Consumers disrupting culture, opening doors to growth possibilities

In the last few years, we have witnessed a food and beverage industry that is undergoing fundamental disruption on many fronts, characterized by a flurry of activity. CPG manufacturers, retailers and restaurants are contributing equally to a surge of development that is disrupting and reshaping the landscape and suggesting new business implications for both now and the future.

Almost daily, headlines reflect an industry in the midst of expansion and innovation, consolidation and redefinition. Amazon buys Whole Foods Market, Albertsons acquires Plated, Coca-Cola acquires a U.K. coffee company, and don’t get us started on all the news surrounding plant-based food activity (e.g., Burger King plus Impossible Foods equals Impossible Whopper).

For those of you who know The Hartman Group even a little, you know then that we are laser-focused on contemporary consumer and food culture in the U.S. We leverage our unique intellectual capital and our analysts’ distinctive points of view to help you think about your businesses differently, all in the pursuit of finding growth opportunities for you. And any discussion of going for growth invariably becomes a conversation about innovation.

Innovation today is about rethinking how business gets done. It’s not just innovating new products and marketing, although those are key components. Innovation today requires a demand-centric point of view and a willingness to work outside or break existing organizational structures and partnerships to forge entirely new paths forward.

To illustrate this point, it may be helpful to consider the following quote we often turn to for a bit of inspiration on innovation:

“What if the only thing standing between where you are and where you have always believed you could be is the courage to let go of where you have already been?” ­ Toni Newman, “Innovation Catalyst”

Letting go is the key. This means to “let go” of existing beliefs about what you know and don’t know about consumers, categories, trends, channels and go-to-market strategies.

We live in a consumer-driven food culture. If it doesn’t exist, a consumer-entrepreneur will create it — with disruptive attributes and/or new business models. Amy’s Kitchen and Arctic Zero are examples of two companies that looked to their customers for potentially new avenues for growth — and found them because they responded to desires expressed by dissatisfied customers.

Amy’s Kitchen capitalizes on the story of why the company came to be: Andy and Rachel Berliner wanted quick and easy, organic vegetarian meals that tasted homemade. The company grew because consumers asked them to make more products, especially for those with food allergies/sensitivities.

Arctic Zero found (in line with The Hartman Group’s own health and wellness insights) that consumers are struggling with food cravings and the desire to eat healthy.

So here we are today standing upon the cusp of a new epoch in the world of food and beverage — born out of a culturally and technologically driven disruption and fueled by grassroots influences — that poses vast opportunities for growth among food and beverage titans.

Consumers Demanding More

Staying closely connected to consumer desires and needs is a priority in today’s demand-driven marketplace. The consumer-creator is a much more influential player in the industry than ever before, and if the industry is not meeting their expectations, consumers can circumvent existing structures and practices to satisfy their own desires and demands, given digital technologies and sharing economies. This is how many disruptive new brands have come to market.

We know that consumers are demanding more from the brands they buy today. Superior experiences inspire consumers to engage with food and beverage brands. Well-designed products and packaging, ingredients that are sourced with the highest standards around quality and ethics, innovative flavors and formats, experiences that fit with modern lives (on the go, heightened physical and cognitive performance demands, etc.) and eating patterns (alone, snacking) and brands with a purpose/mission resonate with contemporary consumers.

A Helpful Lens for Identifying Opportunities for Growth

Delivering growth in a challenged market must come from not solely making a commitment to “innovation” or “brand/product incubation” but also more holistically taking account of the entire go-to-market strategy through the lens of understanding the realities of today’s consumers.

It is important that companies and brands grow with new consumer targets. In the long term, that means Gen Z, but Boomers, Gen Xers and Millennials are all contenders now and potentially for the future. Understanding how these segments bring their unique histories and lifestyle concerns is essential. That said, in many cases a number of trends from convenience, fresh, less processed to health and wellness have relevance across segments. Having a deep understanding of those trends and their implications for product development may be even more essential.