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Monitor: Blurred business models for changing natural products industry markets

The COVID-19 pandemic has upended not just what consumers buy, but also where they buy it, leading to the emergence of "hybrid channel" shopping and marketing mayhem (otherwise known as opportunity) for natural products brands.

Natural Products Industry Health Monitor, May 7, 2020
 
A global lockdown might make weeks feel like months and months weigh like centuries, but business allows little room for ennui. As distracting as the daily inundation of the negative can be, the time to look forward is always now. In this new weekly feature, Informa Health and Nutrition sister properties provide that right-now-right-here update. Look for the Industry Health Monitor each Friday to learn the major news that is affecting the natural products market immediately and the less obvious insights that could dictate where the market may struggle or thrive in the months to come.
 

Consider this: 'Meet customers where they are' takes on new meanings

The multi-market mantra has always been “meet customers where they are,” but on top of that mantra has come a new obligation to meet them in new places as lurching shifts brought about by quarantine and selective lockdowns have forced consumers to rethink every aspect of how they consume. Closed dining rooms forced restaurants to offer take-out and delivery options with “touchless” drive-up service, while grocery stores have turned into an excuse to get out of the house as shoppers either wait in line to get in or wait in their car for curbside pickup. Meanwhile, e-commerce marches further into day-to-day shopping reality as scrolling replaces browsing, which deprives just-launched brands of the opportunity to use sampling and appealing packaging to get noticed.

All of that means brands have to rethink their marketing. And then rethink it again the next day as conditions and restrictions shift and change back one state—even one county—at a time.

Societal disruption makes market disruption seem almost quaint. Take new variations on an emerging hybrid channel phenomenon in which restaurateurs dip into grocery service. It's been happening in small ways and has turned the previously trendy into the suddenly practical.

Call it revenge for what groceries stole from restaurants with foodservice and ready-to-eat meals, but restaurants are now selling groceries. We’d say customers can pick up pizza and a dozen eggs on the way home but, let’s face it, they’re already home. We hope customers remember to tip the pizza delivery jockey a little extra for delivering those eggs uncracked. Panera, Subway and even independents are allowing customers to grab some groceries with their footlongs. Some are even packaging up their special sauces into packaged goods, all ready to go. 

This presents an opportunity for brands to connect with customers as they concurrently face what could be viewed as new competition.

E-commerce outfits, meanwhile, will undoubtedly begin offering entire evenings on order—caviar, vodka and Dr. Zhivago on Blu-ray. Call it "date night on your doorstep."

Farmers are looking to leapfrog the farmers market model and go straight to consumers, especially with cafeterias closing. 

Because bulk bins have shut down, better-for-you snack brand Sun and Swell Foods is selling the ingredients from its finished product in bulk form. Patagonia Provisions has picked up other brands and added them to its online store, too.

The channels, they are a-changing.

While modifying messaging and marketing to meet the channels disruption du jour, it's important to remember which trends consumers were already following and were getting ready to follow next. This above chart highlights growing trends from Natural Products Expo West 2019 and what we expected to see at Expo West 2020.

To market in this channel-improv era will require not just meeting customers where they are, but perhaps meeting them with different services. Retailers are already streaming cooking shows online to go with those meal kits. Other brands are turning to “virtual sampling" to introduce retailers to their product promises. Brands could begin experimenting with entertainment-focused content to create branding experience as a nation of shut-ins turns its lonely eyes to screens (hint: there are legions of comedians rehearsing routines with no club to play in).

Whether and when things return to some forever-altered version of “normal,” all of this experimentation and improv can put new arrows into the quiver. Just as the old mantra says to meet the customers where they are, the new mandate says serve them in new ways and in all these new places.

 

Natural Products Industry Health Monitor indexes

Listen to this

Dear Sonny. The Organic Trade Association isn’t taking the pandemic lying down. The organization is standing up for farmers and brands, most recently with a letter to the secretary of agriculture that, among other things, insists that organic inspections not be curtailed. During this unprecedented time, it is critical that USDA support the organic marketplace by allowing accredited certifiers to utilize emergency remote inspections when on-site inspections are not possible. 

Growing communities. It’s not getting the headlines that the toilet paper rush garnered, but add tomato seeds to the list of unlikely sellouts. The leader of a community garden program says her organization is getting more calls than ever from people who are suddenly interested not just in gardening but in how “microfarms” can bring communities together. "COVID-19’s impact is that only a few weeks ago people thought what we are doing was just sort of a cool idea, and in the last three weeks alone we've seen lightbulbs go off for people as they realize that it's not just nice to have. It's a really important part of the food system," Boundless Landscapes co-founder Mara Rose said.

The fundamentals. Grocers are dealing with no small number of supply chain challenges and other system hiccups while customers line up with new and urgent needs, but the crisis has prompted many in the natural food channel to double down on their fundamental missions. Billy Griffin, owner and president of New Moon Natural Foods, says independent grocers can stay competive as big grocers up their delivery game and Amazon makes big promises. “We are a resilient and dedicated bunch and that is the key. So, you find ways to do what you’re doing better than they do. Give them price, but you beat them on something else they can’t do and find out what your community needs—quality, service, joy, community, fun—the intangibles.”

Enjoy this

Working from home holds many diet perils and people are already saying the 19 in COVID-19 stands for the number of pounds we will all gain during quarantine—an accelerated form of the “freshman 15.” What’s become clear is that “second breakfast” is not just for Hobbits anymore, but we found this Meal Plan for Middle Earth that spells out the Hobbit eating schedule. Who’s up for elevenses?

Methodology footnotes
 
Natural products consumer behavior indexes: New Hope Network NEXT Data and Insights survey of n~1,000 collected weekly since March 30, 2020, using a convenience sample directionally representative of U.S. consumers ages 18-65 weighted for age, region and gender. The 2017 survey data are based on responses of 1,000 people nationally representative of the U.S. adult population. Index tracks top two box responses. 
 
Natural products industry engagement index: New Hope Network NEXT Data and Insights tracks the core 50 trends defining and innovating the natural products industry. By filtering social and mass media listening through these top trends we are able to track weekly indexes of total mentions and Net sentiment of the hot topics representative of the industry from the beginning of March 2020 compared to average weekly scores of the last three months of 2019. This allows stakeholders a view into the pulse of the industry through online conversations.  
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