
  • Affordability will challenge health priorities
  • There will be greater connection with food
  • Employers will place wellness at the heart
  • Obesity will remain a key focus
  • Healthy, sustainable diets will become more relevant

(A complete discussion of these can be downloaded here LINK)

Prosperity under pressure

A strand that links some of these hypotheses together is economics – economic outcomes shape the choices made by shoppers and governments.

Unfortunately, the economy of the UK – and other Western nations – was not performing strongly before the emergence of Coronavirus, leaving little margin to cope with “shock”.

Average real household income in the UK was broadly flat between 2010 and 20191, household cash resources are limited2 and some households have spent less on food and drink over time3.

Economic pressure has now been amplified by Coronavirus and consequent “lockdown” measures; the UK government is predicting an exceptionally deep recession and a rapid increase in unemployment4.

Data from ONS suggests that this is already happening, with economic activity slumping and a deterioration in the labour market, with implications for the income of working age households.

Shoppers themselves seem despondent. IGD’s ShopperVista surveys show that confidence in personal financial outcomes fell sharply in March and April 2020 – in view of recent events, this view is not unreasonable.

Households that see income reduced will be forced to make new choices across the entire household budget, including food shopping.

Social welfare implications are concerning, since many UK households were food-stressed before Coronavirus, relying on food banks and school meals to supplement their diets.

Charities have reported a steep increase in demand – the Trussell Trust distributed 81% more food parcels in March 2020 and 89% more in April 2020, when compared with the same months in 2019.

Looking ahead, it is hard to find cause for optimism. With Coronavirus still present and the challenge of EU exit approaching, a quick return to economic growth and better outcomes for households seems unlikely.

It is quite likely that the economic position of many households will worsen before getting better. This may happen rapidly and on a large scale, impacting shoppers at all income levels.

What this means for nutrition

The association between low income and poor health is well-understood. Dietary choices differ markedly between the poorest and richest households in the UK.

Dietary quality is associated with income

Source: Family Food Survey 2017-18, ONS, February 2020

ONS data shows that UK households in the bottom income decile (ie: the lowest 10%) tend to consume far less fruit and veg than those in the top decile, for example5.

Differing diets are reflected in differing health outcomes. NHS data shows that adults are more likely to be overweight and obese when they report multiple indicators of deprivation.

Excess weight is most common amongst most deprived

Source: Health Survey for England 2018, NHS, 2019

If, as anticipated, the consequences of Coronavirus – and EU exit – cause citizens to become less well-off, then they may be expected to make new choices across all aspect of the household budget, including food.

This may mean that the dietary quality of much of the population may decline in the months and years ahead, rolling-back progress made over recent years.

What this means for businesses

This creates a daunting challenge for government and for public services, but it means challenges for food businesses also:

  • The business challenge - Businesses must ensure that ranges and pricing are appropriate for a changing economic environment
  • The health challenge - Nutritious food should be available for shoppers at all income levels, so that reduced income need not be a barrier to good health
  • The inspiration challenge – Shoppers are likely to be distracted by a range of concerns and so businesses may need to work hard to inspire them to make sound choices; good food cannot be joyless

Possible upsides

Amid the economic and biological gloom, it is hard to find much cheer, but there may be room for optimism in certain aspects of diet and health:

  • Refreshed food culture – IGD hypothesizes that Coronavirus will see a UK food culture renewed, with shoppers taking more interest in food and food issues There is already some evidence that this is happening, such as surging sales of home baking supplies during lockdown.
  • Preventative immunity – Businesses report growing interest in products that promise to strengthen immunity and general health (eg: vitamins)
  • Focus on cleanliness – Covid has reminded citizens of the importance of hand washing and hygiene generally, which may help to reduce food-bourne illness in the long term – we await data on this

These points offer food businesses the chance to open new “fronts” in communication with shoppers and, more importantly, a chance to present positive messages in hard times.

Sources

  1. Households Below Average Income 2018-19, Department for Work & Pensions, March 2020
  2. Family Resources Survey 2018-19, Department for Work & Pensions, March 2020
  3. Family Spending In The UK 2018-19, ONS, March 2020 (with IGD calculations)
  4. Our Plan To Rebuild, HM Government, June 2020
  5. Family Food 2017-18, ONS, February 2020