#1 | How People's Habits are Reshaping Food
New Tech, Shopping Habits, Customer Preferences, Renewed Focus on Health, Wellness and Surprisingly...Sustainability
2020 is a year I’ll always remember. Why? Because of the pandemic. While I remember past crises well, this is one that’s forever going to be etched into my mind simply because it affected me (and everyone in the world) firsthand. I started writing about, researching and learning about how COVID-19 was effecting many industries week over week. Now, six months later, I feel we’re finally starting to see new trends and new patterns simply because the world has started to adapt to “the new normal.” In this newsletter, I’ve heavily focused on what’s happening in the ecommerce space and also with consumer behavior. Future ones will be different, but here’s what held my attention in helping make decisions in my personal life and business.
The Technology Enabled Grocery Store
COVID-19 has changed how consumers shop in grocery stores. For those that aren’t ordering online, stores are rapidly adapting safety measures to help shoppers feel comfortable.
This month, Seattle-based Artefact released The Grocery Store Reimagined case study. Customers are expecting more from their grocery shopping experience. They want to feel and be able to quickly and efficiently shop at their local grocer. They are demanding that the online experience be seamless.
In their video feature, Artefact showcases emerging technology that might help customers shop with more confidence in-store and online, thus ensuring businesses efficiently manage guest volume, protect employees, and sustain revenue that’s now growing after many years of dwindling margins. Grocery sales online is estimated to more than triple as a result of the pandemic, but 87% of people still prefer to buy in-person even with the threat of a viral contagion. Check out the interactive demo that Artefact created to help meet consumer wants and needs, but also help grocers prepare for what’s next.
How COVID-19 Is Shifting Specialty Food
The Specialty Food Association recently released a study that looked at the impact of COVID-19 on consumer purchasing patterns. In it, they found that specialty food and beverage purchases fell from 34% of total grocery spend, to 22-25% of total grocery spend. The report has four key finds worth noting:
Customers' views of local grocers are shifting. COVID-19 closures led grocery stores, natural markets and specialty co-ops to discover just how important they are to the communities they serve. Because of this, they’re recognizing the investment in store safety is going to keep shoppers coming through their doors. They also discovered that being educational, especially online, is going to bea key driver in deepening customer relationships.
Cooking at home is here to stay. Grocers and food markets realize that cooking at home is here to stay. They are shifting the products they carry so that shoppers can purchase what they want in order to create at home. There are also ways to capitalize on this trend with pre-made meals.
Value shopping is going mainstream. There have always been shoppers focused on values and deals. Job and financial losses have grown this category of shopper. The perception of value is affecting size and price points; but it’s also driving a demand for premium, private label products.
Less room for new products. Manufacturers, distributors, and retail buyers are focusing more on carrying and restocking products with high sell throughs. Most of these “essential” product purchases are leaving less room for new products to come to market.
Consumer eating habits impact on-trend categories. Plant-based foods and healthier snacks are seeing large category growth. This growth aligns to other trends in increasing interest in health and developing more sustainable habits.
While there was constriction in total percentage of grocery spend at the beginning of the pandemic, specialty food has started to rebound, and may begin to outpace other areas of food purchase as consumers further develop new cooking and consumption habits that fit new lifestyles. Once the market normalizes, it’s estimated that specialty food sales will top $90 billion by 2024. In the long run, consumer demand for better, premium and more sustainably created food products are poised to drive sales on an upward trajectory.
Explosion of COVID Driven E-Commerce
Ecommerce is expected to grow 18% in 2020, while brick-and-mortar sales will fall 14%. There’s been more growth in e-commerce in the last two months than there has been in the last 10 years. The growth in e-commerce is driven by essential products (discount/value buys for necessities), alcohol, and the purchase of food. Home improvement (online and in-store) has seen massive growth because people are home more as consumers first started cleaning out houses and then investing in outdoor areas due to the shelter in place orders.
Now consumers are investing in work/life projects that will allow them to work and teach from home in 2021. While home improvement purchases sales and contractor services secretly boomed in the last six months, economic uncertainty could dampen demand as we move into fall. Most recently, outdoor and camping gear became the latest pandemic buy as people started to take local vacations. RVs sales have actually skyrocketed in response to the resurgence of the American Road Trip.
Food Advertising: What’s Happening in SEM and Paid Search
At the beginning of the pandemic, many companies pulled their ad budgets to see how COVID-19 would drive consumer behavior. Now that we’re further along, certain companies and brands are starting to advertise again. The social unrest due to the civil rights movement and protests led them to pause again so that they could once again understand what was happening with customers. It also lead them to pivot their messaging and decide how they would take a stance on discrimination, and/or if they would at all.
Google Shopping Trends showed some interesting changes in consumer behavior. Home fitness, the purchase of at-home fitness equipment went up, and home & garden grew the most. In the last week, Stella Rising has seen a stabilization across all categories and purchase volume is returning to pre-pandemic levels. Food & groceries rose 34% in 7 days.
Now is a great time to review and change your campaigns. In general, with many companies limiting their ad budgets, more ad inventory is available. In the last six months, McKinsey found that 75% of consumers had tried a new method of purchase (a new website to buy on, a new store shop at, or tested a new brand) because they needed to purchase something they needed. Of that 75%, 60% were influenced by digital channels before they made that purchase.
In the retail space, Stella Rising found that CPCs are down (+18%) and CTRs are up (28%). Social video (YouTube is up 1.7% and Facebook/Instagram are up by about 4%) and general social media CTRs are up an average of 44%.
Health is the New Wealth; Mindfulness is Becoming Mainstream
Another trend that’s emerging amongst the COVID-19 is that health is the new wealth. According to McKinsey’s latest research, consumers have taken up new ways to entertain themselves and are spending more time on domestic tasks, including cooking, and home improvement.
The chart below shows an increase in personal care routines and wellness while at home. A retail lender survey showed 60% of respondents are spending more time on self-care and mental well-being, with about six in 10 consumers (57%) saying they have started exercising more at home; “The scale of the changes identified in our findings clearly suggest that this is a long-term shift. The new consumer behavior and consumption is expected to outlast the pandemic, stretching far beyond eighteen months and possibly for much of the current decade.”
Retailers are going to focus on carrying health, wellness and personal care products that will help customers meet their needs as it relates to home routines, new hobbies, and personal values. Both studies show that this shift in behavior is long term, thus making it a sustainable growth trend.
In my opinion, it appears that we’re ushering in a healthier era of consumption over the next 10 years. Consumers appear to thinking more about balancing what they buy and how they spend their time, in order to help combat global issues of sustainability through their consumption patterns. In general, there are certain groups that are going to be more selective in what they buy and how they buy.
I think it’s also worth noting that we’re seeing two behavior patterns here. One pattern is driven by value and price as these shoppers are the ones most likely experiencing negative effects of the pandemic. The other pattern is one driven by sustainability and quality. The middle consumer has further diminished. Retailers are going to most likely have to market on either end of the spectrum as the middle is small.
If Nutrition Is Booming, Why Are So Many Americans Unhealthy?
The health and wellness industry is growing, but despite American health consciousness and being more active, Americans are more obese today than ever before. According to a recent review by Axios, the culprit is what we’re eating –– American diets are terrible. Expanding upon that article, when I look at what the research shows, the biggest pattern I see is that the growth of the food and health industries is predominantly based on trends and fads that continuallydrive people to buy into quick fixes rather than lasting solutions (hence the wellness industry being worth over $30 billion).
This is leaving people spending copious amounts of time, money and energy trying to achieve an easy solution to change whatever they have dubbed as the problem. In the quest for a perfect body, it seems that Americans are failing to do one core thing –– look at the nutritional value of what they eat. Given the fact that 36.5% of the world is overweight, why are we not looking at what we put in our bodies as the one of the leading causes of our health problems?
Ashkan Afshin, assistant professor at the Institute for Health Metrics and Evaluation at the University of Washington says, “Data shows there is increased availability, affordability and accessibility of high energy-dense foods and many Americans are eating more than their bodies need.” What Afshin notes about high energy-dense food is specifically related to calories, not nutrition –– not food that feeds your body.
People are eating more calorie dense foods, not more nutritionally dense foods. Calories help give us energy (sugar being a leading component here) in order to get up, stay up and push performance. We need the energy to push ourselves to work longer and harder. That drive is leading to an increased amount of stress that is affecting us on the cellular level.
“Our bodies are now supportive of an environment that really supports obesity," says Mary Teruel, assistant professor of chemical and systems biology at Stanford University School of Medicine in California. So our growing obesity problems stem from two main factors -- stress and poor diet.
Putting health and nutrition first is ultimately a choice for a person as an individual. Learning to eat well requires a great amount of learning, unlearning and relearning. Much of my writing and research has focused on slowly developing healthier habits over time, promoting the fact that you should seek to understand food and your health, and from there, you work on developing habits that you can maintain.
Here are few resources that encourage anyone to explore in order to better understand the simplicity of good food and nutrition:
#RefindingFood Blog: My B2B Articles on Food, Farming & Wellness
#RefindingFood Newsletter: Published 2 Times Per Month
Love Food, Love Yourself: Understanding Nutrition for Women Over 40
Is Hand Sanitizer Profitable for Distilleries?
At the onset of COVID-19, breweries and distilleries quickly pivoted to their production models so they could produce hand sanitizer. The Alcohol and Tobacco Tax and Trade Bureau, which oversees the industry, waived parts of a federal law to allow distilleries to meet the demand. Initially, rapid production was largely supported by community and private donations, which allowed for a large initial round of product to be given away for free.
Six months later, I wondered if the rapid shift yielded profit given the intense competition that has developed and the FDA has started to tighten regulations on production. Selling to hospitals, first responders and front-line workers tends to be done at cost; selling to consumers comes at 2x that price. So for example, if a company sells a 750-ml bottle for $7.50 to “necessary workers and institutions,” it sells that same bottle for $15.00 to a general customer.
In general, it seems the hoarding behavior is still present as small retailers like distilleries and large retailers like Target still put purchase limits on them. Hand sanitizer may be a revenue stream now, but it’s long-term profitability is probably going to be questionable as large scale producers start to turn out higher volumes at lower prices and the FDA continues to tighten regulations.
How Avocados and Toilet Paper Help Explain the Grocery Store of the Future - Fast Company
Home Hydroponics: Tech Trend Or The New Victory Garden? - Forbes
Food traceability becomes even more important in times of COVID-19 - Supermarket Perimeter
Sustainability still top of consumers' minds during COVID-19 - Food and Beverage Insider
Dairy industry sets sights on sustainability goals – Podcast
The Journey to Becoming a Better Human Being
"Life is not about you. It’s about what you do for others. The faster you are able to get over yourself, the more you can do for the people who matter most. Yet external forces keep pulling you toward self-centered pursuits. From books pushing “happiness” to advertisements convincing you that consumption leads to adoration, these messages tempt you to focus inward. That is all a trap (and a load of crap)." — It's Not About You: A Brief Guide found via one of my favorite newsletters Farnam Street - Brain Food
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