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Food Business Africa March/April 2021
By Paul Ongeto
The pandemic has made significant changes in consumer consumption patterns that may change the industry forever
2020 was a year punctuated by the Covid-19 pandemic, disrupting life as we knew it while bringing major changes in how we produce, market, and eat our food. With the cases in China reaching their fever peak, consumers quicklyrealized they needed to be healthy to survive the pandemic.
This led to a rise in demand for healthy and functional food products. Many other trends arose as people tried to adjust to the new normal. At Food Business Africa, we go back in time, to bring you the top trends that shaped the food industry in 2020.
AT HOME CONSUMPTION BECOMES A NORM
Prior to the pandemic, at home consumption was diminishing in nearly every corner of the world. Many people shunned eating at home in favour of the convenience of fast-food restaurants and other food joints.
The pandemic, however, restricted people’s movement and restaurants were either closed or operating on a takeaway basis. Left with no option, the modern-day consumer found himself rediscovering the kitchen and the art of cooking. In UK - one of the country’s worst affected by Covid-19 - a research conducted by Consultancy UK found out that the likelihood of people making their own dinner had increased by almost 10% since the outbreak. In the United States, a study by Hunter revealed that more than half of Americans (56%) were cooking more and 46% were baking more during the pandemic.
In West and Central Africa, Nestlé took the opportunity to offer consumers cooking ideas, recipes, and tips to live a healthy life. Through its MAGGI brand, the company launched a dedicated African cuisine website providing over 40 African recipes along with nutrition information to help consumers adopt a healthier diet.
Having been a major trend in 2020, at home consumption is expected to become a new norm even in a world without the virus. A study by Bloomberg News and Morning Consult reported that almost a third of those surveyed said they plan to cook at home even more once the world returned to normalcy. The survey of 2,200 US consumers found that the intention to keep up with home cooking is especially strong among younger demographics. When asked about their post-pandemic plans, 43% of Gen Z respondents said they intend to cook at home more after the pandemic is over.
E-COMMERCE AND FOOD DELIVERY EXPANDS RAPIDLY
E-commerce and Food Delivery was on a growth trajectory even before the pandemic struck. Consumers used it alongside old fashioned physical store buying.
With covid-19, free movement became highly restricted, forcing a majority of consumers - even those who had never considered online purchases - to make online purchase at a higher frequency than before. This gave e-commerce and food delivery a new impetus for growth.
Six months into 2020, e-commerce in the United States had grown tangentially and was now accounting for 16% of the sales in the US, up from the 10% recorded in the last quarter of 2019, according to data from Smart Insights.
Food delivery also was experienced explosive growth during the pandemic. In the US for instance, the four largest food delivery companies raked in roughly US$5.5 billion in combined revenue from April through September, more than twice as much as their combined US$2.5 billion in revenue during the same period in 2019, according to MarketWatch.
NUTRITION, HEALTH, AND WELLNESS RECEIVES NEW ATTENTION FROM CONSUMERS
As the pandemic ravaged nations globally and claimed millions of lives, people became increasingly aware of the importance of diet to their general wellbeing.
Consequently, food perceived to impart healthy benefits to consumers became increasingly popular while those perceived as unhealthy lost favour among a majority of consumers. According to the Functional Food & Beverage 2020 Report from the Hartman Group, because of the pandemic, 31% of consumers are taking more supplements and 29% are consuming more functional foods/beverages. Another research by L.E.K Consulting found that 93% of consumers want to eat healthy at least some of the time, with 63% trying to eat healthy most or all of the time.
NOSTALGIA GIVES LIFELINE TO LEGACY FOOD BRANDS
Seeking a semblance of normalcy during a period of uncertainty, many consumers opted to revisit favourite joys from the past, including the favourite foods they enjoyed growing up.
Benefitting from this trend were large food businesses such as Campbell Soup Co., General Mills, and Kraft Heinz, whose legacy brands had experienced steady declines over the past years. These companies increased production as demand soared. Sales of Campbell's soup soared 59% from a year earlier, Prego pasta sauce increased 52%, and sales of Pepperidge Farm Goldfish crackers climbed nearly 23%.
Kraft Heinz, whose products were less popular with consumers pre-pandemic, reported increased demand for products like macaroni and cheese, resulting in a 6% increase in full year revenues. General Mills even went a step further to reintroduce Dunkaroos, the cookies-dippedinto-icing combo snack, to take advantage of the rising trend of consumers craving for nostalgic food brands.
ACCELERATED TRANSITION TO LOW ALCOHOL DRINKS
2020 saw an accelerated transition to low alcohol drinks as consumers, conscious of their health, avoided high alcoholic drinks.
Beer sales plummeted across the globe while low alcohol alternatives became increasingly popular. Hard seltzer, a drink first brewed in 2013, was one alternative that was readily embraced by drinkers seeking a healthier alternative to alcohol. For the period ending June 2020, hard seltzer sales had jumped to US$2.7 billion in the US, with the
segment accounting for over 10% of the total beer/FMB/ cider up from the previous year’s 4.4%.
As sales skyrocketed, companies from Molson Coors to Anheuser-Busch InBev SA launched their own hard seltzer brands in 2020 with the hope of tapping into a fastgrowing trend. Market research firms now project that the hard seltzer market is expected to grow at a CAGR of 16.7% between 2020 and 2027 and will be worth US$14.7 billion at the end of the forecast period. The hard seltzer wind continues to blow, with Africa not remaining behind. In South Africa, Distell and AB InBev launched their hard seltzer brands in early 2021 to take advantage of consumer interest in the category.
In response to demand for low alcohol drinks, beer manufacturers also refocused their attention to their zero alcohol brands. Heineken accelerated distribution of its Heineken 0.0 while Guinness launched its own zero alcohol variant to keep up with consumer demand. For Heineken, its 0.0 variant grew double digits for the 9 months ending September 2020, at a time when the company’s volume across all products declined by 12.3 per cent.
SUSTAINABILITY DRIVES INNOVATIONS IN FOOD PROCESSING AND PACKAGING
In 2020, most notable food innovations were around sustainability. Companies, hard pressed to meet their sustainability goals, developed new foods, processing technologies, and embraced new packaging to reduce their carbon footprint.
Nestle, for instance, expanded its regenerative agriculture practices to more countries across the globe in line with its 2050 net zero carbon goal, while Coca-Cola committed to collect and recycle a bottle or can for every bottle they sell by 2030.
Plant-based proteins as a sustainable alternative to animal protein also became popular with companies such as Impossible Foods, Nestle, and Beyond meat all launching plant-based alternatives to beef, chicken, and pork. Quick service restaurant McDonald also joined the plant-based movement with its McPlant, a plant-based alternative to its chicken and beef burgers. It was later followed by KFC, which also launched its own plant-based chicken substitute. In 2020, Singapore hit the headlines by becoming the first country to approve consumption of labgrown meat.
Sustainable packaging as a trend also increased in popularity in 2020. A number of new sustainable packages including paper-based bottles, aluminium cans, bioplastics, and recycled plastics gained prominence, with food manufactures opting to use them as alternatives to plastics. Paper based bottles were arguably the most notable innovation of 2020, with major beverage companies such as Diageo, Coca-Cola, and Pernod Ricard all unveiling prototypes for their flagship brands.
Demand for aluminium cans also, for the first time, exceeded supply as consumers preferred them as convenient and sustainable option to both glass and plastic. The demand for aluminium cans was so profound that Coca-Cola North America made a decision to distribute its Dasani water in aluminium cans as plastic was no longer popular.
EXPANSION OF PET FOOD MARKET
Another unprecedented trend in the food industry was the rapid expansion of the pet food market in 2020. This rapid expansion is attributed to an increase in pet ownership in 2020.
A report by Market Research revealed that in the U.S., 12% of adults with children under the age of 18 adopted pets because of the pandemic. Additionally, 10% of cat owners and 9% of dog owners in the United States said they adopted a pet because of COVID-19 implications. To address increased demand for pet food, Nestlé invested over US$1 billion in expansion of existing pet facilities and
in the build-up of new ones. As pet humanization took hold, quality ingredients also became of utmost importance. Manufacturers, in response, devoted their resources for the development of high protein and low carbohydrate diets. Some of the products were even specially formulated to clean teeth while being consumed.
2020 TRENDS TO STICK
2020 was indeed a year of radical behaviour change. From a spike in at home consumption to demand for nostalgic food products, consumers were on a new journey.
As we progress with 2021, analysts believe that some of the trends that gathered momentum in 2020 will slowly fade away. Demand for nostalgic brands is one of the trends projected to fall out of fashion as normalcy returns. In its financial report, Kraft Heinz, which was a major beneficiary of nostalgic brands, said it expected flat to positive organic net sales despite a strong performance in 2020.
Other trends which gathered pace in 2020 are definitely going to stick around for some time. Home cooking, demand for healthier products and increased development of sustainable foods and packages are some of the trends that are expected to continue staying with us in the future.
