It’s hard not to take the pandemic personally. We all have our own view on the world, but when circumstances conspire time and time again to blow us off course, even from a plan with just a few weeks as its time horizon, it is easy to get downhearted.

It’s also easy to forget that the producer, wholesaler and distributor businesses that service our sector have arguably had it even worse. Take this current lockdown for example – many suppliers have spent the first two weeks resolving issues with surplus stock, disrupted delivery scheduling, and coping with massively lower drop sizes; and will shortly need to plan re-opening on December 3rd, with absolutely no visibility on whether the sector will re-open at all, and if it does where, how and when.

Supplying food and drink profitably relies on a high level of planning and predictability. We have had almost no predictability since late February, and personally I believe that the vast majority of supply businesses have worked miracles maintaining availability in some of the most stressful market conditions I have ever seen. Supply chains are just that – chains of activity that often cannot be activated fully in short order.

Demand planning, developed by many suppliers to a near art form, has dissolved into guesswork. The result has been a mix of clever use of stock, and heart-breaking waste and unsold product. But it has been distribution where perhaps the worst pain has been felt. Routing and driver management have been thrown into a world of constant re-work, and drop sizes have generally plummeted – except during Eat Out to Help Out, when of course quite suddenly the exact opposite occurred.

Drop-size is a particularly important component of profitability for wholesalers and distributors. A £1000 delivery has pretty much the same fixed costs as a £100 one, and it is easy to find a significant number of deliveries in this climate becoming loss-making. It is to the credit of our suppliers that we have seen very little upward price movement in the face of this key impact on margin in recent months.

But operationally the majority of suppliers, though struggling to make money, have coped. The major pain for many has been bad debts. The slew of CVAs and Liquidations in our sector have left some companies with a huge debt burden, and there is a clear sign that the management of cash and risk are getting much more focus from suppliers than is usually the case.

Such is the scale of the raising of the bar right now, that we are beginning to see some suppliers turning down opportunities in favour of customers with stronger balance sheets. The credit insurance market has understandably tightened too, which increases the pressure on the supplier/operator relationship. For some operators this may come as an unexpected surprise, and with only limited (or even no) credit available operational cashflows may become uneconomic. There are workarounds available, but these generally need the active involvement of both supplier and operator CFOs and some careful planning.

It’s also worth pointing out that there remains (at the time of writing) the possibility of a no-deal Brexit, which if it happens would add some unwelcome complexity and operational challenges to the first month or two of 2021. Logically, it seems unlikely that either the EU or HMG will wish for this to happen in the face of a pandemic and recession that is already stretching them both to extremes. Some kind of fudge, where the major trade issues (such as fishing) are kicked into the long grass for a while seems the most likely bet, but as we have found out in 2020, nothing in life is in any way certain.