Pandemic accelerates demand for cold stores and frozen food
The COVID-19 pandemic has accelerated the appeal of online ordering and the purchase of frozen food by consumers and led to an increased need for cold storage facilities.
Whether it's for preserving COVID-19 vaccines or refrigerated and frozen foods, the COVID-19 pandemic has accelerated the already growing demand for cold storage facilities.
Since the start of the COVID-19 pandemic, stay-at-home orders have driven online food sales to unprecedented levels, as more consumers have opted for safety over in-store shopping with all the risks involved. A survey found that 46% of US consumers are likely to continue using online food delivery platforms after the pandemic abates, demonstrating that customers are changing their food shopping habits. (1)
This transition has resulted in an oversupply of perishable products (such as meat, dairy and vegetables) relative to the cold storage space available. As merchants and logistics companies adjust to consumers’ new habits, the demand for cold storage facilities is rising. (1)
Before the pandemic, demand for cold storage facilities, driven by consumer habits that resulted in a gradual shift from shopping in physical stores to online ordering and home delivery, was already on the rise. The pandemic simply accelerated that trend. (2)
And it’s not just new demand that is driving the cold storage construction market. A recent report estimated that over 78% of cold stores in the US were built before 2000. (3) The outdated designs used in many of these facilities do not provide the space needed for efficient logistics and are not as energy efficient as their newer counterparts. (2)
Among new projects, the facility characteristics are changing somewhat. In addition to large regional facilities, owners and developers are building microfulfillment centers. These smaller structures, which are supplied by regional distribution centers, further reduce the distance between the products and the end customer. (2)
Another major trend induced by the pandemic is the steady growth of the frozen food industry, as people turn to foods with a longer shelf life. Frozen foods also appeal to consumers seeking to avoid cooking when they cannot eat out. (4)
According to the American Frozen Food Institute, in 2020, frozen food sales increased both in dollars (+21%) and units (+13.3%), ringing up USD 66 billion in sales, with nearly all types of frozen foods recording double-digit sales increases (4) (5). Moreover, 7% of consumers who rarely or never purchased frozen foods pre-pandemic are now doing so. (4)