There no question that the world is different today than it was at the start of 2020; and there’s no questions that it will be still different when we move into 2021. But what are the key pandemic-produced shifts that have and will impact the food industry, and what can we expect as life continues on? In consulting a range of experts, the following shifts, predictions, and impacts were identified.
IN-STORE GROCERY SHOPPING
Christopher Simons, Associate Professor—Sensory Science, The Ohio State University CFAES Department of Food Science & Technology
The Shift. The COVID-19 pandemic had a substantial impact on grocery shopping behavior. With increased social distancing and limitations on the number of shoppers allowed in a retail space, multiple studies indicated a significant increase in online grocery shopping. Consequently, grocery pick-up and delivery also increased.
The Prediction. On the one hand, Simons believes grocery stores overcame early logistical issues and shoppers were generally pleased with the experience. Some of the minor inconveniences were likely outweighed by the decreased risk associated with shopping. However, many shoppers like to pick out their own foods, especially fresh products, so he can envision a scenario where consumers continue to shop for processed foods online and have them delivered, while shopping for fresh products separately. With most people being time poor, convenience is a driving force behind behavior, but consumers still want safe foods that meet their quality expectations. Additionally, he expects that the continued risk of COVID-19 and the presence of regional spikes in cases will interact with these other drivers to impact consumer behavior.
The Impact. Because COVID-19 is not foodborne, its impact on food safety and quality is minimal. However, the supply chain needs to be intact to get foods from farm to table, and that is impacted by the pandemic. Even when restaurants began to do business again, people continued eating at home a lot, which has an impact on the food supply and can result in some shortages. However, Simons thinks that, by and large, food manufacturers have overcome most of the shortages and supply chain issues.
ONLINE GROCERY SHOPPING
Max Pedró, Co-Founder & President, and Curt Avallone, Chief Business Officer, Takeoff Technologies
The Shift. The pandemic has accelerated online grocery shopping by several years, with a level of online penetration being seen that wasn’t expected until 2025. Grocers are recognizing the need to invest in economical e-grocery solutions, so micro-fulfillment is coming to the forefront.
The Prediction. Pedró feels that the most difficult aspect of getting shoppers to adopt online shopping is changing deeply ingrained behaviors. Now that shoppers have had several months of “practice” buying groceries online out of necessity, this behavior can be expected to continue beyond the risk of COVID-19.
The Impact. The significant out-of-stocks for various brands and manufacturers created new customer trials across multiple product categories, but micro-fulfillment solutions allow consumer packaged goods (CPG) retailers to utilize retailer loyalty data to try to retain customers who began utilizing new products during the pandemic. The increase in online sales for CPG products will also require food manufacturers to increase attention on digital marketing and consider micro-fulfillment centers for their direct-to-consumer programs.
Betsy Booren, Senior Vice President, Regulatory and Technical Affairs, Consumer Brands Association
The Shift. With millions of consumers staying home over the past several months, the demand for CPG products was unlike anything before seen. Simultaneously, consumer trust in CPG manufacturers rose as the industry delivered high-demand products essential to consumer health time and time again.
The Prediction. It remains to be seen what the future holds as it relates to the virus, but Booren believes one thing is for sure: COVID-19 has only reinforced what we already knew to be true — consumers trust and rely on CPG products to power their everyday lives. In fact, 46% of Americans say their trust in the industry has increased during the pandemic.
The Impact. The elevated levels of demand by consumers in their homes, instead of at an office, school, restaurant, etc., have forced manufacturers to be extremely nimble. Booren has seen manufacturers switch their commercial product lines over to retail to meet that demand, and has seen manufacturers reduce product variations (flavors, sizes, etc.) to focus on getting the maximum amount of product they can to market. The crisis also poses new challenges to typical business operations (such as in-person meetings and audits) that the industry, regulators, and customers have all had to adjust to and overcome — by implementing new processes and technologies.
Paul Cuatrecasas, Founder and CEO, Aquaa Partners and Author
The Shift. COVID-19 is driving the technological transformation of the grocery sector in several ways — meal-kit services have become a substitute for some grocery shopping; grocery retailers are trying to reduce their dependence on human capital; and they are ramping up online to meet increased consumer demand while reducing consumer risk of exposure to the virus. This means using automation with technology, such as automated check-out and click-and-collect, as well as dramatically increased use of e-commerce solutions. These trends are not new, they’re just being accelerated.
The Prediction. The trend of depending more on technology will continue to grow even when the pandemic ends. The increased demand for e-commerce solutions, for example, is fueling an increased consumer desire for a more personalized end-to-end experience. To meet this demand, augmented and virtual reality are key growth areas. The technology allows customers to use digitally enhanced goggles to view and select items before putting them in their virtual shopping basket. In-store, the virus fueled the development of automated checkouts and delivery services. The market for frictionless self-checkout technology is forecast to rise 13.3% year-on-year to $7.8 billion and does away with the need for a physical till. Cuatrecasas also is seeing the growth of “robo-grocery” shopping — on-demand self-driving mini grocery stores that deliver goods to residential communities.
The Impact. Technological developments are also being seen throughout the grocery supply chain, with artificial intelligence technology increasingly being used to monitor stock and customer behavior and automate the warehouse sorting and dispatching of food. Additionally, advances in food technology, particularly lab-grown and plant-based meats, are beginning to offer consumers clean and viable alternatives. The demand for and consumption of plant-based meat has taken off in the pandemic, enough that industry leaders in this area expect to achieve cost parity with grocery store meats and mass market their product within the next few years. As such, Cuatrecasas expressed confidence that within his lifetime — or that of his children — the majority of meat will be either plant-based or cultured in a lab.
Mark Brandau, Group Manager, Datassential
The Shift. There are many ways that the pandemic has shifted consumer trends toward foodservice, but perhaps the biggest one is the prevailing need for safety. A recent Datassential dining-out survey showed that consumers are now more likely to indicate safety as more important than anything else, from sustainability and healthful eating to affordability and food quality. It is the first time that cleanliness was rated as a top consideration in choosing a restaurant. But Brandau has been struck by how little some parts of consumer eating and restaurant habits have changed. For the most part, food was a place where people tried to hang on to old routines; so while there was an initial move toward comfort foods cooked or baked in the home, consumers indicated that their food choices reverted back to normal levels as the pandemic wore on. The most popular foods, or those they missed from restaurants, were the typical favorites: such as pizza, burgers and sandwiches, pasta, and the like.
The Prediction. Moving forward, consumers will want to use restaurants like they did before, but they’re very cognizant of the health risks inherent to being out of their homes before a COVID-19 treatment or vaccine is widely available. Brandau thinks that means social-distancing strategies are here to stay and will need to be part of restaurant and foodservice operators’ long-term plans — as will masks, gloves, and increased sanitation. People don’t necessarily distrust restaurants and staff; it’s other people they don’t trust. That will affect their desire to be in crowds and around others, especially if people are not wearing masks or staying apart; and they’ll probably avoid shared-service or self-service food stations like buffets, salad bars, and soda fountains.
The Impact. Because it is harder to execute dine-in service as safely as delivery or takeout, food manufacturers need to explore ways they can help operators reassure consumers. Nearly two in five operators said they will need more convenience-focused products to simplify food prep and work with fewer people in the kitchen and the front-of-house. More than three in five operators overall will continue ordering bulk items (this is significantly greater among traditional restaurants), but nearly half of on-site operators have or are considering switching to single-serve condiments, beverage creamers, etc. Any new solutions that help with sanitation, food safety, and cleanliness will get a look from operators. Most don’t know if they’ll return all pre-pandemic purchases, or if they would continue with the new purchases of the past few months, but many are ready to discuss that with manufacturers.
What foodservice providers most need now are lower purchase minimums, flexible product delivery schedules, and general flexibility from suppliers. The best relationships between the operator and the supplier involve an ongoing conversation to understand the operator’s needs, help that person innovate, and maintain flexibility for the long-term strength of both parties.
Deb Gabor, CEO, Sol Marketing
The Shift. With massive changes already occurring this year with COVID-19 and its impact on every part of our lives, the changing social environment and subsequent protests against racial injustice have made it even more clear that brands must get in touch with their customers’ needs — and fast. Our current social environment has had far-reaching consequences for every brand, and has given many of them an opportunity to re-examine their core values and beliefs. That has meant a lot of upheaval in the food industry as many major brands discover that branding doesn’t come from the company, it comes from the customers. Brands live in their customers’ needs, desires, bonds, and barriers. What Gabor is seeing is an industry-wide moment of course correction as food brands recognize the emotional needs of their customers. In some cases, that has meant acknowledging and responding to a massive disconnect between increasingly race-conscious consumers and brands that have not been vigilant in evolving to reflect the values of their audience.
The Prediction. Gabor expects that brands will continue to learn more about who they are by learning about their audience. Branding is not a one-and-done shot; it’s a continuous process of updating the relationships, emotional connections, and promises that brands make to their customers. However, Gabor feels encouraged that food industry brands are doing the hard work of understanding their customers and making changes that will strengthen their chances for long-term success. Brands that commit to reflecting their customers’ passion for acknowledging and actively fighting systemic racism will be better prepared for the next challenge that comes their way. If 2020 is any sign of what brands can expect from the future, you will need to be ready for some major challenges.
The Impact. Food manufacturers and processors have an opportunity to engage in rigorous self-examination and align themselves with the core values of their audience. Brands that jump on this opportunity now will show themselves to be leaders and position themselves for greater success. A brand can remain relevant to its customers by answering three brand questions: What does your brand say about your customers? What is the singular thing your brand delivers that customers can’t get elsewhere? How do you make your customer a hero in the story of his or her own life? Brands that answer these questions (now and into the future) will find themselves in a much better position to create loyalty in their audience and survive future challenges. Turbulent times are full of opportunities for brands to show their strength. People are looking for guidance, and brands that step up will make a lasting impression on their customers.
Kevin Coupe, Content Guy, MorningNewsBeat
The Shift. The pandemic has caused consumers to have a lot of conflicting emotions going back and forth, not the least of which have been fears of physical effects if infected, and depression from the lack of normality and isolation. Because of this, Coupe sees it as important for the food industry to be aspirational — not harp on the tough stuff, complications, and item shortages. It is an important moment for the food segment and retailers.
The Prediction. Some retailers turned to restaurant suppliers when they faced product shortages. As a result, some of those restaurant suppliers found ways to convert to consumer products and provide foods for the retailer to private label. Consumers who purchased these, and were thrilled that they tasted just like their favorite restaurant’s product, will be unlikely to return to the national brand they were buying before.
The Impact. Before the pandemic, many people were eating away as much as at home. With the restaurant closures and stay-at-home orders, some retailers and food suppliers saw the best quarters of their lives. But Coupe advises that noone become complacent. Retailers need to continue to innovate and raise their game to keep these consumers, and food producers need to reach out to retailers and help them do so. Look at ways to help retailers figure out how to keep these customers. Determine how the relationship can work so both sides win. Be aspirational; continue to communicate with your customers — the restaurant industry will come back and will want its customers back.
Every company should have a “two-pizza” team (i.e., the size of which can be fed with two pizzas) charged to consider how the business will be fundamentally different coming out of this than it was going in. This will not be the last pandemic or the last crisis. Use the situation to improve: How can you deal with or mitigate your weaknesses and focus on what makes you different and strong? What do your customers find to be valuable about what you do? We all need to come out of this differently.
PFSBrands CEO and Author Shawn Burcham
The Shift. COVID-19 has disrupted the entire food industry and presented new challenges throughout the supply chain. But the industry has responded by pivoting to new business models and implementing new operating procedures to safely deliver quality products to consumers, which Burcham sees as truly inspiring. The day-to-day operations of individual facilities have dramatically changed. More employees have been asked to work from home; pandemic plans have had to be fully vetted and sometimes exercised (i.e., keeping individual employees “on the bench” in case they need to be brought in for “relief” of a sick employee); many facilities have re-evaluated shifts and working hours to keep individuals as distanced as possible; and the routine temperature and wellness checks of critical food workers is commonplace.
The Prediction. Moving forward, Burcham believes safety and sanitation will remain top-of-mind for many. Grab-and-go products will be in high demand and the use of online pickup and home delivery services will accelerate. While the future will look different, Burcham is confident that the food industry will continue to evolve to meet consumer needs. In general, wellness checks for both employees and visitors will continue to be common. The benefit is always having a pulse on your employees’ welfare and needs; the fear is that if an employee is sent home because of an illness, they won’t receive the short-term benefits they need (pay, social structure), so may not report an illness to the company to avoid that. So creating a culture of trust from management to workers will continue to be paramount.
The Impact. There’s no question that food manufacturers (particularly meat plants) are feeling very hard hit. Production facilities are built on producing the most pounds with the resources available — labor, capital, and space. Much of the food industry is still very manual and having employees shoulder to shoulder, cutting, grading, inspecting, etc., is common. But the industry will need to continue to find ways to keep individuals working while keeping them healthy and safe and implementing automation. But there will be trade-offs, which may be in product quality and the likely loss of some jobs replaced with automation. Thus, Burcham sees it as essential to balance these trade-offs and find the correct intersection of quality, safety, employee welfare, profitability, and efficiency.