The question investors are facing is what happens as the paranoia dies down and fears of the sky falling eases.
In other words, are ASX shares in the consumer staples sector about to wake with a bad hangover?
The good news is that changes to consumer behaviour is likely to endure even as world gets the coronavirus disaster under control.
UBS identified three trends that will shape the fortunes of the grocery sector and highlighted the winners and losers from the changes.
The big shift to online buying is an easy one to pick. Consumers aren’t only using the web to shop for clothes and electronics, but are embracing online grocery deliveries during the lockdown.
This is unlikely to change post COVID-19. History has shown that once consumers embrace a new channel, they are likely to stick to it as habits are hard to reverse.
Increasing appetite for eating in
The second trend is change in eating occasions. UBS believes Aussies will be eating at home more instead of dining out.
Growing levels of joblessness and closures of restaurants that cannot survive the coronavirus lockdown will keep this trend going over the medium-term, if not longer.
The broker estimated that every 0.1 times increase in at-home cooking frequency equates to around a 1% increase in grocery sales.
Bargain products in vouge
The third trend is the move to value brands. This is again linked to the weakening economy, although UBS thinks premium health products with a clear point of differentiation are well placed to benefit too.
Based on these three lasting changes to spending habits, the broker believes Woolworths, Coles, A2 Milk Company Ltd (ASX: A2M) will be the winners in the sector.
On the flipside, Coca-Cola Amatil Ltd (ASX: CCL) will be a loser as its beverages are aimed at the higher end of the market, while grocery distributor Metcash Limited (ASX: MTS) lacks the online component.
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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk, COLESGROUP DEF SET, and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.