Increased Demand for Cold Storage
Consumers filled their freezers with staples and indulgences in the pandemic, leading to increased demand for cold storage for last-mile delivery.
Rising Interest in Cold Storage Facilities
Americans have treated their freezers a bit like security blankets over the past year, stuffing them full of staples and indulgences, a consumer behavior pattern that has had ripple effects beyond the walls of their kitchens. Developers that focus on cold storage facilities say they are seeing growing interest from companies seeking to build, buy, or invest in the sector, despite construction costs that are roughly triple that of an ordinary warehouse.
Growth in Cold Storage Revenue
Americold, a logistics company focused on the cold storage supply chain, reported that its revenue grew 11.4 percent in 2020 from the previous year. “We gave guidance pre-Covid for our 2020 year, and we’re one of the few companies that didn’t lift or change that guidance,” said Fred Boehler, chief executive of Americold, which added 46 facilities to its portfolio through a $1.74 billion acquisition of Agro Merchants Group last year. “What we eat and where we eat will change, but we’re going to eat.”
Shift in Eating Habits
Where we eat has shifted overwhelmingly to our own kitchens and living rooms, and what we eat increasingly comes from the freezer. “People were very nervous not just about getting to a store, but what was going to happen with the supply chain,” said Jill Standish, global head of the retail practice at consulting firm Accenture. She added that a survey in March 2020, the month the World Health Organization declared the pandemic, found that about one-third of American shoppers were buying more frozen food than normal.
Continued Stockpiling
Even though the food supply chain issues that characterized the early days of the pandemic have largely abated, Americans are still stocking up. “Consumption of frozen or prepared meals was already on the rise leading into Covid,” said Beth Bloom, associate director of food and drink reports at the market research firm Mintel. The pandemic supercharged that trend, as restaurants shuttered and Americans stopped commuting to work and school.
Some people are motivated by the desire to avoid crowds: In a recent Mintel survey, 57 percent of respondents said they tried to limit the amount of time spent in stores — and 36 percent said they were still stockpiling groceries or household supplies. “They want to stock up more so they can go less frequently,” Ms. Bloom said.
Changes in Food Handling and Cold Storage
The widespread migration of the white-collar workforce from downtown office towers and suburban corporate campuses into their homes is another key part of the dynamic. “You’re talking about a lot of people that are going to need to fend for themselves at home in situations where they haven’t before, mainly lunchtime,” Ms. Bloom said.
The industry had to make large, rapid adjustments to accommodate these changes taking place in millions of homes across the country. “This whole idea of food handling and cold storage in an e-commerce world is really different than it was in the past,” Ms. Standish said. “Instead of central locations of huge warehouses that have a long way to go to deliver, we’re seeing a lot of micro-fulfillment centers.”
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