For the food and beverage industry, the pandemic has upended nearly everything. It forced diners away from restaurants, shuttered bars and left marketers grappling with how to launch, sell and promote products that often rely on in-person sampling. Yet, COVID-19 brought new opportunities for e-commerce and at-home dining. With vaccines more widely available, the industry is entering a new phase as millions of people return to routines that include in-person grocery shopping and dining out.
At Tuesday's Ad Age Next: Food & Beverage conference, marketing execs and analysts weighed in on how brands are getting ready for this next phase, while also sharing insights on some broader consumer trends shaping how food and beverages go to market.
Below, some takeaways from the virtual event.
E-commerce is still rising
Some of the trends consumers adopted during the pandemic are here to stay, like buying food and beverages via e-commerce. “It takes a certain period of time to begin a habit,” says Sarah Hofstetter, president of e-commerce analytics firm Profitero. “And once you begin a habit it’s easier to move into more of a routine.”
Hofstetter says her parents embraced online grocery shopping and says such shifts can be as surprising as they are fast. “If you told me a year ago my mother would be on Instacart and my dad is on Amazon Prime Fresh, I would say you’ve gotta be effing kidding me,” she says.
'Ghost kitchens' won't disappear
The dine-in restaurant industry is still dealing with cautious consumers. “You might still not go into a restaurant if you worry if they haven’t gotten vaccinated yet,” says restaurateur and chef Marcus Samuelsson. The apprehension has also created opportunities, with ghost kitchens becoming increasingly popular because of the pandemic.
The trick might be to roll with the changes, experts say. “The word of the year we heard a lot last year was pivot,” said David Henkes, senior principal at Technomic. “Those that didn’t were worse off.”
Community service pays off
Samuelsson says the effects of the pandemic go beyond just the restaurants. “It’s the whole supply chain. That local farmer, the farmer’s market. The dairy owners,” he says. “We need help for a very long time, and it’s going to impact mom and pop restaurants, and those are the heart and soul of our neighborhoods.”
He is part of a charitable effort called Newark Working Kitchens, which uses local restaurant kitchens and staffers to prepare free meals for those in need, supported by Amazon-owned Audible. “For all the years we’ve been open, 2020 was the most important to be open—to have partnerships with the community,” Samuelsson says.
No sampling, no problem
Brands launching just before or during the pandemic faced a unique problem: how to spread the word about the taste of a new food during social distancing. William Schumacher, founder and CEO of Uprising Foods—whose products include "superfood" keto chips and keto bread—says his company was considering how to promote its products without using samples and decided to re-orient around social media and making products desirable outside of the grocery store. Uprising created ads that could “communicate visually and in words the taste of our product.” And while it did mean the ads would not have as much longevity, Uprising made up for this problem by adapting its marketing month-by-month. Uprising is an e-commerce brand first, says Schumacher. “No sampling, no problem.”
Beverage lines blur
Technomic's Henkes says the rise of hard seltzer is an example of blending tastes—in this case a marriage between consumer preferences for lighter alcoholic drinks and the popularity of sparkling water. Beer marketers are seizing on the trend by offering more non-beer products, including Anheuser-Busch InBev, whose "beyond beer" division is putting out a plethora of new offerings including Cutwater Spirits canned cocktails and a new Travis Scott-backed hard seltzer brand called Cacti. Lana Buchanan, VP of marketing for the division, says the company recognized consumers were open to ready-to-drink cocktails but were saving them for special occasions. To broaden its consumer base for Cutwater, AB InBev ran advertising around “any moment that you can enjoy outdoors,” she says, even including deep-sea fishing.
Drew Palin, senior director of digital innovation and ecosystems at Gatorade, says the sports drink brand is embracing customization as a key differentiator. Gatorade recently launched a futuristic sweat patch that can monitor a user’s sweat composition (how salty it is) and sweat rate (how much one sweats). Its vision for the future is to use such data to personalize products. For instance, vending machines placed at gyms could read this information through RFID and dispense customized formulations.
Personalized products are a natural result of a fragmented marketplace where consumers may not be sticking with the same things. “Understanding that leads you inevitably to customization,” says Duane Stanford, editor and publisher of Beverage Digest.
For some brands, the scale and significance of the pandemic effectively leveled the playing field.“Instead of transferring through into college, it’s more like everyone’s starting as freshmen,” says Sean Ro, co-founder of Lunar Hard Seltzer, which is made with ingredients from Asia and launched in 2020. “It almost ended up being there were no rules—everyone was trying to navigate [the pandemic] and get acclimated."
"Ad Age Next: Retail" on April 20 will look at the trends that are shaping the industry, and what risks lie around the corner. Register here.