KANSAS CITY — Food and beverage industry sales growth in the United States was predictable at 2% to 3% pre-pandemic. Then, in 2020, sales growth shot up to 11% and manufacturers and marketers are now trying to understand how to keep that growth elevated. Several trends stand out as potential drivers, according to a panel of market researchers convened during the Institute of Food Technologists’ FIRST virtual conference on July 19.
“For food companies, this is tremendously exciting,” said Nicholas Fereday, executive director for Rabobank, New York. “It’s a tremendous opportunity for the food industry to stick to those gains and retain those gains. It’s theirs to lose.”
Joan Driggs, vice president of content and thought leadership for Information Resources Inc., Chicago, likened the impact of the pandemic to the Great Recession, which ran from December 2007 to June 2009.
“Whenever you have a major change, a major disruption in the market, it does spur innovation,” she said.
Discussing the Great Recession, Ms. Driggs noted that because many consumers could not afford to eat out as often it led to an increase in the development of restaurant quality prepared meals at retail.
“Because of the pandemic we have a whole new generation of cooks,” she said. “Air fryers really took off as did a lot of other small kitchen appliances. What about different products that enable those appliances?”
Mr. Fereday said the pandemic forced the trial of products many people may not have known about.
“The focus of food companies has been on shiny and new,” he said. “It turns out traditional products like cereal and canned soup are popular.”
This has led to a shift, Ms. Driggs said, of larger companies focusing on and innovating their fastest moving products.
Ken Harris, managing partner of Cadent Consulting Group, Wilton, Conn., said while food manufacturers are focusing on maintaining the elevated levels of growth, they are challenged by the fragility of current recovery.
“People thought during the pandemic the foodservice industry had seen the worst of it,” he said. “But coming out of the pandemic has been worse. A flat start to 40% growth is bound to be unsuccessful. The orders came flooding in and manufacturers were unprepared to handle the influx.
“The feeling is things are back, but people in the industry feel like one Suez Canal incident and we are in a different place. There’s a lot of fragility in the system.”
He emphasized members of the food and beverage supply chain need to take a longer view of the market and the supply chain.
But Mr. Fereday countered, “I still think some of this is wishful thinking. People’s attention changes very quickly. Right now there are issues on top of issues, and getting the attention of management to put in place long-term plans while they are responding to more immediate needs can be difficult.”
Macro trends the market researchers see growing include health and wellness, sustainability and the influence of social media.
Ms. Driggs recommended broadening the definition of health and wellness to reflect most consumers have more than six personal wellness goals like losing weight, getting better sleep, improving mental acuity, etc.
“People are looking for a lot of different things,” she said and recommended manufacturers “pull forward” their health claims and “bundle” them.
“A lot of companies let their (health and wellness claims) sit in the background,” she said.
Two sustainability-related trends identified included food waste and freshwater scarcity. Mr. Hill said the industry can expect to hear more about protecting water resources.
“That is the issue of the 21st century,” he said.
Mr. Fereday said he was surprised by how sustainability did as an issue during the pandemic, particularly during the nationwide lockdowns. Ms. Driggs added that one reason why is being home all the time made many consumers confront how much waste they generate each day.
“It made people more aware,” she said.
Social media also was recognized as an entrenched part of the product discovery process by the panelists. Mr. Hill referenced Rap Snacks, a company producing snacks, beverages and ramen noodles that feature prominent rappers on the packaging.
“These are products being sold that have authenticity,” he said. “Rappers are fighting to get on the cover of the bag, and it’s all being done online.”
Ms. Driggs added that people not being in store as often during the pandemic upended product discovery. Product discovery has migrated across people’s preferred social media platforms.
“People are discovering brands and products on Tik Tok,” she said. “The whole shopping journey has changed.”