I am a food nerd, it’s an undeniable fact. I’ve been in this business for over 25 years. I started in a management training program for a boutique chain of restaurants right out of undergraduate school. I’ve been a territory sales representative, a general sales manager, led a supply chain organization, and served as a senior executive. I even owned a food brokerage firm. I’ve called on just about every type of customer in just about every channel. Along the way, I’ve had great mentors, made plenty of mistakes, and had my fair share of successes.
I don’t claim to be an expert. I do, however, consider myself a lifelong student. I feel as if I’ve been the beneficiary of a holistic view of the industry. Today, I use that acquired knowledge to help emerging food and beverage brands grow.
As a food nerd, I spend a disproportionate amount of my time being asked, talking about and debating the future of food. I thought it would be fun to do my best impersonation of Nostradamus offering my vision for how the industry will change.
With all the recent news about Amazon’s acquisition of Whole Foods, the future of retail grocery has been top of mind. I am not sure Amazon’s purchase will change the trajectory, but it will, in my opinion, speed it up.
I see the size of the average traditional grocery store getting smaller. More of the space will be allocated to the perimeter with the center store shrinking. Expansion of the home meal replacement, ready to eat, meat, and produce offerings is likely. There will also be more focus on the shopping experience. In-store dining, cooking classes, and other foodie friendly activities will become more common.
The Food Marketing Institute and Nielsen researchers believe that online sales will make up 20% of grocery sales by 2025. I agree. I know, not much of a leap on this one. However, I think what is important is what that 20% will look like. I estimate that most of that market share will be comprised of the more commoditized categories and products. Items that we know, that are staples, are well positioned for online retail. Ordering your favorite can of soup, box of breakfast cereal, and Greek yogurt online will become commonplace.
Where I believe, online retail will under index is in perishables, center of the plate, and impulse. Consumers will continue to enjoy seeing, touching, and smelling their fruits, veggies, meats, and fish. I don’t believe online retail will be able to effectively recreate the pull of the check stand suggestive sell or the end cap.
Consumers are going to want to have a direct relationship with the brands that they buy. I see a direct-to-consumer relationship as being critical to the success of future emerging brands. Not only is it a great way to learn about your consumers and get direct feedback, it is likely to be a cost-effective route-to-market. This will be especially true for products that traditionally would have been center store. As the available center store real estate shrinks, new brands are unlikely to have the needed velocity to get on the shelf of traditional retailers.
The future is now for these channels. Traditional retail is hard and for many, it’s prohibitively expensive. Alternative channels offer young brands a pathway to its consumers at a much lower cost threshold than retail. Noncommercial outlets such as corporate feeders, campus dining, and sports venues offer great opportunities to target specific demographics. Non-traditional food retailers, such as Bass Pro Shop, REI, Williams Sonoma, can put a brand’s products in front of its ideal consumers. Outlets such as dollar, convenience, and drug stores can get products to consumers faster, cheaper and more effectively than large grocery retailers. I believe that most successful brand and product launches will come from a combination of alternative channels and direct-to-consumer.
Well, there you have it. My prognostications for the future of food. Now the best part of writing this is the conversations and ideas that it sparks. Please share with me your thoughts, predictions, and feel free to debate any of my assertions.