One question preoccupying investors – at least this one – is which lockdown trends will hold fast once something approaching normality returns? Well, we can say with certainty that home working will continue to play a more prominent role in the economy even when the all-clear is sounded.
Less certain is the extent to which the tide of online retail will recede once the high street is back up and running. And I’ve yet to be convinced about the long-term expansion of virtual consultations and diagnosis in the healthcare space, although the figures would suggest that my scepticism may not be warranted. Analysis from McKinsey shows that by the end of the initial surge of Covid-19 cases, 46 per cent of US consumers had accessed telehealth services, against 11 per cent during the same period in 2019.
In truth, many of the perceived changes to our everyday routines were already in evidence in varying degrees long before the pandemic. The direction of travel was clear across a range of segments in the economy, although Covid-19 has accelerated existing trends in consumer and business preferences.
I doubt any of us will look back wistfully to the days of internment, but there have been some silver linings. The closure of restaurants and cafés across the UK meant that more people have been cooking at home more often. This has got to be a good thing, unless you happen to be a restaurateur.
Anecdotal evidence suggests that householders are taking greater account of the quality of foodstuffs they purchase and its impact on the health of their loved ones. Although we have yet to be issued ration cards, the effective restriction on the number of items available to shoppers, coupled with the unmistakable rise in prices, may have forced many consumers to take a more considered view of what the weekly shop means.
Again, however, the consumer push towards a healthier diet has been forcing industry change for some time. Tate & Lyle (TATE) recently confirmed that it was in talks with potential buyers over the sale of a controlling stake in its Primary Products business. If completed, the group will zero in on its Food & Beverage Solutions arm, which provides processes and expertise to food and beverage producers to enable them to make processed food healthier.
The dynamic is in play across the wider sector. As Phil Oakley recently pointed out, heightened awareness of the culinary path to healthier living is also what’s driving sales volumes at Treatt (TET), a Suffolk-based producer of natural extracts and ingredients for the beverage, flavour and fragrance industries.
The group’s share price has more than doubled over the past 12-months, but it was unmoved on publication of half-year figures showing an 880 basis point hike in the gross margin and 74 per cent rise in the operating profit to £10.6m.
Revenue growth at 13.5 per cent was subdued by comparison, but it is worth noting that sales increased by 57.1 per cent from the 'healthier living' categories of tea, health & wellness and fruit & vegetables.
There was also a 2p half-year dividend into the bargain, an 8.7 per cent increase on HY20. And management felt able to bump up full-year guidance, all of which probably added to a sense of well-being among shareholders.
