New Ways to Connect: Necessity Breeds CPG Innovation During the Pandemic
Prior to the pandemic, innovation in food and beverage CPG was disruptive in terms of new products created to meet consumer demand for food and beverage experiences that pushed the frontier of established brands and products. Such innovation and disruption were generally strongest among emerging brands that catered to a changing food culture seeking a variety of distinctions that signal high quality.
Then COVID-19 descended and innovation seemed to grind to a halt as emerging brands were forced to the sidelines and legacy brands prioritized production of existing brands to meet spikes in demand.
We analyzed this topic in both a podcast and a newsletter article during the start of the pandemic and noted:
"We believe the essential question at this time is how companies in this moment strike the right balance between brass tacks essential operations on one hand and innovation on the other while recognizing that the latter is still an essential part of the long-term health of packaged goods firms. And so while the answer's going to be different for every food and beverage company, our bottom line is that innovation must continue during this time, particularly among packaged foods firms and that it would be a huge mistake to totally shift all focus away from innovation."
As if in answer, food and beverage producers are responding to the necessities of the pandemic and finding new ways to connect with consumers in order to innovate. A recent FoodDive.com article describes how some large and small CPG brands are thinking outside of the box. One highlight:
"Alpha Foods CEO, Cole Orobetz, said the maker of plant-based burritos, nuggets, burgers and other frozen meal products stepped up its engagement with consumers through social media and instant messaging — a practice it has since made a permanent part of its business strategy as it continues to grow. Alpha also has hosted cooking recipe demonstrations online and conducted live Instagram takeovers where employees cook some of their favorite meals using the company's products while fans of the brand share creations they have come up with in their own kitchens. The interaction allows Alpha to collect ideas it could use in future product innovation. Orobetz said flavor suggestions and additional plant-based chicken formats are being considered as new offerings as soon as this year."
The article is encouraging since at its heart innovation remains an essential component of ongoing success in the food industry. Innovations help companies maintain a long-term, strategic vision for their portfolios and allow brands that have experienced a sales boost during the pandemic to continue to grow as consumers adapt to a new normal. As consumers increasingly connect their own wellness to the well-being of the planet, they will seek out not only innovative products linking to wellness and culinary discovery but also innovation that takes into account sustainability-related factors like social justice, worker and animal welfare and soil health.
With distribution avenues for small, emerging brands currently suppressed (e.g., cancellations of trade shows, access to capital derailed and retail distribution challenged), large brands should acknowledge the importance of and opportunities for maintaining research, development and innovation as key strategic pillars even during the disruptions that COVID-19 has imposed.
Additional Hartman Group Thinking:
Podcast: Should Food and Beverage Product Innovation Hit the Pause Button During the COVID-19 Crisis?