Frances Dillard is the Vice President of Brand and Product Marketing with Driscoll’s and on a mission for a healthier world.
For the second time in 25 years, annual U.S. food spending declined in 2020, driven by an 18.3% drop in spending on eating out. Though vaccines have spurred some consumers to step outside their homes, the delta variant is threatening the restaurant recovery process, and grocery stores are continuing to evolve their mask policies. Covid-19 continues to impact what consumers eat and how they shop for their food.
The Vital Role Of The Food Industry In The U.S.
Food is a significant expenditure in the daily lives of everyone in the U.S. — not a single person is untouched by this industry. Food has a concrete place in consumers’ lives and their wallets, ranking third behind housing and transportation among expenditures for American households. Food, agriculture, and their related sectors contributed $1.1 trillion (5.2%) to the U.S. gross domestic product, and make up 10.9%of total U.S. employment.
Before Covid-19, food away from home accounted for 54.8% of total food, surpassing for the first time at-home food consumption. But in March 2020, efforts to limit the spread of the novel coronavirus, including stay-at-home orders, led to significant changes in the food-spending patterns of U.S. consumers and it was the first year since the Great Recession that food-at-home spend accounted for more than 50% of total food expenditures.
Digital Transformation Of Food Consumption
The Covid-19 pandemic has shown the food industry that consumers are willing to evolve their food-buying habits, and the digital transformation the industry has seen to this point isn’t going to end. It is predicted that online grocery will account for 21.5% of total grocery sales by 2025 — an estimated $250 billion — which is a more than 60% increase over pre-pandemic estimates.
While consumers typically held out on ordering fresh food online pre-pandemic, it took a major leap forward during Covid-19. Fresh food jumped 200%in online orders, and is just beginning to show signs of slowing down. Instacart published a report in April that cites produce as the fifth-highest selling category on its platform and the fastest-growing among the top 10 categories. Strawberries, blueberries, blackberries and raspberries consistently appear in the top 10 in fruit sales.
Over the course of the pandemic, searches for “food delivery services” skyrocketed 300%, which included both restaurants (eg, DoorDash, Grubhub, Uber Eats) and grocery (eg, Instacart, Amazon Fresh, Shipt). Currently emerging is a collaboration between restaurant and grocery as consumers’ appetites for fresh food and meals blurs lines. Kroger, for example, announced an on-demand meal pick-up and delivery service from popular restaurants; DoorDash is teaming up with Albertson’s to offer grocery delivery.
Mental and Emotional Well Being Takes Precedence
For consumers, spending more time at home has changed their food consumption behaviors in three key areas: how they are preparing meals, what they are snacking on and defining wellness and managing their stress.
At the start of the pandemic, cooking from scratch quickly gave way to ordering in-home delivery for convenience, and consumers snacked on comfort foods as people lived, worked, and played at home, and anxieties about the virus increased.
Now, as consumers have settled into a lifestyle that includes more at-home time, the narrative toward wellness is evolving. Consumers now view wellness through a much broader and more sophisticated lens, and it encompasses flavor with nutrient dense foods, as well as overall mental and emotional well being . What’s more, the increased snacking opportunities are giving way to healthy snacking, and more opportunities for healthy indulgence. To wit, consumers are purchasing more fresh fruit for snacks. According to FMI’s The Power of Produce 2021, produce sales increased 11 percent in 2020, reaching $69.9 billion. Fresh berries again consistently appeared on top of the list for sales growth and usage occasions.
Still More Road To Travel
To meet the ever-evolving behaviors, the food industry must stay nimble and responsive to the changing needs of the consumer by improving technology solutions for convenience and ensuring their brands and products speak to a balance of emotional and wellbeing. The Covid-19 pandemic isn’t over, and while consumer behavior has changed significantly — that much is clear — their shopping and eating behaviors aren’t done changing and evolving just yet.