The coronavirus pandemic has had a profound impact on the growth trajectories of direct-to-consumer (DTC) brands in food and beverage. But as vaccines begin to take effect, and restrictions ease throughout 2021, what can we expect from the industry for the remainder of the year?
Most DTC categories had a good pandemic, and food & beverage was no exception. With competition from restaurants and bars stripped away, delivery services like wine boxes and meal kits won big.
Subscriptions on the rise
Subscriptions are another area where DTC food & beverage have made waves during the pandemic. CBD brand Equilibria say demand for their subscription-based offerings shot up 100% in March 2020, while Grounds & Hounds Coffee Co also saw an uptick with monthly subscribers growing 35% when quarantine took hold.
Expect to see growth in this space continue - as many as 75% of online food & beverage players are likely to offer subscriptions by 2023.
Healthy people, healthy planet
Pandemic aside, increased interest in sustainability and healthy living are heavily impacting both food & beverage. Vegan delivery service All Plants is just one example of a food player that has ridden this particular wave.
Within beverage, oat milk is the fastest growing mini-category, with two-thirds of Gen Z and millennial consumers having tried a vegan alternative to dairy. Carbon neutral oat milk brand Minor Figures are among those leading the way in the demand for plant-based, sustainable and planet-friendly drinks.
Increasing concern around single-use plastic is also a big issue for DTC drinks brands. While consumers have been more forgiving of plastic-heavy takeaways during lockdown, many recognise it’s not sustainable long-term. Brands with eco-credentials are best placed to serve customers with environmental concerns in future.
Another key trend is the increased desire to lead healthier lifestyles - reflected in the explosion of low or no ABV drinks available on the market.
Some 57% of adults say they would now consider drinking a low or no alcohol beverage on a night out - leading craft beer brand BrewDog to launch the ‘world’s first alcohol-free bar’ in 2020. DTC brands that can tap into these wider consumer priorities around sustainability and healthy living are best positioned to win in 2021.
Despite the success of the DTC model, retail players have also had their say. With many consumers stuck at home last year, supermarkets have enjoyed record online grocery sales - jumping by as much as 10% in 2020.
Sarah Looss of gaming platform Twitch said such advertisers had ‘followed customers online’ during last year’s crisis, causing ad spend on digital media to grow by more than 7% in 2020. The easing of restrictions is unlikely to stem the flow either, with dollar spend on online acquisition expected to grow by 22% by the end of this year.
Questions also remain around whether the DTC model, which often provides food at a higher price point than supermarket competitors, can continue to be successful post pandemic.
As Ayisha Koyenikan, Global Food & Drink Analyst at Mintel says:
“While consumers are interested in the format, recipe and meal kits are sold at a huge premium price. It is unappealing to lower-income households and, as we face the most severe recession in nearly a century, subscription services will have to offer more than basic convenience and shift the perception of value to retain newly acquired customers.”
So, will the boom in subscription and delivery services be short-lived? There are other factors at play here: the desire to consume healthy and environmentally friendly alternatives - demand which DTC can help serve. And while the challenge of legacy retail is a significant one, food & beverage brands remain in a strong position ahead of the second half of 2021.
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Thumbnail image courtesy of Minor Figures.