Pivoting in a pandemic… and is Big Food set for a comeback?

By Elaine Watson contact

- Last updated on GMT

Coronavirus: Pivoting in a pandemic… and is Big Food set for a comeback?

Related tags: coronavirus, COVID-19

Businesses across the country are adapting with lightning speed to adjust business plans, and in some cases, change their business model overnight, in order to adapt and survive as large swathes of the population go into lockdown.

At Farmer’s Fridge​, a Chicago-based startup running a network of vending machines selling salads and other ultra-short shelf-life foods in high traffic locations, founder and CEO Luke Saunders moved with astonishing speed to adapt his business model, pivoting from a vending business to a meal delivery operation​ in Chicago and New York in a matter of days.

"We immediately recognized that demand was going to massively shift in our network, so we stepped back to ask ourselves how we could leverage our assets -- team, technology, supply chain, etc. -- to meet the new demand,” ​he told FoodNavigator-USA.

‘With millions of people suddenly working from home, delivery seemed the right strategic direction’

He added: “With millions of people suddenly working from home, delivery seemed the right strategic direction. In particular, we can provide healthy meals at a lower average price per meal than traditional delivery platforms, so we have a competitive advantage that is aligned with our mission, our customers, and our assets."

He added: “Our delivery program is successfully underway. We built a new site and have reached out to our email subscriber list, as well as promoted the site through our social media channels.”

Farmer's Fridge Delivery

SodaStream: ‘Incredible growth’

Other brands, meanwhile, have experienced sudden surging demand as rapidly changing consumer behavior favors their products or business models.  

sodastream range

SodaStream​ - which enables consumers to make their own beverages at home - is experiencing “incredible growth” ​as “people look for ways to easily access beverages without leaving their homes, focus on their health by staying hydrated, and looking for ways to have a little bit of fun with their families at home,” ​said US General Manager Bryan Welsh.

“SodaStream bubbles and flavors water in seconds and is an easy way to keep your home in stock. As a result we are seeing incredible growth over the last few weeks. We are seeing growth across the portfolio of sparkling water makers, accessories, and especially the C02 cylinders and flavors.” 

Rabobank: A comeback for Big Food?

For big packaged food companies, meanwhile, the boost many are seeing now could be partially sustained for those that have been renovating portfolios in recent years as consumption shifts from out of home to in-home, predicted Nick Fereday, executive director, food & consumer trends at Rabobank.

We have been told for years that big food companies have been listening to the needs of the changing consumer and they have responded by reformulating and improving quality. This should help them retain consumers they had previously lost or were shunning them.

“Most emerging brands have not lived through or have little experience of a recession and so some of their premium traits around mission statements, and so on might not fly when customers’ backs are against the wall.”

‘Private label always does well in a recession’

Private label is also likely to experience an uptick, he predicted: “Private label always does well in a recession and many retailers have been focusing on their private label offerings, upping their game. Private label is a lot lower in the US than in many other countries where retail is concentrated, so there is a lot of room to grow.”

kroger oatmilk
Nick Fereday, Rabobank: "Private label always does well in a recession and many retailers have been focusing on their private label offerings, upping their game..."

As for food startups, he said, “Given it will be even harder to get retailer’s attention during this time, it lends itself to companies looking more towards direct to consumer strategies and building up a brand via social media.”

SKU rationalization

In the short-term, however, supply chain management is the name of the game, he said, echoing comments​ from Ripple Foods co-founder Adam Lowry, who predicted that we might see a land grab at co-packing facilities as firms seek to ramp up production and build inventory, with smaller brands finding themselves lower down the pecking order.  

If CPGs and retailers are doing SKU rationalization to get volume through the system then this too will be bad news for small brands and second tier brands as they are going to be squeezed out and may not have the manufacturing flexibility to ramp up demand," ​said Fereday.

"But it’s positive new for big food CPGs and private label.”

Undercover Snacks: ‘Some retailers have temporarily shifted their deliveries to more essential items’

At Undercover Snacks​,  a startup manufacturing chocolate covered quinoa snacks at its own SQF-3 manufacturing facility in New Jersey, “Some retailers have temporarily shifted their deliveries to more essential items,” ​acknowledged founder and CEO Diana Levy.

‘Unprecedented growth’ in e-commerce  

undercover snacks
Undercover Snacks CEO: "Our e-commerce business – which has an even more favorable profit profile than the grocery channel for us - is experiencing unprecedented growth."

But she added: “We are shifting our focus to areas where we can mitigate the slowdown for us in the brick-and-mortar channel by accelerating our online and direct-to-consumer business. Our e-commerce business – which has an even more favorable profit profile than the grocery channel for us - is experiencing unprecedented growth.​  

“To capitalize on this trend, we have been offering discounts and promotions online and hope to reach new customers and expand sales with existing customers.”

‘Our sales calendar – which was completely full – is generally being rescheduled’

As for trying to win new accounts, said Levy, the current environment “is creating tremendous challenges for conducting business as usual – trade shows have been canceled, and our sales calendar – which was completely full – is generally being rescheduled, although it’s important to note that we do have some significant new customers that are still planning to launch Undercover in the near future​.”

‘As people spend time in self-quarantine, they increasingly seek ways to maintain variety and – yes – even fun in their lives’

And while no one knows what will happen, one thing we know from historical data is that snacks and treats are seens as affordable indulgences, even if other spending is reined in, she claimed.

“While the initial panic had consumers buying tremendous amounts of staples, as people spend time in self-quarantine, they increasingly seek ways to maintain variety and – yes – even fun in their lives.”

meatless farm co ads
Coronavirus and plant-based meat: 'We're targeting meat eaters so the texture has to be right, the flavor has to be right... but also the price'

At British brand The Meatless Farm Co​, which entered the US market last August via a nationwide rollout with Whole Foods and has since added 200+ more stores pulling from UNFI and KeHE, US general manager Kasper Vesth acknowledges that onboarding new brands is not a top priority for retailers right now.

"The masterplan was for us to open up distribution in February and have a big push at Expo West, and obviously that is going to take a little bit longer, but on the positive side, we have plenty of food in the warehouse and good distribution, and we've seen an increase in sales in stores where we are available."

Right now, the product is being shipped over from the UK frozen, to be sold in retailers' refrigerated cases, with plans to produce locally via US co-packers temporarily on ice while we see how long the lockdown continues, said Vesth.

While he sees interest in plant-based foods continuing during an economic downturn, offering competitive prices will be important, said Vesth, who said The Meatless Farm Co products had more protein, more fiber, and less saturated fat than rivals [although sodium levels are higher] and a 'playful' brand image that resonated with younger shoppers.

"If you think about it, it's weird that a pound of plant-based beef is more expensive than a pound of ​[regular] beef, when you think how many pounds of plants are needed to feed the cows, but that will change. The long-term goal has to be that plant-based meat is the same price as regular meat, or less.

"We're targeting meat eaters so the texture has to be right, the flavor has to be right... but also the price."

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