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  1. Optimism is high among the specialty food supply chain, who weighed in in the recently released State of the Specialty Food Industry report, on what the future holds for specialty post-pandemic. Here is some of what they had to say about growth, values-based shopping, diversity and inclusion, and retail innovations. “That crystal ball after last year got even murkier. We’re excited because we’re leaning into the mission to grow, we’re adding another fulfillment center and actively expanding the network to serve our members. We see it as a huge year of growth. We view it as getting back on track to the incremental steady growth that we were had prior to the tailwind that we had in 2020. What a great year to be in food and what a great year to introduce people to new products and tell your stories and do great work with food.” -chief merchandising officer of a specialty ecommerce retailer “There was an underlying sort of tension in our society that led to this moment where people wanted to have an opportunity to express themselves and basically vote with their dollars. We’ve heard from customers ‘supporting brands that are doing good makes me feel good.’ There’s a massive opportunity here to transform the shopping experience itself—it’s not just buying the stuff that you need, but inducing an emotional experience that makes you feel good about what you’re doing—supporting great brands that are making a positive difference in this world.” -CEO, cofounder of a specialty ecommerce retailer “We should all be optimistic because specialty products and health and wellness products are what people need. Consumers are going to come out of the fog in the last year and realize that what they eat is important to their long-term health and the health of their families.” -CEO of a specialty chocolate brand “Pre-pandemic, we launched a financial assistance and visibility program for suppliers that are women-, minority-, LGBTQ-, veteran-, and disabled-owned. We’ve had so many more requests from retailers to show them more examples of suppliers like this. With the increase in interest, there will be more callouts on shelves and in campaigns around those companies.” -SVP, category management and growth solutions for a specialty distributor “I’m hearing from the manufacturer and vendor side that they are not fully ready with the pack sizes to support the foodservice business, which is very concerning. It’s not going to be an option for very long for foodservice to take retail packaging. On the flip side, are restaurants going to continue to have these slimmed down menus that drive down margins? That could very much change the shape of the industry for a long time. We expect retail food to remain strong in terms of being better than pre-COVID numbers. Within that, we expect specialty to continue growing at a much stronger rate than conventional food. I think the foodie culture has been exasperated, but its grown [differently] with everybody cooking at home and watching TV food shows.” -national sales director at a specialty importer and distributor “We predict innovation stations will pop up within retail to try to bring excitement back into stores, creating an area for new products to drive trial and awareness.” -SVP, category management and growth solutions for a specialty distributor “It will be interesting to see the evolution of how brick-and-mortar operations shift, whether curbside and deliveries become an even bigger focus. With ghost kitchens, it’s pretty phenomenal to think about what you can accomplish if you don’t have massive numbers of customers in your building every day.” -chief merchandising officer of a specialty ecommerce retailer You can learn more about market growth, fluctuations, and drivers, as well 10-year category tracking and forecasts by purchasing the State of the Specialty Food Industry, 2021-2022 Edition. And weigh in on what you think the new post-pandemic industry norms will be in our discussion in the Community Hub.
  2. COVID has impacted the specialty food industry for a full year. In the SFA’s newly released State of the Specialty Food Industry report, 2021-2022 edition, members of the supply chain were candid on the ways the pandemic has positively and negatively affected their businesses. Here is some of what they had to say about in person versus virtual meetings, the challenges of staying connected, and keeping on top of what’s moving as well as new product discovery: “In some ways things have gotten busier because, rather than getting to talk to everyone at a one-day show, I have to talk to all of those people individually. I don’t have to travel to see them anymore, but I still have to connect with them.” -regional sales manager at a specialty dairy brand “We’ve kept on a pretty good track [with promotions and retailer meetings], but we have a lot of retailer buyers that are still not seeing people face to face. We have some that I don’t believe are ever going to go back to face to face. I think they’re going to remain either in a virtual environment or they’re going to do some sort of controlled category management presentations with dedicated periods of time. Because it’s easier in the virtual environment to stay on schedule and on time. There’s been a lot of outsourcing, roles that used to be done at retailer X are now done by the main distributor for that retailer such as the actual physical entering of promotions, printing of tags, and making sure that the pricing is right.” -SVP, business development at a specialty food and beverage broker “Something that retail buyers have missed during COVID relates to the trends, and they’re asking, ‘What’s the next CBD, or the next plant-based category that’s going to explode?’ They’ve been able to survive with talking to their trusted brokers, advisors, distributors, and brands, but they still miss that experience of talking to new brands, especially those that need education. It’s hard to do that via Zoom.” -head of sales at a specialty dessert brand “Supply chain sourcing stabilized pretty quickly. We did not have the same experiences that a lot of box stores did, because of the diversity of who we buy from. We began leveraging our foodservice supply chain, which plummeted as restaurants and hotels closed. We had no problem taking 50-pound bags of flour and putting them in to 5–10-pound bags and selling them. Our guests appreciated the fact that they could get most of what they wanted. They might not have been the same brands or same sizes that they normally were used to, but they still had access to what they needed. We’ve got a long history of being restaurant-type operators and so we were able to be a little bit more nimble than the typical supermarket that’s super reliant on a particular SKU that fits in a particular slot that’s already entered in a system.” -founder, owner of a multi-store specialty food retailer and foodservice operator “For these younger brands, virtual meetings level the playing field, since you don’t have to fly somewhere, pay for hotel and dining expenses, etc. All of that makes it so much more affordable to pitch to retail accounts for these emerging brands, and I think that that is a welcome change. I don’t think the virtual pitch is going to go away, simply because it’s easier for the buyers and it’s more equitable for the brands.” -owner, founder of a specialty brand consultancy “For us it’s a matter of staying on top of what’s moving. We’re constantly rotating and moving things and that’s why our customers like coming in. We’re never going to have a store that’s more than 1,000 square feet, because it’s too big. [At big stores], it’s almost information overload. How do you discover new things if you’re overloaded by different products and brands? It’s a nice conversation that you have with your customers in this small format because you’re listening to them, but you’re also educating them more than ever.” -founder of a specialty c-store concept “It’s hard to get the same level of dialog with our retailers when we’re doing things on Zoom. It’s less personal and hard to make a connection. The food business is so much about the passion and enthusiasm of tasting it, and you either couldn’t send product to people or the companies had different rules on what they could receive. It would have been much harder if we were still a young company that needed to make new personal connections.” -CEO of a specialty chocolate brand “We launched a new and emerging brand program just before the pandemic hit, which turned out to be lucky because the demand bounced back so fast that we ended up onboarding more new suppliers in 2020 than ever before. We’ll do fewer in-person meetings going forward, which is causing us to think about how our offices are laid out, and our retailers are doing the same thing. We previously traveled to do category reviews with our retail partners, those are now done virtually. We’ll still go back to in-person meetings, just not as frequently.” -SVP, category management and growth solutions for a specialty distributor “I don’t plan to go back to my office much at all, and a lot of my staff is the same way. Retailers want the samples of food and to see the product, but they have also gotten accustomed to the succinctness of an online meeting. They have found they can be a lot more productive when there is less time taken up by the in-person discussions that go in many directions. We send a lot more samples, which tends to give us smaller opportunities with each client but ones that are more likely to succeed.” -national sales director at a specialty importer and distributor “All relationships are being maintained with buyers via Zoom, and the same with our vendor meetings. I’ll bet that is going to stick – not 100 percent because you still need that human interaction. But for a supplier especially, it’s a lot easier to do it virtually rather than get on a plane to visit our offices. For our partners, there aren’t any relationships that we’re walking away from. Our relationships strengthened because of the need to do these repeated meetings and discuss service levels. As far as large CPG vendors go, we had to work with them more than usual and it helped us work through those relationships that have been a challenge in the past.” -VP vendor relations at a specialty distributor You can learn more about market growth, fluctuations, and drivers, as well 10-year category tracking and forecasts by purchasing the State of the Specialty Food Industry, 2021-2022 Edition. And weigh in on what you think the new post-pandemic industry norms will be in our discussion in the Community Hub.
  3. The SFA’s newly released State of the Specialty Food Industry report, 2021-2022 edition, digs into a business environment still adjusting from COVID’s impact over the past year. A burgeoning ecommerce channel has been one of the shifts the industry has experienced and here, members of the supply chain share their opinions on its growth, challenges in discoverability for small or emerging brands, and the future. “For specialty brands, a lot of the ecommerce platforms for retailers are very not friendly to browsing, not nearly as much as old-school shopping trips where you’re walking through a store, and you say ‘I’ll try that.’ Retailers need to level the playing field a little bit for specialty because you need that browsing ability for specialty for somebody to stumble onto your [brand]. That’s my biggest concern right now for long-term growth for specialty.” -SVP, business development at a specialty food and beverage broker “When we added the online ordering platform that came along with DoorDash, it was like having an additional outlet to give people food. We just had the discussion this week where a store manager asked when we’re getting rid of curbside and our response was ‘probably never.’ It’s probably going to be an element of our service model going forward. This will allow us to curate those relationships with frequent customers and do special rewards for them.” -CEO of a specialty retail and foodservice group “Brands are discovered in a variety of ways and you have to be relevant in every way that your consumer would discover and buy your brand. And maybe online is a very saturated platform, it’s hard to compete as a small brand. I know for us online was pretty small [pre-COVID], and now it’s a huge chunk of our business. And [by] online I mean our own DTC, but also online retailers like Imperfect Foods, Fresh Direct, Good Eggs, and Amazon Fresh.” -head of sales at a specialty dessert brand “We saw a lot of emerging brands do more paid advertising themselves to location-specific audiences, driving traffic back to particular retail stores rather than driving traffic to their own websites. Especially brands in cold distribution since they simply don’t ship direct to consumer. They do paid ad spending, which you have to dial in, but once you get it, it’s relatively affordable, and there should be a positive return on investment. It’s win-win. The brand wins and the stores love it.” -owner, founder of a specialty brand consultancy “One of our biggest challenges has always been that people love sweets and they believe that something with low sugar can’t taste good. Demos and getting people to try the product for their first time has gone away, so we’ve been focusing more on how to engage with people digitally. The challenge is how to get taste cues across, so we’ve been using recipes a lot to help them understand what it will taste like. And we’re also starting to use coupons more than before.” -CEO of a specialty chocolate brand “Jet, Walmart, Amazon—basically all of the major retail platforms out there … bias the large incumbent players, which makes sense. That’s where the mass demand is, that’s where the dollars are. So, what does that mean for small and emerging brands out there? It’s really interesting to see great things that small brands are doing, truly innovating, and offering a lot more value to stand out versus the big incumbent players in the space.” -CEO, co-founder of a specialty e-commerce retailer “We launched in October 2020 and think the timing was ideal in many ways. Of course, with COVID forcing people to change their patterns, it unlocked some behaviors that were previously closed off. We’re pretty big believers that [ecommerce] is only going in one direction. This is not a trend. This is a permanent shift in consumer behavior that’s here to stay.” -CEO, co-founder of a specialty ecommerce retailer You can learn more about market growth, fluctuations, and drivers, as well 10-year category tracking and forecasts by purchasing the State of the Specialty Food Industry, 2021-2022 Edition. And weigh in on what you think the new post-pandemic industry norms will be in our discussion in the Community Hub.
  4. The specialty food supply chain shared opinions and observations on pandemic-influenced pricing strategies, consumer behavior around trading up and down, and private label. More insights can be found in the recently released State of the Specialty Food Industry report. “I was looking at [a big retailer account] today, and the condiment set. Based on the trends you’d think with condiments, cooking sauces, etc., that the retailers would go into specialty because of the cooking at home thing. And instead, they went really commodity, really warehouse, away from the distributor business, and put in a lot of restaurant brand name stuff. But then the same buyer, for pasta and pasta sauce, went more specialty. I can’t really understand why. Consumer behavior in general varied wildly by category. With pasta, it almost didn’t matter what brand. If it was on the shelf, people bought it. Pasta sauce in the $7.99 to $10.99 range did better than it ever does. People also traded up on coffee.” -SVP, business development at a specialty food and beverage broker “As far as private label, we’ve made the decision to stay committed to our makers and not compete directly against them. To support them and help amplify the greatness of their products, and their stories, and their voices, so in contrast to a lot of other players out there we don’t have a need or interest to get into private label.” -CEO, co-founder of a specialty ecommerce retailer “We have seen competition from private labels, especially in baking chocolate. But a good thing about a good private-label brand is that it can help by getting more exposure to a category. We had the opportunity to expand into a club store, but in the rest of retail we didn’t need to upsize any of our packaging. We got feedback from customers at the onset of COVID that they would like to stock up, but we knew it would take a while to develop that packaging, so we took a wait and see attitude and didn’t jump into it.” -CEO of a specialty chocolate brand “In the beginning of the pandemic, retailers didn’t put promotional tags on the shelf because they had to simply keep up with the increased volume. Then we saw a huge bounce back in promotions. While a lot of consumers lost their jobs, I haven’t seen an overall change in pricing strategy. It was more around the promotional piece of it – EDLP (everyday low price) versus a hi-lo strategy, a shift in when they promote, or the depth of the deal.” -SVP, category management and growth solutions for a specialty distributor You can learn more about market growth, fluctuations, and drivers, as well 10-year category tracking and forecasts by purchasing the State of the Specialty Food Industry, 2021-2022 Edition. And weigh in on what you think the new post-pandemic industry norms will be in our discussion in the Community Hub.
  5. Plant-based, brain health, stress support, and foods from BIPOC (Black, Indigenous, People of Color) makers are among the trends seen by the supply chain in this year’s State of the Specialty Food Industry report. Here is some of what they had to say: “Some of the macro trends that we’ve seen with COVID are going to last. Indulgence, taste exploration, restaurant quality, and having our type of item for retailers is a way to [show consumers that they] have the option for [them] to stay here. For a meeting I had with Target [recently], indulgence was something that they focused on. In August it was SKU rationalization, now it’s ‘we need to play on indulgence. Better-for-you is important but we do want to cater more to like something that’s delicious and indulgent.’” -head of sales at a specialty dessert brand “Probably six months to a year ago it was all about why categories, brands, and products are relevant during COVID, and now it’s [buyers saying] ‘show that its relevant with COVID, but show that it’s relevant beyond COVID, and if you need to adjust the product, be ready to address it.’ It’s kind of the horizon of the next 12-18 months, what those big categories and trends are, and how they’re going to surface, and how are customers going to adjust back to eating more away from home. Are they going to change their eating habits? How sensitive or not will they be to promotions, because obviously you didn’t have to promote a lot [during the height of COVID] and products would sell.” -head of sales for a specialty food maker “I’m hyper-focused on trying to figure out how the workplace, the office space, is going to function. We had a large B2B business selling to local firms, feeding their staff and that evaporated overnight. All of our events business evaporated overnight also, and I firmly believe that the quality of our food is going to get us back into the door when people step back in. I’m just trying to think of ways to improve upon the experience and improve upon the flexibility that they have with the experience, and the safety around it, so that we’re top of mind for them when they do return.” -founder, owner of a multi-store specialty food retailer and foodservice operator “What I’m seeing through sales is a lot of interest in exploring flavors, and in plant-based. We do a lot of cheese in the northwest U.S., and our marketing person in that area recently held up a plant-based cheese and said, ‘I can’t believe I’m saying this, but it tastes great.’ Also, the impact of cooking at home is evident in our numbers. The traditional categories of baking and grains and all related scratch cooking areas.” -VP vendor relations at a specialty distributor “When people are excited about doing the actual cooking, then they get excited about the quality of the ingredient that they’re using, and that’s the defining factor. That’s what is differentiating the products that we sell. Why go to [our stores] and not go to [big supermarket chains]? These are the reasons. We tell people how to actually make a Roman pizza dough and talk them through it. And those people can take those experiences home and share them with their children, the rest of their family, and that’s what people want.” -owner of a multi-store specialty food retailer “The majority of [my clients] who are BIPOC (Black, Indigenous, People of Color) founders are so proud and really leaning into it, rightfully so, and seeing good responses from retailers. We’re seeing more of a call for diversity from all across the supply chain. They’re essentially sending BIPOC and female founders to the front. And then the other side is that I have founders who are hesitant to do that. They’re in more conservative areas of the country … and they question if the retailers and consumers would respond to [BIPOC founders announcing themselves.]” -owner, founder of a specialty brand consultancy “Natural and specialty products will continue to gain share because of trends related to active lifestyle, stress support, brain health, gut health, and how to use food as medicine. Conventional retailers will continue to offer up space for those products. Brain health and stress support will emerge as strong categories, including things that feed into those like mood, sleep, and immunity. Other strong drivers are healthy fats, alternative sweeteners, and the Keto lifestyle—if not Keto specifically then the three factors behind it: low carb, low sugar, and healthy fat. While family meals will continue, I do think people are getting worn out from scratch cooking, so baking sales have subsided slightly. Frozen or simmer sauces that can make at-home cooking easier will also continue to do well.” -SVP, category management and growth solutions for a specialty distributor “Private labels are continually being added by the retailers whom we work with and that volume continues to grow. I’m a big believer in private labels, both conventional and specialty food.” -VP vendor relations at a specialty distributor “Meat, produce, and baking items all continue to trend year-over-year at a higher rate than we would have normally expected. We’ve also seen an increase in our prepared foods. Not in our full-service deli prepared foods, but all the packaged foods, probably for the convenience of being grab-and-go versus having to wait, and maybe just the allure of it being packaged and being safer than something that’s on a platter and open.” -founder, owner of a multi-store specialty food retailer and foodservice operator You can learn more about market growth, fluctuations, and drivers, as well 10-year category tracking and forecasts by purchasing the State of the Specialty Food Industry, 2021-2022 Edition. And weigh in on what you think are the pandemic-influenced consumer and food trends in our discussion in the Community Hub.
  6. From online shopping, to the reinvigoration of stalled categories, to in-store changes that may be here to stay, the specialty food supply chain offered insights into the pandemic’s influence on consumer behavior. Here is some of what they had to say, excerpted from the recently released State of the Specialty Food Industry report, 2021-2022 edition. “Home cooking trends that will stick include baking, pastas, grains, beans, and snacks. Online grocery shopping will continue growing because of the convenience factor of not having to spend an hour or three hours getting to and from the grocery store. And even if you are going to the store to get produce and dairy, you’ll supplement with online.” -chief merchandising officer of a specialty ecommerce retailer “All that difficulty that we saw during the initial impact had less to do with a trade-down mentality, or a size-up mentality and more to do with just ‘what can I get?’ So, we saw a lot of consumers just buying whatever they could find on the shelf, and thankfully our supply team did a lot of amazing work quickly changing procedures to be able to keep up largely with demand, which allowed us to be that sort of regular option on shelf for people to choose.” -regional sales manager at a specialty dairy brand “The one thing that changed drastically from the start of COVID was that people didn’t want any prepared foods. They didn’t want to eat anything that we touched. In the beginning, that was our one weak link. But they bought fruits and vegetables like crazy, which of course we had to put on the shelf. The prepared foods business has already come back very strongly. That business is now much bigger than it was originally because of the new customers that we’ve picked up.” -CEO of a specialty retail and foodservice outlet “Once you’re in the store there’s a relationship there, and that relationship is one where people have enough confidence and trust that they are willing to spend the time and energy in continuing to nurture it. That was the beautiful part of what happened this year.” -founder, owner of a multi-store specialty food retailer and foodservice operator “[Early on], people wanted more guidance on how to cook [meat] cuts that they weren’t familiar with that they might have experienced in a restaurant. We saw items like scallops increase in sales. We saw finer cuts of meat increasing in sales. Items that need a little bit more finesse. Caviar sales increased. People still wanted to experience those little pleasures that they would get when they would go out and then found ways to find that pleasure at home. It was cool to see how people adapted. They were still trying to find joy in the day-to-day.” -founder, owner of a multi-store specialty food retailer and foodservice operator “A lot of people are acting under the assumption that the world has changed permanently, but I’m more of the view that most people are going to be anxious to get back to life as it was. Yet, some of our businesses, like coffee shops, might not come back.” -CEO of a specialty retail and foodservice group “There were a couple of changes that we made back in September to some of the flow in the retail store. We took on an extra space to allow for curbside pickup and the addition of outside seating. Our whole mentality is ‘eat, shop, learn,’ so we have a bar in there where you can eat great foods. Our cheese and charcuterie selection, and the wines and beers are from small artisanal producers around the world, and we have to tell their stories. We’re highlighting special producers like that. People weren’t spending in the beginning to discover new products, but by September or October I think they were feeling like ‘we’re stuck in the house too long, and we should treat ourselves,’ and so the economy started to change a little bit in our retail.” -owner of a multi-store specialty food retailer “We made small changes to the retail flow of the new store because it’s about playing to the customers’ new behaviors; making it easier for them, making their experience still great, because shopping [at our stores] is an experience and that’s what we need to and want to deliver on. People don’t just come in and say, ‘Oh, I know that olive oil, let me buy it.’” -owner of a multi-store specialty food retailer “[Because of] the pandemic, we have such a mix of consumers now. We were the only store open during the [height of the] pandemic within our block radius for hot coffee. So now we’re getting the MTA bus drivers, were getting the incredible blue-collar workers, and the construction workers that were still working that didn’t have hot coffee. But [guests] are also discovering new things, and since we make sure we’re properly pricing things, they’re able to try different things. So, we’re curating based on this, too, thinking that average person wants to spend $5-7 or less.” -founder of a specialty c-store concept “The things you read about in the trend charts: its maximizing value, its comfort foods. Shockingly, though, it’s not hitting the high end [adversely] the way we thought it would. [Shoppers are] willing to spend on quality goods but they’re budgeting more, so when they do it, it might be an in-between treat or it’s really something special.” -national sales director at a specialty importer and distributor “We brought in essentials for guests. We wound up selling a whole lot more eggs, milk, butter, beans, and things like that. They’re back to cooking and they’re buying canned tomatoes, yeast, and flour. We used to sell a lot of it, and then we didn’t, and now everybody’s making pizza and bread at home, so we had to buy flour by the pallets, and we used to buy it by the cases. So, that’s the switch. We’re still selling a whole lot of those ingredients. Fresh meat and seafood is blowing up like crazy. Deli went wild. Sandwiches, bread, outrageous. So, we took on more local bread bakers.” -owner of a multi-store specialty food retailer You can learn more about market growth, fluctuations, and drivers, as well 10-year category tracking and forecasts by purchasing the State of the Specialty Food Industry, 2021-2022 Edition. And weigh in on what you think are the pandemic-influenced consumer trends in our discussion in the Community Hub.
  7. The SFA’s newly released State of the Specialty Food Industry report, 2021-2022 edition, digs into a business environment still adjusting to and recovering from the pandemic’s impact. Following are four insights and takeaways from this year’s research. 1. Center store rebirth. COVID recalibrated several grocery categories. Some are forecast to grow more than they would have otherwise, and some have new life after being stalled for years. A year of home cooking has led to consumers rediscovering the usefulness and necessity of a home pantry. While cooking-at-home habits will eventually strike a balance with dining out as more foodservice opens, at-home cooks are now more resourceful, willing to experiment, and enjoying (some of) what the pandemic forced them to learn. 2. Improving discovery. Online meetings have been solving an immediate need for retail buyers and makers, and this has proved to be a more efficient way of getting business done that will become a fixture going forward. However, buyers and makers acknowledge that it comes at the cost of hurting new product discovery. Combined with limited in-store sampling, fewer demos, and the decimation of foodservice, 2020 was a rough year for innovation discovery. This will be one of the key issues for the specialty industry in 2021 and beyond. 3. Specialty’s ecommerce visibility issue. Related to diminishing discovery, specialty is facing challenges with the growth of online shopping as it allows fewer opportunities for impulse buys. Industry data shows nearly two-thirds (62 percent) of consumers say they miss finding items not on their list when shopping online. In fact, impulse sales account for 20 percent of in-store purchases, meaning 2020 was likely a year of “safe bets” with essentials and known brands from a consumer purchase standpoint in ecommerce. Rising ecommerce retailers such as Thrive Market, Hive, and Good Eggs are addressing the visibility issue by working harder at showcasing specialty. 4. Channel shifting. Almost every online e-grocery market saw phenomenal growth in 2020, while drug stores gained new customers by adding grab-and-go and refrigerated aisles. Dollar stores continued pulling people from all other channels, and in 2021 are projected to account for 50 percent of all newly opened stores. Consumers shopped in stores for groceries that they may have rarely visited much in prior years. Most pronounced through spring and into summer of 2020 because shoppers were desperate to try to find everything from toilet paper to commodity foods, this channel shifting led them to discover that some of these channels and chains were good enough that they would visit again. Expect a behavioral shift to continue for the foreseeable future. You can learn more about market growth, fluctuations, and drivers, as well 10-year category tracking and forecasts by purchasing the State of the Specialty Food Industry, 2021-2022 Edition. And weigh in on what you think the new post-pandemic industry norms will be in our discussion in the Community Hub.
  8. COVID continues to impact the specialty food trade. Members of the supply chain spoke out in the SFA’s newly released State of the Specialty Food Industry report, 2021-2022 edition, to elaborate on what ways the is affecting their businesses. Here is some of what they had to say about channel evolution, price/value shifts, food and beverage trends, and a return to normalcy for buyer-maker relations: “One of the things that came up repeatedly was ‘how deep are your relationships?’, and those suppliers who had longstanding relationships with their co-packers, their distributors, and their retail partners were in a better situation. With COVID, everything went out the window. From the co-packer level, small brands were being pushed aside as bigger brands were doing larger production runs and needed all that time in the production facility. At distributors, a lot of smaller brands got overlooked, and wouldn’t get picked for the pallet. It was frustrating because [small] brands would find out that they were out-of-stock from either their consumers or from the store level [buyers], who’d say ‘Hey, we’re reordering every Tuesday and Thursday from [the distributor] and we’re not getting [your] product.’ These small brands [knew] the products were in the warehouse but not on the truck. Some brands who had a great relationship with a store and store buyer would pick up the phone or email them and [look into options to] ship direct, self-deliver, or circumvent distribution, but obviously you can only do that where you have the logistics to do it regionally.” -owner, founder of a specialty brand consultancy “In some ways, the execution of the supply chain is more important than the quality of the product right now … In an old environment, a brand manager would probably be expected to know that manufacturer X has a big promotion running at [a specific retailer]. Now, this is less of a priority than knowing whether or not manufacturer X has a long term out-of-stock on an imported item because the container is stuck at the port, or they can't get a container to ship it over [to the US].” -senior vice president, business development at a specialty food and beverage broker “We have strong relationships with our farmers, co-packers, and everyone right up to our website, and those relationships worked well. It was the ripple effect from seemingly random elements of product production, like bottle caps or plastic film being out.” -chief merchandising officer of a specialty e-commerce retailer “We saw a lot fewer retailers bring on new items, and that’s probably a long-term impact of this; retailers looking to do more sales with fewer SKUs.” -regional sales manager at a specialty dairy brand “Some retailers preemptively planned for a recession, and they went really commodity, really private label, high velocity, less margin. Other retailers leaned in [to specialty, knowing consumers] aren’t going to restaurants, and eating at home, which was great for business. It was just interesting to see the retailers’ reactions over time. But it's too early to tell, because consumption's been so high, who made the right decision.” -specialty food broker “One of the worst things that’s happened is [the loss of] those discovery moments when you walk into a store and those opportunities to meet a vendor or a producer or maker to hear their stories directly. Some companies are experimenting with pre-packaged samples, but COVID is going to have massive long-term effects on how new products launch, how people discover new products, how they take chances with new products.” -founder, owner of a multi-store specialty food retailer and foodservice operator “In some cases, we had to turn away new business, which is heartbreaking, but [we did so] to do right by the customers that we already have. We were able to work proactively … and had direct forward-looking conversations with distributors and retailers where we could say ‘we can’t ship you this, but we have this instead.’” -regional sales manager at a specialty dairy brand “As an e-commerce business, we were trying to balance out a surge in new consumers with making sure that the people who have been loyal customers for several years were getting served. We had to have site hours that we allowed people to shop during the early months, as well as maximum order quantities to help manage that impact. In the end, the pandemic accelerated our business pretty dramatically.” -chief merchandising officer of a specialty e-commerce retailer “Because we manufacture everything in house, we do have a little bit more flexibility. We’re not [challenged] because of a co-packer who is at their limits. That would have been a nightmare.” -head of sales at a specialty dessert brand You can learn more about market growth, fluctuations, and drivers, as well 10-year category tracking and forecasts by purchasing the State of the Specialty Food Industry, 2021-2022 Edition. And weigh in on what you think the new post-pandemic industry norms will be in our discussion in the Community Hub.
  9. Denise Purcell

    5 New Norms

    Where do we go from here is the question on everyone’s mind as we start to approach the post-pandemic new normal. That same question is integrated into this year’s newly released SFA State of the Specialty Food Industry research. As you can see in report highlights we published in the summer issue of Specialty Food magazine, food sales fared well in a year of stay-at-home mandates. Brick-and-mortar and online grocery sales boomed across the board, more than offsetting foodservice’s unfortunate plummet as restaurants limited seated dining or closed for good. How these new norms will shake out is still unknown but based on the research and supply chain interviews, here are five shifts we expect to stay in place. Cooking-at-home habits. The research indicates that most people who gave extra home food preparation a serious try in the past year have created some lasting habits, at least for a few specific tasks. Whether it’s baking bread, making from-scratch soup, or using the slow cooker, home cooking will remain prevalent to a higher degree than it would have without the pandemic. New foodservice business models. Supply chain interviews show foodservice operators are planning new business models that include commissaries or partnerships, outdoor dining, new recipes/menus, and delivery as part of the segment’s comeback. Increased takeout and delivery, especially, will remain elevated, in part because older adults and those with young children may be slower to return to on-premise dining and partly because many consumers now more regularly incorporate some takeout dishes into their at-home meals. Better ecommerce opportunities for small brands. Several industry conversations centered around improved ways to discover new products online. Retailers and makers are both looking for ways to showcase on-trend and new products in a way that is enjoyable for shoppers to browse, including reliable ways to surface local and regional products, and increase visibility for brands that support social, economic, and environmental justice causes, areas of high consumer interest. Virtual sales meetings between retail buyers and makers. From what we have learned, both parties believe that the new style of meeting will be the norm going forward, though some in-person meetings will resume. Makers tell us that meetings are more efficient, and while there is less time to talk about multiple SKUs, there is a higher success with a maker’s leading SKU. Tighter SKU management. The one thing that major retailers want from specialty manufacturers is “your very best product.” Total SKUs have been reduced as the pandemic uncovered supply chain weakness, and 2020 results suggest that scaling back on SKUs did not harm sales. Most of the reductions have come from “me too” brands and under-performing line extensions. The new challenge for makers is how to successfully get to market all their SKUs that aren’t number-one. If a brand’s best product does well, a targeted new product that attracts many of the same users might get strong consideration. You can learn more about market growth, fluctuations, and drivers, as well 10-year category tracking and forecasts by purchasing the State of the Specialty Food Industry, 2021-2022 Edition. And weigh in on what you think the new post-pandemic industry norms will be in our discussion in the Community Hub.
  10. “People who are saying restaurants are dead and everyone is going to cook at home are giving consumers way too much credit.” I second that quote from a member of our SFA Trendspotter Panel, Jonathan Deutsch of Drexel University, speaking at our recent webinar, Trends from Specialty Food LIVE!, our digital marketplace event held in January. Pre-COVID, aka the Before Time, dining out socially was a way of life for many—from grabbing quick fast-casual lunches to dinners out a few times a week. And after a year of hunkering down at home, many are eager to emerge from their bubbles, ready to enjoy. As vaccine rollouts increase and indoor dining restrictions become more lenient, recovery predictions are rolling in. A recent story in Bloomberg, Bars and Restaurants Are About to Go on an Epic Post-COVID Hiring Spree, quoted foodservice operators across the U.S. heartened by a noticeable uptick in business as weather warmed up, and the pandemic showed signs of receding. According to Labor Department data, bars and restaurants added almost 300,000 jobs across the country in February, the first substantial increase in four months. High hopes aside, the pace of foodservice’s return is still dependent on a number of variables influencing consumers’ comfort levels. In our spring issue of Specialty Food magazine, we look at Foodservice in Crisis: How the Channel Can Recover. There is no question that foodservice has been devastated. More than 110,000 restaurants—about 17 percent of all locations—are gone, according to National Restaurant Association data. Some segments, especially small immigrant-owned mom-and-pop restaurants, were severely hit, as you can read about in the issue. Hope to prevent more closings has come in the form of the recently passed Restaurant Revitalization Fund, part of President Biden’s American Rescue Plan. But clearly, recovery is going to take years for the channel to return to pre-COVID sales. While in survival mode this past year, some of the new avenues of business operators turned to are expected to continue as key to recovery, including: • Ghost kitchens. Consumers have gotten used to and comfortable with restaurant quality food at home and it will remain part of their dining habits even as they begin to branch outside more. With ghost or dark kitchens, restaurants can operate for delivery without incurring high overhead costs. • Off-premise dining. Delivery was rising even before the pandemic and is certainly part of the norm now. Many operators plan to make this a priority and ongoing investment. • Specialty retail products. Several restaurants and food trucks began packaging their proprietary sauces and condiments, making them available for sale via e-commerce or in brick-and-mortar retail. You can read more about the trends and changes that are going to help pave foodservice’s way back in the spring issue. Like many things post-COVID, all signs point to a comeback shaped by a new normal.
  11. The Specialty Food Association is continuing its weekly webinar series to support and educate the specialty food industry. Webinars are held live with recorded versions available for download in the specialtyfood.com Learning Center. Webinars are free for SFA members and $19 for non-members. Here are highlights from some of the latest webinars: In The CARES Act’s ERTC: Retaining More Cash for Employers Who Retain Their Employees, Jeffrey Tate, tax partner at Arent Fox LLP, discussed the Employee Retention Tax Credit, which provides fully refundable tax credits to employers affected by COVID-19 business disruptions. Jeff walked through the ins and outs of the ERTC, addressing how SFA members can obtain immediate and substantial benefits from the ERTC, enabling them to maintain focus on delivering innovative products in the specialty food space. In Co-Packing Agreements: The Key Elements, attorney Jeni Lamb Rogers discussed the basic elements of a co-packing agreement, including confidentiality, intellectual property, setting expectations, food safety, and recall responsibility. Peter Guyer, CEO and founder, and Bob Jones, vice president of international sales, at Athena Marketing spoke about Increasing Your Sales in High-Growth Export Markets in this sponsored webinar. The speakers went over what you need to do to become export-ready, how to use data to make smarter export decisions, the importance of website localization and social media, and much more. Visit the Learning Center to download these and many other webinars in the series.
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