“Innovation still exists in brands that are in market,” and retailers “are saying that they’re still willing to invest into innovation,” Jordan Gaspar, managing partner at AF Ventures, said recently during a roundtable discussion with leading food industry specialists organized by the PR agency JConnelly, Inc.
But, Gaspar added, “there will probably be a little bit of a lapse of new companies willing to launch, obviously, as a result of everything that’s going on in the more macroeconomic climate.”
In terms of new product development and launches, Gaspar said, recent calendars of companies in AF Ventures’ portfolio and at retailers appear to be holding.
“They are sometimes being pushed back by a month or two, but, for the most part, all planned innovation in our portfolio, which is all I can speak for, is going to be holding through this period,” she said, adding, “the retailers are accepting of those new products onto shelves. We are going to be seeing Whole Foods global launches. We are going to be seeing corporate launches, which is great news.”
Gaspar noted, however, that “review dates are a little bit more challenging,” and there likely will continue to be a “momentary period where we won’t be seeing presentations of innovation occur.”
But, she explained, “that’s just for lack of the ability of getting those products in retailer’s hands, as well as the reluctance of retailers to put new tags up that they hadn’t already committed to.”
“There’s still white space”
Once retailers and manufacturers are ready to unveil new products, Gaspar predicts that much of the innovation will be “an expansion of what were existing themes in 2020” before the outbreak. But, she added, the pandemic has revealed a few intriguing areas of white space.
Among the areas bolstered by the pandemic are functional and immunity-boosting products.
“There is a huge surge, increase into immunity focused products and that’s going to stay. We don’t see that going away. I think that if anything, there’ll be further increases as people focus on personal wellness,” she said.
Similarly, she said, “we’re seeing increases of adaptogen-focused consumption habits. People are looking for stress relievers that they can bring into their homes that are natural.”
Ingestible beauty also will get a boost from the health and wellness purchasing fueled by the pandemic, Gaspar said. “People are trying to figure out how to experience beauty from within and taking supplements to create a little bit more of that outcome that they’re losing from being able to have the personal care done outside the home,” she explained.
Wanted: more lunch, grab-and-stay & sustainable options
Beyond health and beauty, Gaspar said the pandemic has revealed a consumer need for lunch solutions, more “grab-and-stay” options and products in more sustainable packaging.
She explained that the pandemic is the first time that families are consuming lunch at home regularly. Often this meal is more rushed than dinner as many people are trying to work from home, provide childcare and balance other new obligations created by the pandemic.
An outgrowth of the continued need for convenience combined with stay-at-home orders is “we’re also seeing a decrease in grab-and-go” options that might have constituted lunch pre-COVID-19, and an increase in “grab-and-stay” solutions, Gaspar added.
She also cautioned that the packaging associated with single-serve products, and to a lesser extent all food and beverage, will become more of a turn-off for consumers during the pandemic.
“We are also going to be seeing coming out of this a bigger focus on sustainability as people are now seeing their trash patterns in real-time. People are in their homes and now we are aware from nine to five how much trash they’re creating,” she explained.
Investors are still reviewing options
Just as the pandemic has changed how and where innovation will appear, it has changed how investors are reviewing potential partnerships, Gaspar said.
“Investors are thinking through their commitments in the space and, obviously, being very conscientious and careful,” she said.
This will translate to longer lead times on deals as performing due diligence in the current environment is more challenging, she explained.
“Performance is something that people are going to be watching a little bit differently because it’s going to be very hard to trust the data [from the pandemic] since it’s so volatile right now. And understanding what sort of the lasting change in consumer adoption” will be is more difficult, she said.
Despite all these changes and a fair amount of lingering uncertainty, Gaspar said she is “cautiously optimistic about the packaged food sector and innovation and entrepreneurs. I think that there is going to be a resetting of the landscape on how to market these products, which is going to be very important right now, but for the most part, in the broader context of what’s happening, I do think that people are going to continue to gravitate towards those authentic brands that are offering ‘natural’s better for you’ solutions.”