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.
Fermentation was the No. 2 trend on the North America Flavor Trend Report for 2020, but with a twist: sweet foods are the new star of fermentation. The trend report was released by Symrise, an international producer of flavors and fragrances.
“Over the past few years, we’ve seen fermentation has really come to dominate the condiment category with foods like kimchi, that have really led the charge,” says Julia Gorman, Symrise digital marketing specialist. Now, “fruit is getting funky.”
Pickling berries, fermenting tropical fruits, using sour fruits and incorporating pulp byproduct into fermented dishes are some of the key flavor trends among chefs. Adds Dylan Thompson, Symrise marketing and consumer insights manager: “It’s all about the evolution of fermentation.”
Fermentation was particularly high on the list because of gut health components. Fermentation encompasses some of the mega trends Symrise is seeing this year. Consumers are buying simple foods that benefit a healthy lifestyle. Fermentation’s “health benefits remain a huge bonus,” Gorman says.
Symrise polled chefs and mixologists for their survey, and found four fermented fruit flavor trends:
- Pickled Berries. Made popular through the cookbook “Noma’s Guide to Fermentation,” Scandinavian cuisine is making a major impact on America’s acceptance of fermented fruit.
- Tropical Fermentation. Mixologists have been particularly experimenting with tropical fruits in drinks. Fermented pineapple, for example, is used to “add flavor funk to what is otherwise a classic beach cocktail,” Gorman adds.
- Ume (and Ume Boshi). More chefs are using Ume, the salty, sour Japanese plum. It can be pickled, brined or traditionally served with rice.
- Fermented Cacao Pulp. Usually a wasted byproduct of cacao bean production, the pulp has an array of health benefits. Chefs are salvaging the pulp to use in a variety of dishes.
The new innovation in vinegars is grape vinegars. Grape vinegar is made from grapes macerated and slowly allowed to ferment with their skins for a year. “The fermented juice then spends several years in small oak barrels to evolve into the delicately fruity pinkish vinegar,” according to the New York Times. The white grapes and skin contact is why the grape vinegar makers call it to the “orange wine” of vinegars. The latest grape vinegar collection comes from Sirk in Friuli, a region in northeast Italy. The grapes grown there, Ribolla Gialla white grapes, are prized for wine making.
Read more (New York Times)
While trying to keep up with increased demand during the pandemic, fermented food brands can’t lose sight of their core values and business strategy.
The COVID-19 outbreak has altered retail sales, with fast-paced, constantly changing sales and production cycles. Customers are going out of their way to find natural and fermented products, believing healthy food will be one of their best defenses against the global virus. But there is also pressure on pricing, with soaring unemployment and large segments of the economy shut down.
Dan Lohman, author of Brand Secrets and Strategies, says brands that sacrifice quality in order to compete on price will suffer.
“We as a natural (industry), we need to do everything we can to help leverage this storm,” he says “The mainstream retailer’s Achilles Heel is price – and you’ll struggle to compete if you just think about price. … Don’t apologize for quality. Always, always focus on the quality of the product.”
Lohman, an organic and CPG industry strategic adviser, shared business advice in a webinar sponsored by Whole Foods on “How Do You Future Proof Your Store in Uncertain Times.” Here are four of his strategies to help brands survive the pandemic.
1. Focus on Quality
As consumers experience wage loss and unemployment, brands will be tempted to drop their prices and offer a cheaper product. Lohman calls this a tired strategy.
“When you’re thinking about gluten-free, plant-based, some of these other things that we champion that start in our industry, these are the things that are driving sustainable sales across every single channel,” he says. “We should never have to apologize for good quality. Understand it’s our products, our industry, that’s responsible for growth across every category.”
Nielsen Data shows total U.S. food sales are up 1.9%, but natural and organic sales are up 11%.
The modern consumer frames their shopping list by the adage “You are what you eat.” They know eating a healthy, nutritionally dense food will keep them full for longer than a cheap, generic product.
“If I buy the cheap generic bread, I’m hungry almost before I finish eating it. If I eat the best mainstream bread, I may be satiated for a few hours. But if I eat the organic bread and that organic bread provides me the nutrition I need, that might satiate me longer. Even though I’m paying more (for the organic bread), I’m paying less overall. That’s the argument this industry needs to make,” he says. “Unfortunately, this is where we need to rethink how we need to go to market. Its not about price, its about value.”
“Focus on that, focus on how you are delivering that real value to your customer.”
2. Know Your Shopper
The natural shopper stereotype is someone who eats a salad and takes a walk. Defining the shopper in a small scope is limiting. Today’s natural shoppers are diverse and united in a common purpose: craving healthy food.
“Creativity is our single greatest asset. This is how we stand out on a crowded shelf. This is all about having a purpose. Natural is really good at that because were all purpose driven,” Lohman says.
3. Maintain a Score Card
Critical during the pandemic is continuing to track sales measurements. Brands need to tell retailers average turns, anticipated sales, ideal backstock, customer insight and category trends.
“A lot of brands today are reactive. They need to be proactive. It’s your name on the package,” Lohman says. “When a customer sees your product out of stock, they’ll blame the brand, not the retailer.”
Eighty percent of natural food brands fail in the first year of operation. Measurements are key to surviving, Lohman says. They show the retailer “the contribution a brand brings to the store.” Your band may not be the top-selling brand in the category, but it may be bringing the most dollars to the category.
4. Market Intentionally
As grocery store shelves quickly deplete of essential goods and medical supplies, natural brands can market their product as a health alternative.
Shoppers are struggling to find cold medicine. How does your product help alleviate cold symptoms? Grocery stores are selling out of flour. Is your product a healthy alternative to a carbohydrate?
“Help customers understand you’re there to solve their unique problems,” Lohman says.
Wired writes about the “Stay at Home Bread Boom,” which is causing flour and yeast to sell out on grocery store shelves. More people are baking at home during the coronavirus outbreak, some to start a new hobby and others out of necessity because bread is also selling out. Stephen Jones, a wheat breeder and the director of Washington State University’s Bread Lab, recommends people start with sourdough because it doesn’t require yeast. “You can start a sourdough culture in just a couple days. I mean, you just basically mix flour and water and let it sit there, and the bacteria and yeast will come to it. So that’s a nice experiment.”
Jones also encourages people not to get discouraged by the perfect “Instagram bread load.” He explains: “Well it’s open crumb, so it’s — it’s called the Hairy Forearm Crumb Shot. It’s somebody holding up a rustic loaf that’s been cut in half and has these huge bubbles in it and things like that. People think if they can’t do that, they’re failing at baking. It’s part of this notion that your bread has to look perfect to be good, right? People should take pressure off themselves in that way.”
“It doesn’t surprise me in this environment that people are baking, because they need to and they want to. But I think an important part too is how little time it takes to bake a loaf of bread. Not totally, but in terms of the work that’s required when you’re actually working on the bread, that can be about 20 minutes. Even if you’re doing a long ferment, and it goes for a full day and then you bake it … including prep and folding and cleanup, you’re talking about 20 minutes out of your day. The rest of the time is waiting.”
Read more (Wired magazine)
Donna Schwenk is not surprised kefir has gone from relative obscurity in the U.S. to the new star of health food. The author — “Cultured Food in a Jar,” “Cultured Food for Health,” “Cultured Food for Life” — has been making and eating fermented foods for over two decades and, in the last few years, watched interest and research in probiotics climb.
Kefir is expected to grow to a $2.58 billion industry by 2027, increasing at a CAGR of 5.8%.
“(If you want to improve gut health), drink kefir. It has the most probiotics, it’s the most versatile. You can strain off the whey and make kefir vegetables, kefir cheese, kefir soda, kefir dips, kefir smoothies. It has the most probiotics, it’s the easiest to make, and it’s the most life changing thing I’ve seen.”
Schwenk was 41 when she received life-changing news: she was unexpectedly pregnant with her third child. Health problems plagued her through the pregnancy. She suffered from diabetes, high blood pressure and her liver was shutting down. Schwenk became so sick that her daughter, Holli, was born 8 weeks early.
“I felt so guilty she was born early to save my life,” Schwenk says.
The genesis story of most health food advocates usually begins with a personal health scare. In Schwenk’s case, she was searching for answers to help her premature daughter thrive. Schwenk read Sally Morell’s book, “Nourishing Traditions.” The kefir section piqued Schwenk’s interest. Morell details the benefits of kefir in her book — and the ease of making it. Kefir is made by using kefir grains to culture raw milk. Because kefir can be cultured at room temperature, it takes only 24 hours to make. The taste of kefir is tart, flavorful and refreshing.
A few weeks after regularly drinking kefir, Holli began sleeping through the night and started gaining weight, a key developmental milestone for a premature baby. Schwenk was drinking kefir, too, and her health improved. Her blood sugar levels stabilized and she felt better than she had in years.
“I realized the answer to my prayers were in this jar that had billions and trillions of microorganisms in them that made me well. And I wanted to know why,” Schwenk says in a podcast with Kriben Govender, a food science and technology grad and founder of Gut Health Guru (Honours Degree in Food Science & Technology). “Microbes are where it’s at for me. They were my angels in disguise.”
Schwenk dove into the world of fermentation, making her own kefir, kombucha, cultured veggies and sourdough bread. She shares her DIY tips in her books and on her website Cultured Food Life. Schwenk’s developed a loyal following of fellow home fermenters. Her tips have helped fermented food brands launch their businesses, too.
Though she realizes many people are attracted to dairy-free water kefir, Schwenk is still a fan of milk kefir. She’s made vegan kefir, but says the greatest benefits are in milk kefir. She notes water kefir has 14 strands of bacteria and yeast, but milk kefir has over 50 strands.
“When you ferment it, it completely changes the food. You put vitamin C into it and more B vitamins, you add more probiotics, you remove the lactose. You transform the food by fermenting it. It’s a completely different food than regular dairy,” Schwenk says.
Vegan kefirs are finicky. While kefir grains must be fed daily with raw milk, vegan kefir must be fed more. There are few carbohydrates in a coconut milk kefir, for example, and the bacteria feed of the carbs to make probiotics. She suggests adding a date paste to vegan kefir.
Regularly drinking kefir is key for health benefits, she adds. Schwenk says many fermented foods have “transient bacteria” — bacteria that is good for the body, but doesn’t dwell in the stomach or organs. It only lasts 2-3 days. Consuming more fermented foods replenishes that transient bacteria.
Kefir is not the only fermented drink star with incredible health properties. Schwenk is passionate about kombucha, too. Kombucha is strong artillery against potential viruses because of the saccharomyces yeast strain found in the fermented tea. Saccharomyces is the No. 1 probiotic yeast strain used in hospitals worldwide because it cannot be killed by probiotics.
“That’s one of the strong things that makes kombucha stand out and do its job more effectively. It actually acts like a pathogen in the body and it attracts pathogens to it and kills them. But it only lasts a few days in the body,” Schwenk says. “That’s one of the powerful weapons kombucha has that’s such a benefit to our own bodies, our own lives, and keeps us healthy. If you have to take an antibiotic, kombucha is a great thing to help keep your body in balance because it doesn’t get killed by antibodies.”
The Second Brain
Gut flora is a balance. The gut is often referred to as the “second brain” — neurotransmitters and other chemicals produced in the gut affect the brain.
“We’re made up of trillions of bacteria. We’re basically a big sack of bacteria walking around. When I connected to that, I healed my body and my mind,” Schwenk says.
A historic home in Los Angels is now an experimental kitchen, highlighting fermentation, art and design. The Schindler House hosted an event last month featuring a fermentation-based installation. Stone vessels were filled “with different combinations of soybeans, koji, barley, brown rice, citrus, salt and microbes. Several months later, the altered (mushier) contents of the containers, which had sat in the outdoor hearth of one of the house’s courtyard’s, became key ingredients in an afternoon that was part art happening and part cocktail party.” From the New York Times article: “Over the past decade, chefs and diners have been drawn to all manner of fermented produce, as well as to fermented staples like kombucha and kimchi, sourdough and cider, for their tangy flavors and presumed digestive health benefits. Perhaps surprisingly, so have artists, though for their own reasons. ”
Read more (New York Times)
Miyoko’s has filed a lawsuit against the California Department of Food and Agriculture, after the state agency sent a letter demanding the plant-based creamery stop using the word “butter” on the Miyoko’s butter, a cashew cream that is fermented with live cultures. The agriculture department says the term butter is restricted to products containing at least 80% milk fat. The department also told Miyoko’s to drop the terms “lactose-free,” “hormone-free” and “cruelty-free” from their packaging because “the product is not a dairy product.” In addition, the department also wants Miyoko’s to remove an image on their website of a woman hugging a cow because “dairy images or associating the product with such activities cannot be used on the advertising of products which resemble milk products.” ..In response, Miyoko’s points out that the front of their butter label uses the terms “Made from plants,” “Vegan” and “Cashew Cream,” so consumers are not confused whether or not the butter is made from cow’s milk. A change would cost the company $1 million. Miyoko’s added: “The Milk and Dairy Food Safety Branch may be tasked with supporting the State’s agricultural industries, but it is prohibited by the First Amendment from taking sides in a contentious national debate on the role of plant-based foods and leveraging its power to censor one emerging industry’s speech in order to protect a more powerful and entrenched industry.”
Read more (Food Navigator)
A Japanese study published in the British Medical Journal found that people eating higher amounts of fermented soy products (like miso and natto) reduce their mortality risk. Participants with the highest intakes of fermented soy had a 10% lower risk, compared with those who had the lowest intakes. For participants who ate a lot of soy products that were not fermented, no significant association was found between intake of soy products and mortality rate.
Read more (British Medical Journal)
At this week’’s Winter Fancy Food Show in San Francisco, Mintel research announced what a senior analyst called a “major milestone” — specialty food and beverage sales account for 16% of all food and beverage sales, with a record year of growth at $148.7 billion.
The biggest drivers of the specialty food market are 1) functional drinks aiding the microbiome, 2) snacks rich in protein and low in sugar, 3) plant-based foods with unique innovation and 4) international sauces and seasonings from new regions of the globe.
Research from Mintel and the Specialty Food Association shows that nearly three in four consumers purchase specialty food products. The specialty food market is defined as premium products, food made in small batches, food featuring authentic recipes or food made with high-quality ingredients.
“I think so many consumers are more aware of what they’re eating and are more interested in what they’re eating, they’re curious about it, they care about clean ingredients and quality foods. And were on the cusp of all of that,” said Denise Purcell, director of content for the Specialty Food Association.
Some key points from research highlighted at the winter show:
- Specialty beverages hold 18% share of all specialty products, totalling $14 billion in sales. Consumers want functional drinks that boost energy, mental focus, relaxation and microbiome health.
- Snack foods total $18 billion in sales, 27% of the specialty food and beverage share. The fastest growing sellers were turkey and meat (10% growth), then chocolate and other confectionery (9% growth) and juices and functional beverages (7% growth).
- Plant-based foods “It’s a movement, it’s hard to call it a trend anymore,” Purcell noted. Innovations in plant-based items are leading growth in their segment, like shelf stable creams and creamers (37% growth), plant-based meat alternatives (36% growth) and refrigerated creams and creamers (20% growth). One-third of specialty food consumers have purchased plant-based products. And 90% of specialty food consumers, Mintel found, are “committed plant-based consumers.”
- E-commerce is the key specialty food purchasing channel. Today, 41% of shoppers buy at least some of their groceries online, with Mintel estimating online specialty sales will double to $6 billion in sales in the next few years.
- The top 10 online specialty categories for sales from specialty food consumers include:
- Sparkling water (15%)
- Nuts, seeds, trail mix, dried fruit (11%)
- Soda and carbonated beverages (11%)
- Bars (10%)
- Juice (10%)
- Marketing and positioning claims is an important branding element, too. Sales from positioning claims were led by:
- Natural (68%)
- Organic (55%)
- Non-GMO (45%)
- Locally-sourced (41%)
- Eco-friendly (40%)
- Ethical (37%)
- Fair trade (36%)
- Plant-based (34%)
- Gluten-free (27%)
- Sustainable (25%)
- Global sauces and seasonings are also trending, especially flavors interesting new regions of the globe. Trends are showing customers are willing to pay more for these higher-quality, authentic ingredients. “People…always want to see a value,” says Mat Schuster, chef at Canela Bistro & Wine Bar. “It doesn’t mean they want to pay less, per say, but they want to feel the value. So if they’re getting an ingredient that they feel is special, that is authentic, that is flavorful, then that is part of the thing that builds the value to them.”