Impact of coronavirus (COVID-19) pandemic on the food industry
Updated food regulations
Evolving food supply channels
Due to the global pandemic of coronavirus (COVID-19), Americans are more concerned about the potential for empty grocery store shelves than the latest Instagram-friendly food trends. A recent study reported in JAMA Internal Medicine (April 7, 2020) found that nearly 75% of 8,950 people surveyed had stockpiled food and supplies due to the pandemic. As restaurants and other foodservice institutions are adversely impacted nationwide due to ‘social distancing’ mandates, the food industry has been recognized as “essential, critical infrastructure” during the COVID-19 pandemic.
In the United States, the ‘stay at home orders’ issued by the majority of states has impacted the business operations of food manufacturers, retailers and the foodservice industry. In fact, the declaration of a national emergency in March triggered a shift toward online grocery shopping, increased consumption of processed foods, and limited restaurant operations. The National Restaurant Association expects the foodservice industry will lose $225 billion and 5-7 million jobs during the next few months.
In the midst of this challenging business environment, new opportunities for strategic industry partnerships are emerging in the evolving food industry landscape. Food products from manufacturers and foodservice establishments are being diverted to serve food retailers on the front lines of the COVID-19 pandemic. Federal agencies have altered several regulations providing new distribution opportunities for manufacturers, restaurants and retailers.
Here is a rundown of how the revised food regulations will support the food industry.
Nutrition Labeling for Food Diverted to Retail
On March 26, the FDA issued guidance to provide restaurants and food manufacturers with temporary flexibility regarding the enforcement of nutrition labeling rules for packaged food during the COVID-19 public health crisis.
Under the guidance, restaurants can sell packaged food to consumers and retailers without complying with the FDA rules for a Nutrition Facts label. Similarly, food manufacturers with food labeled for use in foodservice are temporarily permitted to divert packaged food to retailers.
For both restaurants and manufacturers, the labels of food products diverted to retailers cannot contain nutrition claims, but must provide the following information:
- a statement of identity,
- an ingredient statement,
- the name and place of the business of the food manufacturer, packer, or distributor, net quantity of contents, and
- allergen information required by the Food Allergen Labeling and Consumer Protection Act.
On January 1, the new FDA requirements for Nutrition Facts Labels took effect for food and supplement manufacturers with $10 million or more in annual sales. The agency planned to permit enforcement discretion until July 2020, but the new guidance indicates the agency will work with manufacturers for the remainder of the year. The FDA is expected to postpone enforcement actions for the updated Nutrition and Supplement Facts labels until 2021.
The USDA Food Safety and Inspection Service (FSIS) will permit temporary allowances for labels of meat and poultry products intended for foodservice but diverted to retail during the coronavirus pandemic. The FSIS policy applies to food products complying with FSIS labeling regulations with the exception of nutrition labeling. Bulk products can be repackaged into smaller sizes by retailers and labeled for sale directly to consumers. The temporary labeling acceptance will end on May 26, 2020.
Menu Labeling Flexibility
On April 1, the FDA issued guidance to permit temporary flexibility for chain restaurants and similar retail food establishments required to comply with the menu labeling rules. During the COVID-19 health crisis, the FDA does not intend to enforce the menu labeling requirements that took effect in May 2018.
Under the federal rule, retail establishments with more than 20 locations, including restaurants, convenience stores and similar establishments, are required to post calorie information for standard menu items on printed menus, menu boards and drive-through menus. Despite the temporary enforcement reprieve, the majority of restaurant chains should continue to provide nutritional information to consumers in support of public health goals.
Eggs Diverted to Retail
During the COVID-19 pandemic, the FDA will temporarily postpone enforcement of the egg safety rule (21 CFR 118) to grant shell egg producers the flexibility to reroute shell eggs intended for processing facilities to supermarkets and other food retailers. A related FDA guidance established a temporary policy regarding the packaging and labeling of shell eggs diverted to retail food establishments.
Food Imports Carry On
Imported foods will continue to arrive at ports of entry. The FDA will rely on the automated import screening tool, Predictive Risk-based Evaluation for Dynamic Import Compliance Targeting (PREDICT), to identify higher risk products for inspection.
On April 3, the FDA announced plans to immediately begin conducting remote inspections mandated by the Foreign Supplier Verification Programs (FSVP) rule. The use of remote inspections will focus on the “inspection of FSVP importers of food from foreign suppliers whose onsite food facility or farm inspections have been postponed due to COVID-19.” In March, the FDA issued guidance indicating the agency would not require supplier verification onsite audits for receiving facilities and importers provided other supplier verification methods were conducted.
New Frontier of ‘Unprecedented Demand’
Despite the profound impact of COVID-19 upon the industry, the Food and Drug Administration (FDA) has emphasized that Americans will not experience a food shortage. Frank Yiannas, Deputy Commissioner for Food Policy and Response at FDA described the occurrence of empty grocery store shelves as “an issue of unprecedented demand – not a lack of capacity to produce, process and deliver – and manufacturers and retailers alike are working around the clock to replenish shelves.”