July 2020 Food & Beverage Pulse

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GCG’s July 2020 Food & Beverage Pulse provides an overview on recent news topics and trends within the Food & Beverage sector.

Key findings include the following:

    • Grocers, delivery platforms adjusting to meet online demand. Due to COVID-19, the number of consumers ordering food online has quadrupled from 11% to 41%. Companies have been slowly building out their e-commerce capabilities for years but had not made significant traction until now. Retailers and delivery platforms are struggling to keep pace with the surge, which is causing significant delays on orders and frustrated customers.
    • Food delivery poised to drive growth over the next decade. The restaurant industry is scrambling to find ways to respond to an everchanging demand from consumers. Traditional restaurant goers are now seeking out meal and snack solutions away from home. Delivery is expected to drive food service growth in the next decade and will force restaurants to adapt to provide new offerings such as online ordering, meal kits and grab-n-go items. The biggest challenge restaurants face with delivery is product quality. Lukewarm or soggy food will not be tolerated and restaurants that deliver on quality via delivery will find additional growth in the long-term.
    • Half of food companies say coronavirus pandemic will make them stronger. Consumers rediscovering cooking at home, coupled with the streamlining of supply chains necessary to get products out at this time, create a net positive for the industry. Large CPG brands are continuing to innovate to capitalize in the surge in demand with two-thirds working on new concepts and new products.
    • During pandemic, consumers prioritize product availability over brand loyalty. While consumers are still largely shopping in stores during the coronavirus pandemic, 69% of them are purchasing different brands if their preferred one is not available. Only 14% said they will not make a purchase if their preferred brand is unavailable. Shopping trips have also become less frequent as 39% of consumers report spending more money per shopping trip than before the COVID-19 outbreak. If big brands are unable to keep shelves stocked at brick-and-mortar retailers, the brand loyalty they have cultivated for decades will dwindle as consumers discover other options and develop new household favorites.
    • Why PepsiCo launched two new direct-to-consumer sites. While PepsiCo is no stranger to e-commerce, the rollout of these direct-to-consumer sites is reflective not only of a company working on giving shoppers more places to purchase their products, but one that is quickly responding to trends that have been amplified during the pandemic. With shoppers quarantined or reluctant to leave their homes, e-commerce has become an increasingly popular way for shoppers to buy their groceries. Direct-to-consumer shipments have not traditionally been a major source of revenue for large CPG companies, but this new trend will undoubtedly remain a part of consumers’ buying habits in the near and potentially longer-term future.
    • Eight in ten consumers changed their eating habits due to COVID-19. The biggest change is that 60% of consumers reported cooking at home more. More than 40% of consumers under the age of 35 reported snacking more than normal, compared to 26% of consumers over the age of 50. The pandemic has also impacted the way Americans view food safety, with food handling and preparation related to coronavirus risk topping the list of concerns. The most interesting trend has been the almost even split of Americans (20% for each) that state they are now eating healthier or more than they used to.
    • As meat giants face scrutiny, small and niche producers capitalize. Tyson Foods, JBS SA, Cargill and National Beef are the four largest meatpackers in the country and currently control nearly 85% of meat sales in the industry. As their massive meat plants face challenges with tens of thousands of workers getting sick and criticism from the public about worker safety, smaller protein producers are using this opportunity to highlight their products, which have a more transparent food process, to consumers. “This is really the first time in modern history when we’ve seen any kind of a disruption at this level, so it will be interesting to see if there are some changes,” Cassandra Fish, a meat industry analyst, told Food Dive.
    • Restaurants Have Lost $120 Billion in Sales, Permanent Closure Count Rising. Two new reports in the hospitality industry have come out with the research showing the dire situation bars and restaurants continue to face. The National Restaurant Association (NRA) is reporting that $120 Billion in sales have been lost from March to May and Yelp has announced that nearly 50% of restaurants that are currently closed have closed for good. As a further threat, several cities across the country are looking at slowing their plans for reopening as COVID-19 cases continue to spike.

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