Image credit: Mindful Chef
The internet has changed many aspects of our lives – from revolutionising communications to how we even order food. In recent months many food has been a case in point. Many food companies have entered the direct-to-consumer market, perhaps driven by the corona pandemic.The latest entrants include Beyond Meat and Impossible Foods. Only last week, Nestlé announced it had taken a majority stake in UK recipe box service Mindful Chef for an undisclosed fee.
Nestlé has clearly looked at the stats before this purchase as its portfolio of direct-to-consumer businesses now includes coffee brands Nespresso and Nescafé Dolce Gusto, as well as additions in the petcare side of the business.
A Nestlé statement on the Mindful Chef deal put its thinking into focus when it wrote, “Great tasting, healthy food is core to Nestlé’s food strategy as it looks to transform its portfolio to meet growing consumer demand in this area”.
Can other food companies afford to ignore this market segment? According to Spotify, selling direct is a good opportunity for manufacturers to fuel growth. You could even go further and say that companies are missing out if they don’t they don’t marry mastering e-commerce while providing quick delivery services.
Consumer expectations have shifted, generations of smartphone users understand what’s possible and want to buy food offline.
While I believe that many people will return to spending patterns from pre-corona times, direct-to-consumer is here to stay. According to GlobalData, direct-to-consumer platforms in the food industry will be complementary to existing channels, at least with the manufacturers who have the resources to make it effective.
Food and beverage brands will have to find a way to embrace this way of business and appeal to consumers as this trend continues to evolve. At the same time, brands will have to be able to maintain relationships with retailers and other partnerships.
A direct-to-consumer channel brings benefits such as a better response to fast-changing consumer needs, increased consumer loyalty and a more personalised experience for consumers.
But going direct to consumers means that brands can own that relationship. With those relationships comes all kinds of customer data that opens up new insights and opportunities.
The big challenge for companies going direct, however, will be educating those customers. Sure, people are forming new habits around e-commerce, but they are still shopping with established retailers. Companies will need to provide some kind of additional value for direct purchasing to incentivise consumers.
Now that more brands than ever are building out direct sales channels, we’ll have to see if sales follow.
Until the virtual part of shopping becomes a new normal, there’s life yet in the traditional shop at store experience. Brands needn’t lose sight of this as they innovate to move forward.
- Rodney Jack, editor, Food & Drink Technology.
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