Food and Beverage Industry: What you need to know in 2021

The past decade has witnessed multiple transformations in consumer behavior and the way the retail market operates. The food and beverage industry, too, hasn’t remained unaffected. A study suggests that online orders will make up for 15-20% of the overall sales in the food and beverage market by 2025 – and that is ten times more than what it was in 2016.

From getting food delivered only from trusted restaurants to depending on online marketplaces for groceries, digital technology has revamped consumer’s perception towards online eCommerce stores in the f&b sector.

But, what brought about this change, and what does the future hold for online food and beverage stores? What are the significant challenges that a food startup may face in the f&b industry? We discuss all of this and a lot more in this detailed blog. Let’s begin by discussing the role that online stores play in the market – 

Online eCommerce stores: The future of food and beverage industry

Currently, there are 3.8 billion smartphone users globally, and their number is only expected to rise. As a result, the world is increasingly dependent on mobile devices and online eCommerce stores for their day-to-day needs.

In the past few years, people have adopted the use of online food delivery worldwide. The impact of digitization has already been spreading to the remaining sectors of the food and beverage industry. 

However, the Covid-19 pandemic accelerated the adoption and doubled the expected growth rate in just a few months.

In a virtual event held by The Food Business News, it was concluded that the use of online eCommerce stores in the f&b industry has leaped by five years since the pandemic hit us. It reasoned that only 19% of Americans purchased their groceries online till early 2020 but the number shot up to 40% by May 2020.

Instacart, a US-based platform for grocery delivery and pick-up, registered an increase of 8.32 million orders between February and April. In fact, nearly one-third of the American households ordered groceries online.

Similarly, the world of food delivery wasn’t left too far behind. Many restaurants avoided working with online food delivery apps earlier to protect their exclusivity. However, they had no other option but to resort to them to keep their business running.

Four major food delivery companies – DoorDash, UberEats, GrubHub, and Postmates – made a combined revenue of $5.5 billion from April till September 2020, double than the previous year. 

The customer’s belief and dependency on these apps have encouraged them to expand their functions on multiple fronts – a lot of them now offer services to pick up items and parcel gifts on behalf of their customers.

The sudden boom in the online food and beverage industry has been attributed to the pandemic; however, it is not likely to fizzle out once the worst is over. People will get back to eating out and buying groceries on their own, but the convenience of getting things delivered in your footstep will keep the online eCommerce stores flourishing.

The last 2 years have also resulted in some significant transformational trends in the food and beverage industry that are here to stay. Let’s find out what these are in our next segment-

Latest trends in the food and beverage industry

• Direct-to-consumer eCommerce (D2C): One of the biggest trends to emerge in the food and beverage industry has been direct-to-consumer eCommerce. Leading brands like PepsiCo launched D2C portals within a few months into the Coronavirus pandemic. 

The benefits of D2C eCommerce are immense for f&b brands. An exclusive D2C website helps them gather critical insights about consumer behavior, create a personalized user experience, and develop exciting offers like customized meal kits, meal-prep boxes, and bulk buying. Not only does D2C commerce benefit merchants, but it also enables consumers to remain in touch with their favorite brands even without offline outlets.

• Plant-based products: Gen Z cares a lot more about the climate than its previous counterparts. Thus, it is not surprising that they prefer organic, plant-based products. Right after the pandemic went into full swing during the first half of 2020, the sale of meat alternatives went up to 129%.

In fact, the global plant-based food market is expected to grow at 11.9% and reach $74.2 billion by 2027.

• Transparency: Similarly, today’s consumers are also conscious about what exactly goes into their food and carefully read the labels of the products they purchase.

• Your products are more likely to be accepted if you’ve built a brand that stands for trust and ethics. From now on, establishing a socially responsible brand image will be as important as inventing new flavors and mixes for your customers.
• Sustainability: To add to the previous point, modern consumers are equally conscious about associating with those f&b brands that prioritize sustainable practices. 

From replacing plastic packaging to sourcing organic raw materials, consumers are mindful of sustainability and authenticity at every stage of their buying journeys.

• Health and immunity-boosting products: Owing to the pandemic and its after-effects, people are now opting for healthier alternatives when it comes to their food. Research conducted by FMCG Gurus in 2020 indicated that 81% of consumers plan to eat healthier in 2021.

From replacing plastic packaging to sourcing organic raw materials, consumers are mindful of sustainability and authenticity at every stage of their buying journeys.

• Health and immunity-boosting products: Owing to the pandemic and its after-effects, people are now opting for healthier alternatives when it comes to their food.

In fact, the Innova consumer survey concluded that 6 out of 10 global consumers are looking for food and beverages that boost immunity.

Despite new trends and challenges, this is a booming era for online eCommerce stores in the f&b industry. The following section discusses the significant challenges that an online store in the industry may face and what businesses can do to overcome them.

Notable challenges of online food and beverage industry and their solutions

Supply chain management and inventory control: With an increase in the number of regulations, demand for shipping traceability, and poor communication with suppliers, inventory and supply chain management persists to be a significant roadblock for online merchants in the food and beverage industry. Adding to the mix is covid-19, which has resulted in unexpected lockdowns and delays in shipments.

Solution: Get your digital commerce solution integrated with an ERP, preferably with Microsoft Dynamic 365 Business Central. With an ERP in place, you can have a real-time view of inventory movement on a centralized platform, which, in turn, will simplify inventory control and help you in estimating, forecasting, and communicating the proper demand to your suppliers.

Pro tip: Due to the Covid-19 situation, you must always inform the customer about the expected delays in the order fulfillment process. 

You could do it with a message on the homepage, after the checkout process, or even through the order confirmation eMail!

Change in demand and consumption level: “What consumers want” – this question follows the retailers of the F & B industry every day, and its answer is constantly changing. From instant food to organic ingredients, the consumers keep on evolving with time.

During this worldwide crisis, the consumer now focuses on healthier options, as we have discussed earlier. For example, the sale of vitamin C supplements and related products skyrocketed after the pandemic. At the same time, the poultry sector has severely been hit due to the persistent fear among the consumers.

In such a scenario, the onus of tracking and providing for consumer demand falls on the online retailers.

Solution: In today’s times, it is essential to have a good CRM integrated with your online eCommerce store. In fact, you could always think about migrating to Magento (now known as Adobe Commerce) or choosing SFCC as a platform so that you could keep track of consumer insights with real-time analytics.

Acing multichannel commerce: Your potential customers navigate through multiple channels in the course of their buying journey. They may come across your product on a YouTube cooking channel or an influencer’s post on Instagram, read reviews on Google, and then place an order on your online f&b store. Thus, it is crucial to establish a presence on multiple channels.

Solutions: Do not limit your digital commerce strategy to a single website. Integrate social selling and leverage your Instagram, Facebook, and Pinterest following.

New-age platforms like Shopify Plus are powered with features that simplify multichannel commerce and help you manage every channel from a single admin panel in a unified manner.

Nurturing a strong sales funnel: With increasing competition, changing customer preferences, and shorter attention spans, it is essential to remain in touch with your customers. However, managing the logistics of an f&b business and taking care of the marketing operation is not an easy task. Often, food and beverage companies invest in new product lines without a proper marketing or lead generation strategy. As a result, their offerings, no matter how good they are, fail to reach the right market.

Solutions: Invest in marketing automation software like Adobe Marketo, which helps in reducing time spent on communication and campaign creations, enhancing lead generation, nurturing, and scoring strategies, and establishing a single source of truth for all your marketing efforts.

Final Take

Digital commerce has slowly but steadily made a place for itself in the last decade, and the pandemic has only reaffirmed its importance in the customer psyche. As the customers become more concerned about their health and wellness, eating the right food procured from suitable sources has become their priority.

Whether it’s creating a dine-in experience at home by getting gourmet delivered or learning to cook with ready-to-use ingredients, the lockdown has opened up various opportunities to experiment in the online food and beverage industry.

Suppose you are unsure about how to launch or optimize your online f&b eCommerce store. In that case, you could always collaborate with a digital consulting agency with a rich portfolio in food and beverage IT solutions. 

Until then, keep delivering happiness to your customers via delicious food and beverages!