The current global health and economic situation is a far cry from business as usual. “Pivot” will be the new buzzword in the food and beverage industry, as fermentation brands and food service institutions must implement creative manufacturing and marketing solutions to maintain sales during the coronavirus pandemic.
“We are in a real-time focus group situation. …We’ve seen an acceleration of trends,” says Emmanuel LaRoche, vice president of marketing and consumer insights for Symrise, an international producer of flavors and fragrances. “This current situation will lead to new, large structural trends that are going to impact the next 15 years.”
Solving economic challenges posed by the coronavirus outbreak will be the “new normal” in the food and beverage industry. Here are six ways to adapt.
- Create More Online Instruction
As a brand, are you helping your consumer cook with your product? And what about the products you don’t sell. Canned goods and frozen foods are flying off grocery store shelves. Can consumers pair your product to create a meal with the pack of canned beans they panic bought or the pound of frozen berries?
“Consumers may be stockpiling shelf stable products, but it doesn’t mean that they know how to use them,” says Melanie Bartelme, global food analyst at Mintel. “Brands have an opportunity to help consumers who suddenly find themselves surrounded by dried foods and frozen foods. Direction and support, in the way of webinars, YouTube videos or Pinterest links, will help them feel confident cooking meals with these staples.”
2. Position Your Product into Consumer’s Home Routines
Though some states are lifting stay-at-home orders, allowing businesses to reopen, social distancing will alter regular business through 2020 – and likely beyond. Many people view dining in a restaurant, working in an office and exercising in a gym as too risky. Consumers are now eating, working and exercising at home. They’re also spending more time on self-care routines and home cleaning. How can businesses join the home-based routine?
“The formation of routine, it’s an action that typically takes 60 days to form. If we repeat something on a daily basis, we turn it into this new habit,” Laroche says. “So the question here is how quickly, if ever, will consumer behavior return to pre pandemic levels or are we at the beginning at a shift of how we spend our time?”
It’s unknown whether the affects likely becoming permanent. But brands should adapt to home living. Product delivery and e-commerce sales are essential to fermented food and beverage brands. But brands should also think outside the box. Marketing must pivot from “on the go” to “staying at home.” More than ever, consumers want their products to be convenient.
“The new normal at home may create many opportunities for companies and brands to provide a new and exciting product connected directly to what consumers are experience,” says Dylan Thompson, marketing and consumer insights manager with Symrise.
3. Create Business Opportunities for Consumer’s Shift in Spending
Many of the new consumer spending trends mirror what happened during the 2008 recession. During the Great Recession, consumers shifted their spending habits in the food and beverage industry. Consumers:
- Valued cost more than convenience.
- Switched from mainstream to value brands. There was a big increase in private label purchases especially, as consumers searched for better deals. Premium and top brands were more insulated as consumers sought affordable luxuries.
- Bought smaller, lower-priced food and beverage packages. Manufacturers switched to smaller packages as they downsized to improve margins.
- Shifted to purchasing at value channels, like big club stores (Costco, Sam’s Club).
- Stopping shopping frequently at gas station stores, correlating with dropping gas prices.
- Declined eating at restaurants, increasing eating at home.
Already, new shopping trends are emerging during the COVID-19 outbreak. These include:
- Decreasing brand loyalty. Consumers buy whatever brand is available when their favorites are out of stock.
- Revival of the center store. As consumers stock up and try to keep their pantry full of shelf-stable items, they’re shopping in the center of the store again.
- Stock up behavior. Sales at mass and club stores are increasing while sales at restaurants are decreasing.
- Increased sale of comfort items. Consumers are indulging in purchasing things they can enjoy from home.
- Greater shift to ecommerce. Online shopping and “click and collect” pick-up have become a popular option during the pandemic, especially in urban areas.
“There are opportunities for retailers to fill the void of what consumers are missing out on,” adds Thompson.
4. Restaurants Must Create a New Business Model
Restaurants have been dramatically hurt by the pandemic, especially non-chain restaurants. Estimates by Technomic show that, at the end of the pandemic, restaurants sales will decrease by 14-29%.
For comparison, at the end of the Great Recession from 2008-2009, restaurant sales only failed by 1.2%.
“We know that social distancing will have a long-lasting impact on food service,” Laroche says. “Social distancing has been particularly disastrous for on-premise beverage, alcohol sales as the dining, drinking side of the business has essentially disappeared.”
At the end of the pandemic, Technomic estimates 15% of restaurants will not reopen.
Restaurants must reformat their business model to allow takeout, curbside pickup, no contact delivery, cashless pickups and alcohol to-go. Some restaurants are even offering DIY kits, selling materials to recreate favorite restaurant dishes at home. Others have decreased dining space to expand the kitchen.
5. Capitalize on what People are Already Buying.
Shopping trends are falling into two categories: survival and sanity. There’s been explosive growth in the food and beverage category during the pandemic (74%), especially for alcoholic beverages (24%), according to IRI. Fermented products like foods like coffee (60.6%), spirits/liquor (37.3%), beer ale/cider (37.8%), chocolate (21.2%) are all top purchases. There are bigger trending categories where a fermented food or drink could get creative, like pasta (229.8%), soup (212.7%), salty snacks (51.5%) and cookies (50.3%).
Increased “beer and liquor at home is one of those sanity categories, and it’s always been well-known that it’s recession proof,” Thompson says. Alcohol flies off shelves during recessions. Consumers are looking for comfort and want a way to cope with uncertainty.”
Alcoholic drinks like hard seltzers and craft brew were not popular enough to track in 2008, but in 2020, are not proving to be a permanent part of consumer alcoholic beverage purchases.
6. Consider Consumer’s Storage Space
Storage at home has become a premium, especially for consumers in densely populated areas that have been hit the hardest by the pandemic. Think of younger, Millennial and Generation Z shoppers living in urban areas with limited storage space.
“The Propensity to stockpile food is a challenge to those without a place to store such products. There is an opportunity for condensed, dried foods, like bone broth soup and contemporary bouillon cubes, to be positioned as more viable alternatives,” says Dasha Short, a global food analyst with Mintel.
Fermented food and drink brands should consider selling items in single-service packages and snack sizes.