‘In some cases, retailers have simply canceled the meetings and not rescheduled them as phone calls’

COVID-19 in focus: Mayhem in stores, instore demos plummet, retailer meetings canceled, online sales surge

By Elaine Watson contact

- Last updated on GMT

The bakery department at Trader Joe's, Santa Barbara, early Friday evening (Picture: Elaine Watson)
The bakery department at Trader Joe's, Santa Barbara, early Friday evening (Picture: Elaine Watson)

Related tags: COVID-19, coronavirus

Coronavirus is creating significant challenges and opportunities for the food and beverage industry, with panic buying prompting mayhem in stores and a surge in online sales, while instore demo companies have seen business fall off a cliff and smaller brands in particular are suffering from canceled retailer meetings and events.

At UNFI - one of several food and beverage firms to participate in a Sunday afternoon discussion convened by the White House to discuss COVID-19 - CEO Steve Spinner told analysts​ it’s too early to say how COVID-19 will impact the industry long-term, although in the short-term firms are reporting:

  • Mayhem and empty shelves in stores (see pics below) prompting limits on purchases​ of key items including vitamins, meal replacements, boxed cereal, milk, juice and soup and reduced hours so stores can sanitize and restock shelves
  • The closure of bars and restaurants for eat-in services in several states. Read data from Open Table HERE​.
  • A sharp uptick in online grocery shopping and food delivery/collection  
  • Canceled retailer meetings and business travel
  • Several retailers have discontinued instore demos until further notice
  • A drop-off in sales at full-service and midscale/family and casual dining restaurants, but continued growth in QSR chains driven by breakfast offerings (read the NPD Group data HERE​) although this is changing by the day
  • Disruption in the sourcing of select ingredients from overseas
  • Price gouging of high-demand items
  • An increase in purchases of some health and wellness-focused products
  • Canceled trade shows and other events (click here ​for a list of canceled or delayed events)

Onboarding of new and emerging brands is grinding to a halt

New and emerging brands, meanwhile, reported challenging conditions as retailers have canceled meetings and dropped instore demos, while trade shows (where they meet retailers and promote brands to the media) have been canceled or postponed, and events with more than 50 people (often used as places for sampling and promotion) have been canceled or severely restricted.

Onboarding of new and emerging brands is grinding to a halt, Dr. James Richardson at consultant Premium Growth Solutions told FoodNavigator-USA.

"If the current social distancing policies continue for more than a couple of months - which is not ruled out yet  - this will end up being a disastrous year to rely on distribution scale up for growth or to try to launch in retail at all.

"Such a situation would lead to a generalized culling of unstable early stage companies and of those highly negative EBITDA brands sustaining themselves on regular capital influxes. Whether a one month or nine-month disruption, those brands selling eight figures and above AND who have a strong repeat purchase consumer base and strong gross profits will be the survivors.

"The reality is that consumers in these kinds of social situations do not engage in speculative brand trial, unless it's on an extreme deal basis. Early stage brand growth relies on adventurous trial of new trademarks as a critical oxygen for growth."

2020-03-16 08_10_51-Media Alert - Giant Food Answers Customer Questions.docx  -  Protected View - Wo

"We have made the decision to pause ordering capabilities on Giant Pickup, due to inconsistent levels of supply by store, by day. As soon as we are confident that we can again provide an exceptional Pickup service, we will restart the program. Giant Delivers, which is fulfilled at our local distribution center, is still available to our customers, although delivery availability will fluctuate due to the high demand."

Giant Food customer announcement, March 14

trader-joes-3-13-2020
The fresh pizza department at Trader Joe's Santa Barbara on Friday evening (Picture: Elaine Watson)
meat-trader-joes-3-13-2020
The fresh meat department at Trader Joe's Santa Barbara on Friday evening (Picture: Elaine Watson)
peapod tweet

Poppilu founder: ‘If we can’t get in front of retailers, we have zero chance to grow our businesses during this time’

Melanie Kahn – founder of functional lemonade brand Poppilu, which has just launched a new lower sugar products for kids​ – told FoodNavigator-USA: “For us, the biggest challenge is not only canceled tradeshows but also canceled retailer meetings.

“For any start up, getting new distribution is critical, and if we can’t get in front of retailers, we have zero chance to grow our businesses during this time and that may literally push the distribution gains into next year. For small brands, the face-to-face interactions are critical to telling our story, particularly if we don’t have name brand recognition like some of the start up’s that are already on fire.

‘In some cases, retailers have simply canceled the meetings and not rescheduled them as phone calls’

POPPILU founder Melanie
Melanie Kahn: ‘In some cases, retailers have simply canceled the meetings and not rescheduled them as phone calls’

She added: “In some cases, retailers have simply canceled the meetings and not rescheduled them as phone calls. In other cases, retailers are saying the only new items they will now look at for the time being are those that are absolutely critical.

“So we definitely have our work cut out for us and hope this pandemic passes quickly so we can stay on track for our growth this year. After all, if we don’t show growth, it will be harder to raise investment dollars as well, so that’s another consideration.”

As for instore demos, which several retailers have temporarily put a stop to, she said: “We have a big program planned at Costco this summer, but I’m a little worried that if we’re not going to be able to demo, it may not make sense to have the program at all.  And that would be a real shame to walk away from such an amazing opportunity otherwise.”

'We are working overtime to pivot our initial launch strategy and execution'

Colter Gerrard, national account manager at Casper's Ice Cream in Utah, said the cancelation of trade shows - key opportunities to meet retailers and create a buzz around new products - was devastating for small brands.

"We are now faced with redirecting frozen product that was en route to Expo West, and get it shipped elsewhere before it goes bad. We are also trying to recuperate costs from the booth as well as find alternative ways to ensure our new products, strategically planned months in advance to launch this week, are seen and consumed. These are all costs we were not initially expecting, in addition to the costs we will not recuperate. Internally, we are working overtime to pivot our initial launch strategy and execution."

We've been completely sold out in some stores’

Mark Samuel, founder and CEO at protein-fueled snack brand IWON Organics​, said he had witnessed a sharp rise in sales as coronavirus changed shopping habits, meanwhile: “We were already growing, already creating month over month success, but this takes it to another level. We've been completely sold out in some stores.”

But he added: “I personally would prefer we normalize, get our country healthy, both physically and emotionally. The latter creates economic stability, which is far more important than any business (even ours) seeing a benefit from this. I'm about people first, the business is secondary.”

INST0RE-TESTING-GettyImages-Noel-Hendrickson
Multiple retailers have discontinued vendor sampling programs until further notice (Picture: Gettyimages/Noel-Hendrickson)

Instore demos and sampling: Demos will return because they work, but ‘when the dust settles, food safety will be top of mind’

As for instore demos, which are a key tool for many emerging brands to encourage trial and raise awareness, multiple retailers have discontinued them until further notice, although on Friday firms providing such services told FoodNavigator-USA that some retailers were still allowing ‘factory sealed’ product samples to be distributed in stores.

Jesse DeAgustin, CEO at EDS Strategy​, which specializes in store product demonstrations of natural and organic foods with retailers from Wegmans and ShopRite to Central Markets and Sprouts and had a record month in February 2020, said he hoped the one silver lining to emerge from COVID-19 would be a new emphasis on food safety and staff training for instore demos, “something those 1099 / W9 demo ‘agencies’ don’t focus on.

 “Unlike a lot of other demo companies, we’re not using independent contractors; we’re one of the only W2 demo companies in the country and we’re raising the bar for the industry.

no-sampling-trader-joes-3-13-2020

“When the dust settles, food safety will be top of mind for these vendors and they are not going to want to work with a demo company that is hiring contractors off facebook. They act like employers but they are not employers. Our staff are food safety trained, they have a three-step interview process, and they learn about the brands they are representing through online custom training.”

He added: “We see ourselves as an extension of the client sales team and if the demo is done properly, you see an immediate uplift but also a sustained lift.”

Demos are the most effective way to drive trial and build lifelong customers

Matthew Kubick, ​founder and president at instore demo firm Local Demo Service​, ​said some clients had switched to doing talking demos or handing out coupons rather than food samples, but said that like DeAgustin, he didn’t think that COVID-19 would spell the end of instore demos, but would prompt a change in approach and a renewed emphasis on food safety.  

“I think the vast majority of stores are going to want us to come back in. I’ve seen countless products get into stores and the discontinue rate is usually well over 50%, and demos are the most effective way to drive trial and build lifelong customers, which is critical if you want to stay on shelf when the category review comes up.

If you’re a new brand and you’re on a shelf with 40,000 other items, people are creatures of habit, so you need someone to get in front of people, stop them and wake them up and say this is something you need to try.”

Karishma Brahmbhatt, national account director at Sonas Marketing, ​which handles samples for everything from instore demos to trade exhibitions,​ added: “Our business had been consistently growing before the coronavirus.”

Organic Oat Beverage - Thrive Market

"We are experiencing much higher than average sales. We have been working diligently on all sides of the business to keep products in stock and serve our members."

Jeremiah McElwee, Thrive Market

The National Grocers Association​ is urging members to: 

  • Communicate with customers the steps your business is taking to protect against COVID-19
  • Educate employees and customers on CDC-recommended hygiene procedures and social distancing actions
  • Institute additional mandatory cleaning or sanitizing schedules and directions around stores
  • Increase or add hand sanitizing stations around your stores for customers and employees
  • Update and communicate your sick leave and paid-time-off policies to employees 
  • Encourage employees with flu-like symptoms to stay home
  • Identify hard-to-cover positions and implement cross-training to prepare for coverage issues
  • Assign employees to regularly sanitize shopping carts and other high-traffic or high-touch areas
  • Institute purchasing limits on high demand items  
  • Stay in communication with local and state health officials and make sure your company is receiving regular updates
  • Consider changing regular store hours to encourage grocery shopping at lower traffic times
  • Expand remote shopping options if available (click-and-collect, delivery, pick-up, shop-by-phone)
  • Consider temporarily closing salad bars, buffets, and other ready-to-eat or sample offerings in stores
  • In areas where community spread of COVID-19 has been identified, consider requiring your checkout employees to wear gloves and ask customers to implement social distancing (six feet per person) while standing in checkout lines

Comfort eating?​ "In the week from March 8 to March 15, our recipe network increased by 400,000 users and received 10% more views... Needing some comfort among panic and daily updates, consumers are turning to hearty, homemade recipes like The Ultimate Chicken Noodle Soup, Classic Lasagna and Favorite Baked Spaghetti. We’re seeing more baked dessert recipes like Ultimate Chocolate Chip Cookies​, Italian Cream Cheese Cake​ and Easy Pineapple Upside-Down Cake​ and more baked entree recipes like Crustless Spinach Quiche​, Baked Garlic-Butter Salmon​ and Classic Stuffed Peppers​."

Chicory​ [NYC-based tech firm with a 'Get Ingredients' button now on 1,350+ recipe websites, including Taste of Home, Delish, and Betty Crocker. Leveraging its recipe network, Chicory partners with CPG brands such as General Mills and grocery retailers including Wakefern to serve hyper-relevant ads to consumers in the moments when they’re planning their grocery purchases].

Related news

Show more

Follow us

Products

View more

Webinars