COVID-19's Impact On The State Of The Specialty Food Industry
COVID-19's impact on the industry is a critical component in this year's research. Here are seven top takeaways on the influence it is having on sales channels, the supply chain, and specific categories.
1. Retailers are re-strengthening their value. Despite massive growth in online grocery ordering, brick-and-mortar retailers are more important in their communities than ever. “What’s coming up is just how, maybe even without retailers [initially] recognizing it, they’re an essential service for their community. That’s really coming to the forefront,” said a retail services manager for a natural/specialty retailer cooperative. During the height of stay-at-home orders, in addition to selling some retailers took the opportunity to create virtual events or classes to keep their shoppers engaged and connected.
2. A resurgence of cooking and baking at home. Instances of cooking at home during the pandemic were obviously way up and some of these behaviors will stick, especially in a recession. As consumers either teach themselves how to cook or look for creative options and recipes, the specialty food industry is in a good position to offer solutions. Baking will likely see an especially large and continued surge through the fall and winter months of 2020-2021, says Mintel. “There’s no active dry yeast out there right now. Five-pound bags of flour are flying off the shelves. Maybe not going into summer, but after summer it’s going to be a bigger baking season,” said a co-owner of a 27-year-old independent natural/specialty food retailer.
3. Value shopping. Though specialty food consumers are typically more affluent than non-specialty food consumers, Mintel expects that a sizable percentage of SFCs will prioritize value more than they have previously because of the pandemic. They’ll continue to seek out specialty products, but favor those that are a better value, and/or are offered in larger sizes (such as at Costco). They’ll also seek out premium, specialty private labels.
4. Diminished innovation. The word essential is being applied to most aspects of the supply chain. Manufacturers are assessing their SKUs and eliminating low-selling products in favor of their top sellers. Retailers and distributors are optimizing their sets and only reordering essential products. The efficiencies and cost cutting will result in diminished innovation through the remainder of 2020 and into 2021. That said, most natural/ethical claims are going to remain relevant to consumers—and retailers have recognized the need to keep innovation on shelves—so it will continue, albeit at a reduced pace.
5. Snacking soars. Snacking has become a much more common behavior among all consumers (specialty food and non) as they stay at home more frequently, not eat out of the home, and grow tired of from-scratch meal preparation. Some industry stats show 53 percent of consumers say they’re eating more snack food than ever, upping their intake of snacks they’d deem healthy and unhealthy. Continued social distancing keeping people at home more than usual will likely keep snack sales up.
6. Plant-based benefits. For the most part, the plant-based food movement hasn’t been adversely impacted by COVID-19. Many brands saw sales increase as dairy products like milk and animal proteins were out-of-stock at times during the panic buying surge in March. Consumers bought plant-based milk in greater frequency, and shelf-stable products especially surged. Shoppers will likely continue to consume even more plant-based products in 2021, and the pandemic has catapulted this market.
7. Better-for-you product demand. Health is of growing importance to consumers and they’ll increasingly seek better-for-you options, especially functional products that offer immunity boosting ingredients.
SFA members can purchase the State of the Specialty Food Industry Full Report + 10-Year Category Tracking and Forecasts separately or as a package.