Health, sustainability and experience are the three things consumers value for their food.
“We have an ongoing tracker of 16 trends, but then this year COVID happened and this upset the whole order,” said Mike Lee, co-founder and co-CEO of Alpha Food Labs.
“Now we’re a few months away from the initial reactions, one thing we saw highlighted was the cracks in the food system,” Lee said during the virtual Dairy Experience Forum organized by Midwest Dairy. “Those are opportunities to fix the food system so it’s stronger once we get back to a post-pandemic world.”
Lee highlighted several key signals that are emerging for the food industry.
“Some of these things have been going on already and the pandemic may have accelerated their progress,” Lee said.
“The tension has always been there between hedonism and altruism, but it drastically shifted towards hedonism right after COVID happened and people returned to comfort food,” he said.
“Purchases of products like Campbell’s soup went up 59%, Prego pasta sauce up 52% and Pepperidge Farm goldfish crackers up 23%,” he said. “Pre-COVID, a lot of those legacy brands were losing footing to younger brands, but once the uncertainty of COVID hit, everyone flew to something that was familiar.”
Generally speaking, consumers are interested in sustainability.
“The data is not so clear because when you ask people what drives their food choices, the top reasons are taste, cost, nutrition, quality and freshness, but sustainability is missing,” Lee said.
“If you don’t have food security or you don’t have access to safety and shelter, it’s really hard to think about the experience or sustainability of your food,” he said.
“For so long in the U.S., by and large we were fairly secure in fundamental needs, so we had the luxury to think about things such as sustainability,” he said. “Plastic straws were a huge deal pre-COVID, but this virus is leading to a pandemic of plastic pollution.”
People are looking to food as medicine and the main way to control their health, Lee said.
“They are jaded about the medical industry, and as a result, they’re looking at things that have functional benefits,” he said.
In 2018, $247 billion worth of products were sold as functional or fortified, Lee said.
“That is something that gives you a benefit outside of the basic nutrition or calories of the food,” he said.
The role of healthy eating and a strong immune system is compounded with COVID-19.
“A lot of problems like high blood pressure, high cholesterol and diabetes can be cured with a better diet,” Lee said.
The impact of the pandemic which resulted in a huge increase in unemployment has re-centered people’s values, Lee said.
“Dan Giusti was the head chef at the No. 1 restaurant in the world — Noma in Denmark,” he said. “He decided that he needed to teach school lunch cafeteria workers how to cook from scratch and do it affordably, so he founded a non-profit that is focused on training schools to cook from scratch.”
The pandemic has triggered the refocusing of where the industry is putting its innovative energy.
“High tech should exist, but low tech needs to exist in a similar way,” Lee said. “We need to start redistributing the focus of innovation, talent and energy, so we’re also making things that are innovative for a more accessible audience.”
COVID-19 has accelerated the reinvention of restaurants.
“Estimates I hear are that 30% to 40% of restaurants especially in urban areas will never return,” Lee said.
“What happened overnight was restaurants moved from a service model to requiring a three-legged stool of how they need to operate in the future,” he said. “They will need some element of service, some product they can sell and some sort of offsite whether it is delivery or takeout.”
The virus has negatively impacted one of the key reasons people go out restaurants which is the atmosphere, Lee said.
“When you’re without atmosphere you really have to deliver the results,” he said. “I think over time we’re going to have a reinvestment in the quality of restaurants.”
Consumers are returning to local food.
“We saw an explosion of community-supported agriculture,” Lee said. “Local food is not about the distance — it’s trust and people want transparency, so this is an opportunity for proper story telling.”
Online grocery is slated to grow 40% in 2020, Lee said.
“Whatever you thought the trajectory was for online grocery, it is coming five years sooner because people want the safety and comfort of getting things delivered,” he said.
Companies don’t spend enough time talking to consumers in a structured way, Lee said.
“We need to try to identify behaviors as they are emerging and this can be done in so many different ways like focus groups,” he said. “Don’t undersell the small conversations you have because food is sold one bite at a time.”
With the pandemic and a more digital world, Lee said, the way companies find attention is going to be more competitive.
“You are now competing against a sea of media and it’s going to get very crowded,” Lee said.
“We all can make a similar product, but it is what makes you stand out and what your value system is because we have a value-driven consumer now,” he said. “We have to be more sophisticated in telling our story and make it unique because the demo in the grocery store is not coming back anytime soon.”
The consolidated food industry really caused problems as COVID-19 became an issue across the country with meat plants closing and dairy plants at over capacity.
“About 75% of the food in the world comes from 12 plants and five animal species,” Lee said. “We have traded biodiversity for maximum efficiency in a handful of crops and products.”