Call for a Free Audit877.728.5328

Monthly Archives June 2021

Comfort, Convenience and Health Consciousness: How the Pandemic Changed What We Consume & How We Shop

How the Pandemic Changed What We Consume & How We Shop

As it did for most industries, the COVID-19 pandemic exposed the fragility of food and beverage supply chains around the world. Changes in consumer buying patterns made demand planning difficult, leading to unanticipated surpluses or shortages (who can forget those viral photos of empty grocery store shelves and meatless meat counters?). And even though we have been in the midst of this pandemic for more than a year, it could be another six to nine months before certain categories like spices are fully replenished due to disruption and elevated demand.

While grappling with these challenges, food and beverage companies have also been forced to adapt to new pricing structures, surcharges and volume restrictions imposed by carriers while quickly developing omnichannel shopping experiences and multi-vendor strategies.

The pandemic changed life as we knew it, including the foods and beverages we consume and how we purchase them. In this blog post, we’re breaking down these changes, plus how the pandemic affected category sales and influenced emerging trends.

 

Food and beverage ecommerce sees historic growth

The COVID-19 pandemic forced food and beverage brands to adapt and pivot to meet customers’ changing needs, and for many businesses, this meant getting on the fast track to technological transformation.

At the start of the pandemic, some of the biggest food and beverage makers had no direct-to-consumer (DTC) ecommerce channels; in fact, only about half of food and beverage companies had an ecommerce presence. The pandemic sparked “incredible acceleration of the online food and beverage space,” said Elizabeth Buchanan, NielsenIQ’s head of consumer intelligence for North America. “COVID-19 brought more digitally engaged food shoppers into the mix.”

In 2019, only 10% of revenue for consumer packaged goods (CPG) makers like Nestlé, PepsiCo and Mars came from DTC offerings. When the pandemic hit, big brands and artisan food makers alike launched online stores, and food and beverage surpassed health and beauty to become the largest online CPG segment. According to Forbes, food and drink ecommerce posted 53% growth, the highest of any product category.

During the pandemic, 18% of consumers changed their primary method of grocery shopping to shopping online (Lumina Intelligence). Statista’s Digital Market Outlook estimates that by 2025, revenue from the ecommerce food and beverage industry in the United States will rise to $35.7 billion—making up 15% to 20% of the industry’s overall sales.

 

Consumers seek solace in comfort foods and alcohol

During times of stress and uncertainty, consumers often turn to comfort foods like sweets and snacks for solace. The 2020 State of Snacking report from Mondelēz International indicates that 88% of consumers increased their snacking habits or continued at pre-pandemic levels. Half of adults started buying snacks online more often and 69% planned to continue this practice after the pandemic. With online sales up 73% compared to last year, Frito-Lay predicts that online snack sales will double by 2025. Sales for chocolate—another popular comfort food—grew 12% to $27 billion last year.

Alcohol sales also have risen dramatically in the U.S. since the start of the pandemic. Research from the University of Southern California found that between April and June 2020, sales of alcoholic beverages increased by 34% compared to the same period in 2019, chiefly due to consumer stress, boredom, anxiety and depression. Consumers turned to new online platforms to get their alcohol, and the U.S. is now expected to overtake China as the largest alcohol ecommerce market in the world by 2021.

“People had the necessity of ordering alcohol online, and now they’re starting to wake up to how convenient it is,” said Sara Goucher, head of Molson Coors’s ecommerce operation.

 

Consumers shift to healthy, functional foods and beverages

Although “gaining the COVID-19” became a popular pandemic wisecrack, the witty wordplay held some truth for the millions of Americans whose weight increased during the pandemic. As a result, statistics show that consumers at some point during the pandemic decided to make better choices when it comes to nutrition. Research by FMCG Gurus shows that 80% of consumers around the world plan to eat and drink more healthily in 2021 as a direct result of the pandemic. Companies like PepsiCo, Danone, Chobani and General Mills have even started their own incubators to innovate and introduce products in line with fast-growing food trends—products that are better for you, natural, clean label, plant-based and functional.

Organic food sales surged in 2020, reaching a record $56.4 billion, largely due to the renewed interest in healthy eating amid the pandemic. Even Hershey’s is trying to balance indulgent offerings with healthier, low- or no-sugar treats and organic options. According to Hershey’s, only 6% of confectionery sales fall into the “better-for-you” category, and they hope to see that figure climb to 20%, on par with other snacking categories.

Consumers are increasingly seeking food and ingredients that can help with mental clarity and stress relief, such as adaptogens, CBD and I-theanine, and industry experts predict that new and innovative superfoods marketed to boost immunity will be a top food and beverage trend this year.

 

Pandemic pushes consumers toward plant-based options

Although the shift toward plant-based meat consumption started before the pandemic, COVID-19 has accelerated consumer interest in plant-based foods. Many consumers turned to plant-based meat when COVID-19 outbreaks at meat plants led to nationwide shortages, and they continued to purchase meat alternatives for the health benefits.

According to Nielsen, sales of fresh plant-based meat alternatives nearly doubled every month after the pandemic started, and in March 2020, grocery stores sold 231% more fresh plant-based meat than a year prior. Sales for snacks promoted as part of a plant-based diet rose 10.5% and plant-based beverage sales increased 13.5%.

 

Food and beverage subscriptions are on the rise

The consumer shift from in-store to online shopping has fueled the growth of subscription box services—particularly for items like snacks and beverages. According to Ordergroove, enrollment in all types of subscription programs surged 48% in 2020 over 2019, and there was a 25% increase in the food and beverage category. Subscription boxes allow consumers to change up their snacking habits and try new brands they can’t find in their local grocery store—plus, there are boxes specific to dietary restrictions and that help with specific nutritional goals. With consumers’ love of convenience and growing desire to improve their health after the pandemic, it’s no surprise that healthy snack subscription boxes in particular are expected to be a top trend this year.

 

Fulfillment Audit

 

Sales sink for on-the-go snacks, mints and gum

While sales increased markedly for some categories during the pandemic, others struggled to sustain strong numbers. During lockdown, life for many consumers slowed down, reducing the need for on-the-go snacks like nutrition bars. According to Nielsen statistics, sales of performance nutrition bars were down 17% in the first seven months of lockdowns. Sales plunged 23% for breath-freshening mints and gum due to social distancing measures and mask-wearing, but the category is expected to make a strong comeback later this year.

 

Coffee drinkers embrace new routines and trends

When cafés closed and consumers started working from home, coffee drinkers had to embrace new consumption routines. Data from the National Coffee Association shows that 23% of coffee drinkers bought a new coffee machine amid the pandemic, 40% tried a new type of coffee drink and 25% purchased new types of coffees for brewing.

Single-serve and ready-to-drink coffees have become increasingly popular as well as premium monthly coffee subscriptions, ethically sourced beans and hybrid beverages (e.g., light sparkling coffees and coffees blended with fruit juice). Like other food and beverage categories, this market has a growing base of health-conscious consumers, and they’re looking to get their caffeine boost without the calories and sugar of traditional energy drinks and sodas.

 

Pandemic shakes brand loyalty as consumers grow more adventurous

After supply chain disruptions and panic buying led to barren grocery stores aisles, brand loyalty was put to the test as consumers were forced to buy whichever brands or products they could get their hands on. An Ipsos study reveals that in April 2020, more than 25% of consumers tried a new brand because their usual brand was unavailable. According to Statista, consumers were most likely to have tried new brands in the healthy foods category and plan to continue buying these brands after the pandemic. Twenty-nine percent of survey respondents said they were trying new snack and junk food brands.

 

New dining behaviors are here to stay

When restaurants closed, consumers had to cook more at home—and many discovered that they actually enjoyed it. A recent study shows that more than half of Americans are now cooking more than they were before the pandemic, and 35% said they enjoy cooking now more than before. More than one-third of consumers say they are getting more takeout than before the pandemic.

Experts predict that even after the pandemic, people will continue to eat at home, whether that means cooking or takeout and delivery. Packaged meals, ready-to-eat meals and meal kits—especially healthy ones—are expected to have a strong future.

 

What’s next—and how Visible can help

COVID-19 emphasized the need for businesses across all industries to focus on building supply chain resilience and adaptability. Now that consumers have discovered the convenience of purchasing food and beverages online, experts agree that these newly adopted shopping behaviors will remain in place. As reliance on ecommerce grows, businesses must prioritize their supply chains with these behavioral shifts and customer satisfaction in mind.

While having an online presence and on-trend product line puts companies in a great position for growth, the key to lasting success is having a supply chain partner with expertise specific to this industry. The right food and beverage fulfillment partner provides skilled inventory management, understands how to store and package products properly, ships timely and accurately and has the facility footprint to split inventory for quicker delivery to customers.

Visible provides supply chain solutions to a wide array of customers in the food and beverage space. From fulfilling subscription orders of coffee and superfood powder to creating packaging for cheesemakers, we have the expertise to get your products safely into the hands (and stomachs) of consumers everywhere. To learn how Visible can support the growth of your business and improve the efficiency of your product distribution, fill out our contact form or call 877.728.5328.

 

 

Supply Chain Stats to Prepare for a Post-Pandemic Fashion Comeback

For many of us, the year 2020 can accurately be referred to as “the year of the elastic waistband.” With store closures, event cancellations and people sheltering at home, there has been little need to wear “real” clothes, let alone shop for new outfits. Now, as more consumers become vaccinated and begin their post-COVID plans, industry experts predict they’ll be updating their wardrobes for new experiences. With a return to normalcy in sight, retailers must be prepared to meet customer demand while delivering the seamless and convenient experience consumers have become accustomed to during the pandemic. Here are some key statistics to help brands strengthen their supply chains and gear up for a fashion revival.

 

Fashion Embarks on Post-COVID Road to Recovery

  • Although clothing and accessories sales plummeted almost 90% a year ago, Wells Fargo analysts find that store traffic is up and margins are growing
  • As of March 2021, U.S. retailers had plans for 3,344 new stores and 2,649 closures (this is a new trend, as store closures have far surpassed openings in recent years)
  • Retail executives expect post-COVID-19 ecommerce penetration to increase 25% to 40% across categories, which will drive retailers’ investments in real-time inventory tracking and the conversion of stores into fulfillment centers
  • A McKinsey survey shows 34% growth in customers purchasing footwear most or all online and 48% growth in customers purchasing apparel most or all online
  • What’s motivating these purchases? Out of more than a thousand shoppers who participated in a Digital Commerce 360 survey earlier this month, 41% said they made an apparel, accessory or shoe purchase to replace something in their wardrobe, 36% were inspired by the changing weather and 35% simply wanted to freshen up their wardrobes

 

Omnichannel Becomes the Future of Retail

  • More than 1/3 of Americans have made omnichannel features such as buying online for in-store pickup part of their regular shopping routine since the start of the pandemic
  • 2/3 of retail executives cite the growth of omnichannel and digital shopping as the most significant trend affecting the industry—and its greatest challenge
  • 46% of retail executives plan to increase their investment in omnichannel retailing moving forward, compared to their plans prior to COVID-19
  • 51% of retailers cited ecommerce platforms among the top three budget priorities for 2021

 

Returns Climb Amid Ecommerce Surge

  • Per Narvar, the number of ecommerce packages returned in 2020 rose 70% from 2019 due to the increase in online shopping and uptick in “bracketing” (buying multiple versions of the same item—usually apparel—to try them on and return the ones that do not fit)
  • In a Digital Commerce 360 survey, 62% of consumers said they bracketed an online purchase in 2020, up from 48% in 2019
  • The most common reasons consumers are bracketing now more than in years prior: Weight gain/loss and uncertainty of new size (41%), inability to try things on at stores (31%) and purchasing from new retailers (21%)
  • In the same survey, 26% of shoppers said they will factor in free return shipping before making a purchase
  • A Narvar survey found that of shoppers whose last return was “very easy,” 46% were able to drop the return off at a convenient location, 43% were informed when the refund was processed, 38% got an instant refund and 32% received an updated status of the return

 

Consumers Care About Environmental, Social and Governance (ESG) Issues

It is critical for brands to map their supply chains and understand what is happening at every tier; in fact, a company’s reputation depends on it. If a company is unaware that their supplier is using a subcontractor that they did not authorize, and that subcontractor engages in unethical or illegal labor practices, the brand’s reputation is at risk for irreparable damage.

  • 1/3 of participants in a McKinsey survey said they stopped using a brand based on its social actions; 71% indicated they would lose trust in a brand forever if it placed profits over people
  • 66% of consumers said they would stop or significantly reduce shopping at a brand if they found it was not treating its employees—or its suppliers’ employees—fairly
  • Gen-Zers are willing to pay more for products that support their values, and 80% of that generation refuse to buy goods from companies involved in societal scandals

 

The Rising Trend of Sustainable Fashion

  • According to McKinsey’s State of Fashion 2021 report, sustainability is the second biggest opportunity for retail behind digital, with more than 3 in 5 consumers saying environmental impact is an important factor in making purchasing decisions
  • 67% of consumers consider the use of sustainable materials to be important when buying clothes, while 63% also look at the way a brand promotes sustainability
  • As much as 12% of fibers are discarded on a factory floor, 25% of garments remain unsold and less than 1% of products are recycled into new garments. With consumers’ growing concerns about sustainability, the fashion industry must focus on building and scaling strategies around circularity—reducing, recycling, refurbishing, reselling, renting and repairing items

 

“Dupe Influencers” Become a Growing Concern

Because legitimate brands go to great lengths to ensure their supply chains comply with labor, safety and environmental practices, they should be wary of a fast-growing group of influencers promoting counterfeit merchandise.

  • According to a report released by the American Apparel and Footwear Association (AAFA), “dupe influencers”—those who use their social media platforms to promote counterfeit merchandise—are becoming a growing threat to reputable brands. These influencers are using hashtags to attract new followers and increase online engagement, and as of a month ago, #designerdupefinds had more than 6.5 million associated views on TikTok
  • By 2022, the influencer industry is set to be worth $15 billion, and counterfeit goods will displace roughly $1 to $2 trillion of global sales

 

Retailers to Strengthen Partnerships with Suppliers

  • In April 2020, around 3/4 of sourcing executives reported cancelling orders during the first wave of the pandemic. Some brands didn’t just cancel their orders—they refused to pay for completed goods, jeopardizing the livelihoods of millions of garment workers and exposing the need for stronger partnerships between brands and suppliers
  • Last year, 35% of fashion executives said they expected resilience and partnerships in the supply chain to be a top theme in 2021
  • 73% of fashion executives expect that companies will increasingly enter closer partnerships with suppliers and reduce transactional supplier relationships in 2021

 

RFID Technology Makes a Comeback

As ecommerce grew during the pandemic, so too did the need for increased supply chain visibility. The use of Radio-Frequency Identification (RFID) tags is becoming more widely adopted with the growth of ecommerce due to improvements in labor efficiency as well as traceability at the pallet or unit level.

  • Over the last decade, costs of RFID tags have fallen by 80% while accuracy has doubled and range has quintupled; prices have dropped by nearly 50%
  • In-store RFID benefits: 99% inventory accuracy, 60%-80% stockout reduction, 2%-12% sales lift and 10% shrink reduction

 

Don’t Wait to Prepare for Peak Season

If this year’s peak season is anything like last year’s, the time to prepare is now—especially if fashion makes the comeback industry experts are predicting.

Import volumes are projected to remain at record or near-record levels as retailers replenish and build their inventories to prepare for the back-to-school and holiday shopping seasons. According to FreightWaves, as retailers continue building up their inventories, they will face even higher shipping premiums—and potentially caps on their imports due to a trans-Pacific shipping network that has reached its limit. Retailers may also face delays due to port congestion heading into the summer-fall peak shipping season. Be sure to consult with your supply chain partner and build a plan to get your products in without racing against the clock or blowing your budget.

It’s also important to consider implementing a multicarrier solution. Retailers who had their volumes capped by major national carriers during last year’s “Shipageddon” were left scrambling to find another option, and a multicarrier solution can mitigate the risk of that happening again.

 

Packaging CTA

 

Visible is here to help you prepare. Whether you need customs brokerage support, facility space for your imports or a fulfillment solution that speeds up delivery to your customers, we’re here to help your business thrive—now and in the post-pandemic environment. Fill out our contact form or call 877.728.5328 to talk to an expert today.

 

Sources: McKinsey, RILA, Retail Dive, AAFA, BigCommerce, NRF, FreightWaves, Shopify, Business of Fashion, Digital Commerce 360, Narvar