Friday, September 4, 2020

Five COVID-19 Behaviors with Long-Term Implications for the Food and Beverage Industry


It’s the end of summer, a strange summer at that. I don’t want to use the cliché “new norm,” but let’s face it, life and business is different. It will continue to be different, according to most food, beverage and consumer behavior analysts. 

As a new empty nester, I have time, lots of time. I am partaking in many webinars and identifying the similarities in messaging. From what I have heard—and observed—there are five COVID-19 (consumer and manufacturer) behaviors that will have long-term implications for the food and beverage industry. 

Here they are.

1. Product developers and manufacturers must rely on their suppliers and co-packers more than ever before. Without trade shows, it’s paramount that ingredient suppliers get new concepts in front of manufacturers in new ways. It might be a catalog of concepts, with or without an accompanying tasting box. It might be a webinar, again, with or without a tasting box. But I highly recommend that box, as eating and drinking is very much about the experience. 

The Chicagoland Food and Beverage Network (CFBN) brought that experience to its members on August 27, when the nonprofit hosted a virtual trends and innovations event, which included a tasting box delivered to your door. I wrote about the webinar for Food Business News. You can read more HERE.

The interactive live event was designed to not only assist food industry professionals in Chicago, but members around the country, even beyond U.S. borders. Attendees were able to dive into the trends and insights that are shaping food today with a look to where “taste” is headed in the future, according to Alan Reed, executive director of CFBN, the region’s food and beverage cluster organization. 

Kelley Fechner, director of customer solutions for Datassential, explored the nine trends taking place in foodservice, which while many have been put on hold by chefs, consumer interest in them continues. Food and beverage manufacturers have the opportunity to tap into them for retail innovations. Read more HERE.

At this time, innovators are tapping into co-packers more than ever before, as many have the knowledge and expertise to assist with everything from scaleup to ingredient sourcing to distribution.  They also have the processing, packaging and warehousing capacity, which means the innovator reduces capital investment. This assists with cash flow, freeing up dollars for marketing efforts to build brand awareness.

“Everybody’s projections are off right now,” says William Madden, co-founder and senior partner of Whole Brain Consulting, a company that assists innovators with finding and working with copackers, among other efforts. “Don’t be the brand who holds up the line. Holding up production long enough will put your relationship with the co-packer on the line. Being proactive in these uncertain times means having several backup suppliers for rare raw ingredients and buying more of those ingredients than needed if you can safely store it in a warehouse near your co-packer. Don’t be the brand who goes out of stock because you didn’t protect your supply chain.”

Co-packers are experts at what they do. This frees up man power and brain time, reducing energy spent on learning the process and troubleshooting common production issues. But don’t settle on a handshake. Get your agreement in writing. 

“It’s easy to dismiss formalities in this crazy time, especially if your brand is currently desperate to find a new supplier or co-packer,” says Brandon Hernandez, co-founder of Whole Brain Consulting. “It can be tempting to accept a handshake arrangement and hope for the best, but brand owners need a contract, even if it’s a one-pager, to ensure they don’t get burned.” 

At the very minimum, he says, be sure to get the following documented: What will happen if there’s a recall? Who is responsible if the co-packer makes a mistake?

“After getting that signed, a brand owner needs to start negotiating a real contract, one that accounts for pricing and sourcing of ingredients, run times and warehousing,” says Hernandez. 

Madden, adds, “In this industry, loyalty is power. You may think your relationship with your suppliers is purely business, and as such you can be as rude or polite as you want to be without affecting the relationship, but that’s not the case. In today’s market, when brands are jostling for position on the co-packer lines, those that have good relationships with the suppliers and co-packers are the ones who are getting first service.”

The competition is stiffer than ever, which means you need to be reliable; pay your bills on time; get the co-packer everything they need to run your product and do it professionally and pleasantly; and communicate politely and with gratitude, according to Madden. 

“These are crazy times, no doubt. The entire food industry is trying to figure out what’s going on, what will happen next and how to prepare so they aren’t left behind,” Madden says. “Take a deep breath, be proactive and enlist the help of experts on anything overwhelming that tempts you to bury your head in the sand.”

Before you begin interviewing potential co-packer partners, it is paramount that you identify those criteria that are non-negotiable and those where there’s flexibility. Keep in mind, co-packers vary in capabilities. Decide if you want to source ingredients and packaging, or if you prefer the co-packer do this for possible bulk pricing benefits. 

Remember, if you are prepared and do your homework, it will be easier to identify the best co-packer for your innovation. Your chance of success increases. 

Link HERE to a list of co-packers that specialize in milk and dairy foods manufacturing. 

For more information on having your company included in this list, email me HERE.

The Specialty Foods Association recently held a webinar on a working with co-packers during COVID-19. Link HERE to read a summary. 

2. Consumers are interested in functional foods, foods that do something for you. That was the message from Datassential, as well as The Hartman Group, which held a webinar this week on quantitative and qualitative research conducted in April 2020 on the topic of functional foods, beverages and supplements. The quantitative online survey of 2,367 U.S. adults (aged 18 to 74) was balanced for age within gender, race/ethnicity, income, presence of children under 18 in household and geographic division. The results confirm there’s lots of opportunity in functional foods. 

“It’s very clear that functionality as a concept was something consumers were already interested in prior to the pandemic,” says Laurie Demeritt, CEO of The Hartman Group. “What the situation has done, though, is really dial-up the volume on their needs, their aspirations and their behaviors in this space.” 

She says there’s a focus on personal empowerment for all generations; however, there are definite differences by generations, with Gen Z (18 to 22 years old) very interested in some targeted benefits that their functional foods offer. They also are more interested in getting these benefits through beverages rather than foods.

“There’s not very much we can control except for some of the things happening in our particular households,” says Demeritt. “How we spend our time, how we spend our money and what we put into our bodies, what we consume.”

It’s all about taking care of our health through functional products. 

3. There’s a new emphasis on resilience. Individual and collective well-being is severely at risk, underscoring the need for economic, physical and mental resilience, according to The Hartman Group. It’s all about proactive wellness. And while this includes functional foods, it also is about making smarter inherently nutritional food choices. 

Gen Z and Millennials are very interested in inherently functional foods and beverages. This is why if you are marketing to younger consumers, it is so critical to identify specific benefits. 

“Inherent functional foods and beverages do better than fortified functional foods and beverages,” says Demeritt. “That idea of inherent being something that is attributed to natural and less processed and fresher, and all of those other quality cues consumers are thinking about today.” 

With functional foods, energy tops the list of what consumers are looking for in their selection. 

“It’s to assure that the foods you eat are giving you long-lasting energy and not just giving you spikes in energy throughout the day,” says Demeritt. “This is typically aligned with protein.

“Immunity is popping,” she says. “It is number-six on the list, with over two-thirds (67%) of consumers either currently using or interested in using functional foods for immunity.” 

Immunity pops for beverages, as well. More than half (59%) of consumers are looking to beverages for boosting immunity. 

Younger consumers over-index for whey proteins. This makes it an exciting time for dairy proteins. 

I highly encourage you to watch this VIDEO about The Strong Inside. The time is right to get this messaging out, especially to younger consumers. 

Did you know that 68% of Americans want to consume more proteins and that protein content is influencing the purchasing decision of three in five global consumers? The Strong Inside campaign is dedicated to educating consumers about the importance of proteins from milk. Its goals are to drive consumers to consider/select proteins from milk, and increase the connection between health and proteins from milk with key target audiences

If you want to learn more, REGISTER for The Strong Inside webinar this Thursday, September 10th, at 2:00pm EST. (I will be listening.)

4. Reassessment of connectivity is another COVID-19 behavior with long-term implications, according to The Hartman Group. There is a new emphasis on the connectivity of communities in myriad ways. This includes concern about protecting essential workers, caring for vulnerable populations and supporting local businesses.

5. There’s also a surge in call for systematic change, which became very apparent this summer. The Hartman Group says there’s an erosion of consumer trust in both government and large corporations. This was already happening prior to COVID-19. The pandemic simply accelerated the need. Renewed interest in self-empowerment reflects a further questioning of these institutions’ ability to do right by consumers.  

Let’s do our part and do right by consumers!  

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