Head start or headwind?
Over the C19 lockdown, New Zealand Food and Beverage businesses were deemed essential services, and most continued operating. Now, all New Zealand businesses can reopen, but many are blinking in the bright light of day – what is the legacy the Food and Beverage sector will take from this two month period of intense demand and necessity to operate differently?
Has C19 provided the catalyst for the sector to pivot to online, delivery, and direct channels, and will this prove to be beneficial in the years ahead?
The ‘lockdown’, both here and overseas, significantly altered consumer demand and patterns of behaviour, logistics and operating structures, and channels and partners for Food and Beverage businesses.
On issues of supply chains and logistics – the system didn’t grind to a halt, but it was, and still is, slow going to get products from A to B – whether that’s over the last mile in Auckland’s suburbs, or into Southern China. NZTE advised to stay in daily contact with supply chain and logistics partners – what affects them, affects you – getting ahead of any choke points or critical links early is key. From there, work through the feasibility of sourcing from elsewhere, supplying into a different channel, or utilising different freight methods.
Doing things the same way as you have always done probably won’t work in the ‘new abnormal’, but also finding what will work can be time consuming and energy sapping.
A recent ‘Stuff’ article illustrated how direct, online channels can leverage significant demand for New Zealand food and beverage producers through this period, potentially though not in the most obvious category. Changing consumer behaviours are driving substitution to ‘better for you’ products, from producers they can trust – Christchurch based Trickett’s Grove, a co-operative of more than 50 walnut growers, experienced a 500 per cent increase in their online sales since the start of lockdown…
And F&B is more than just walnuts.
Food and Beverage accounts for 46 per cent of New Zealand’s total goods and services exported – $71 billion of revenue in 2019, and 83,800 jobs beyond the farm, such as in processing and packaging. A 2019 Coriolis report stated the processed food sector has the potential to support an additional 10,000 jobs if more of the country’s primary produce was processed into value-added products.
What if New Zealand’s fabled ‘value-add’ strategy relied less on brand, processing and packaging, and focused more on the story of the producer, through a direct (online?) channel to the consumer?
FoodHQ CEO, Dr Abby Thompson, in a recent ‘Scoop’ article said that during the lockdown ‘there have been unprecedented examples of collaboration and innovation in the NZ Food Industry in order to overcome the obstacles of lockdown at home and abroad. A number of NZ producers and wholesalers have pivoted to selling direct-to-consumer, opening up consumer-facing online shops and social media channels, which offer delivery to customers’ homes directly.’
Outside of the anecdotes we have been hearing about, especially within Katabolt’s EXPORT RECOVERY PANEL Webinars (replay’s of any part of the series available here), reliable source data on this pivot to online in Food and Beverage is difficult to ascertain.
It may be too soon to establish the scale of the shift to direct and online channels by the sector’s producers, but there does exist good advice for producers looking to leverage off the changes in consumer buying behaviour:
US E-Commerce solutions provider SANA reported how B2B transactions are also switching online through the C19 crisis, and they predict that with this shift, as will be the case with their B2C counterparts, B2B customers won’t ditch the habit. Having an e-commerce store is not only important to meet the changing behaviour of existing and prospective B2B customers now, but will be essential post C19. Their tips to ensure an e-commerce platform meets the needs of B2B customers:
With the disruption, demand and trend impacts C19 has had on the Food and Beverage sector in New Zealand, it seems rational that this crisis has provided a major catalyst to pivot to online channels – the truth is though we really don’t know how significant the growth in these channels for the sector has been only two months into the crisis.
The online trend is likely to accelerate, and talking to those in your industry who have made online/direct strategies work for them is highly advisable. People are open, more than they probably ever have been, on sharing their insights and guidance where they can.
Bolting on the right online sales channel to your business will probably be a wise decision, but focusing on the development of online channels to the detriment of your traditional channels should be considered very carefully.
If any of these aspects – on partner, channel or market assessment – are whirling around in your head, contact us on how we can help to provide clarity. Don’t hesitate to email email@example.com or click here
Deloitte – Supply Chain Risk – https://www2.deloitte.com/global/en/pages/risk/articles/covid-19-managing-supply-chain-risk-and-disruption.html
NZ Food Sector – https://www.mpi.govt.nz/
Scoop – NZ Processing Sector – https://www.scoop.co.nz/stories/BU2004/S00379/nz-food-processing-sectors-key-role-in-nzs-post-covid-19-recovery.htm
FCB NZ – How brands are pivoting – https://fcb.co.nz/news/how-brands-are-pivoting-during-the-covid-19-crisis/