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The FMCGs Survival Guide to the COVID-19 Pandemic

(This article can also be found on Young Foodies Blog)

With the supermarkets working round the clock to replenish shelves quickly and the delivery times for online groceries being 10 days+ (or without any availability at all), we find ourselves thinking about how we could adapt and how brands are reacting to the situation.

Quick-glance summary:

  • COVID-19 has hit retail hard in ways we’ve not seen before
  • Brands are reacting quickly, but we are currently in a stalemate period where brands are assessing before making strategic decisions
  • We have taken the opportunity to act fast and launch more online options for our users and brands including the introduction of Amazon, as consumers turn their purchasing to online from in store
  • Animal-free products are seeing a rise in sales as consumers seek perceived safer alternatives (due to the virus ‘jumping’ from animals to people), presenting a huge opportunity for plant-based brands

The Six Phases of Consumer Behaviour during Coronavirus

We’ve done some digging to understand consumer behaviour and see what their expectations are, but also to see how the brands are adapting to this unprecedented situation.

Nielsen has concluded a direct link between each stage of the virus to specific shopper behaviour. According to Nielsen, customers’ behaviour in reaction to COVID-19 pandemic can be classified in 6 consecutive stages:

  1. Proactive health-minded buying 
  2. Reactive health management
  3. Pantry preparation
  4. Quarantined living preparation
  5. Restricted living
  6. Living a new normal
The six phases of consumer behaviour during coronavirus

(Source Nielsen 2020)

What we are witnessing first hand in the UK is that after first reacting to health by stocking up on medicines and vitamins, then sanitisers and face masks, people move into phase 3 – pantry preparation as multiple cases of the virus come to life and work from home and social distancing become a new reality.

We’ve all been witness to this, and seen the galleries of photos of empty shelves, where people have been grabbing in particular for the basics such as loo roll, pasta and UHT milk. 

According to Nielsen, the UK is currently in the 4th stage of Quarantine Living and Preparation, which means an increase in online shopping over in-store visits, even further strained supply chain and generally many products being out of stock. 

(Source Nielsen 2020)

Many supermarkets have openly written to the public to ask them to “think before they buy”, making a more conscious effort not to panic purchase, and leave supplies for others. Retailers have started to limit items per person, and introduce “over 70’s only” shopping hours in-store to make sure the elderly are provided for. As to how long this will last, Virginia Spiegler, an academic at the University of Kent predicts it will “It may take a long time to return to a ‘business as usual’ operating mode after panic buying ends,” because distribution was planned months in advance around normal demand patterns.

FMCG brands Transitioning their focus to Online Channels

For those still venturing into the supermarkets, although their basket volume is higher (GreenJinn shopper’s average basket increase by x2.5 in the last 2 weeks), the frequency of their shop visits is down (-43%). This is due to anxiety related to the virus, and is in parallel to the UK moving into more extensive quarantine conditions.

Consumers are transitioning into online shopping

Illustration by Manman Dang

Therefore many move to online shopping from the “safety” of their homes (+18%). Due to this surge in demand, online stores have gone into meltdown, with many having to temporarily close, or put shoppers into virtual online queues in an effort to fulfill existing orders. This has taken its toll across the board from traditional retail players such as Sainsbury’s, to direct to consumer brands as well such as Farmdrop, Abel & Cole and Gousto.

According to the FT Online, deliveries account for roughly 7 per cent of the £167bn UK grocery market, and even without these increased pressures, retailers have argued there is little scope to increase that proportion.

“The big pinch point is vans,” said the chief executive of one leading supermarket chain. Unlike most delivery vehicles, grocery delivery vans are equipped with three temperature zones, making scaling up operations expensive and slow.

 

At the same time during the last days supermarket depots are working round the clock to get food through the supply chain as quickly as possible to meet demand. This means that certain products are being prioritised over others with their focus predominantly on core staples such as pasta, fresh, milk, and toilet roll.

We asked our brand partners to see how they are adjusting to the change and the months ahead. Many are turning their focus from in-store to online. With many products out of stock, those in stock have the potential to take a more central position on the stage, whilst shoppers potentially have more time on hand at home to explore new offerings. 

Here they look to Ocado and Amazon in particular, with Amazon presenting a mix of Fresh where deliveries are affected according to their website today, and the traditional Amazon main site, where ambient products are able to be shipped via the normal means. For brands that mainly play in the world of ambient, next day delivery is still very much on the cards and unaffected by the rush for grocery. 

Sam Hiscocks, Creative Director of Olly’s Olives confirms “the focus for all efforts really must be on digital – so the likes of Amazon, Musclefood, Ocado for us. Digital will continue to surge as more and more people go into lockdown mode.

In response to this, GreenJinn has decided to act fast to support our partner brands, and have added Amazon (fresh and main site) as options for our users to explore, shop and redeem coupons. We hope this gives an even greater choice for our users, and additional revenue streams for our partner brands during this uncertain time. 

Whilst Brand Advertising Takes a Hit; Consumers Choose Quality and Safety over Price

Brands are also pulling back on awareness marketing spend during this uncertain time, with eMarketer reporting total media ad spending worldwide down 0.4% to 7% versus their previous prediction for 2020. 

Where the best place for brands to invest in currently is uncertain, and with buyers at the supermarkets tied up in trying to secure the supply chain, it feels the usual instore marketing is to take somewhat of a back seat. This view is supported by our partner Olly’s Olives: With this now paused we’ve had to pull back on almost all marketing spend outside of digital and really batten down the hatches to get through this period of uncertainty – which we will do”.

Whilst brands pull back temporarily on instore and online marketing, shoppers deprioritise pricing, as availability and quality of products play a key role in the decision-making process.

According to Nielsen: “Globally, 49% of consumers said they were highly willing to trade up in price for this benefit. In light of the COVID-19 outbreak and reports of stores around the world being stripped bare of sanitary and hygiene products, canned foods and other pre-packaged durables that have these inherent guarantees built-in against the virus — this need will only become more important.”

We believe that marketing is still an essential strategy during this time, but the need is greater than ever for complete transparency around effective spend and ROI. Every penny spent should result in incremental sales. 

What global consumers will pay more for

Source: Nielsen 2020

Opportunity for Healthy and Vegan Brands to Shine

Although all we hear in the news is the search for the cure for coronavirus, there is a growing movement of people exploring the source of how and why this virus came about, and more critically, its link to animal products. In parallel, China is already experiencing protein shortages due to African Swine Fever, so demand is peaking for safe, reliable healthy food, with a completely transparent and animal-free food chain. 

With many more shoppers worrying about the quality of animal products, Chinese distributors and retailers are exploring vegetarian, and in particular, vegan alternatives. One such alternative are JUST eggs – a purely plant-based, yet fluffy egg mixture to make the perfect scrambled eggs. It would seem that coronavirus has now prompted even Chinese state-backed food companies to proactively reach out to the brand, to stock their product. 

A recent study in the States saw that sales of Oat Milk had increased +333%, and fresh meat alternative products rising by 158.3% compared to just 31.8% for canned meat. 

This is good news for healthy and vegan brands. In fact, our user base for the GreenJinn app consists of 26% vegans, and we pride ourselves by giving access for our users to explore healthy brands, many of whom are plant-based. If your brand offers plant-based alternatives, get in touch to see how we could help you.

Convenience or Opportunity to #StayHomeStayFoodie?

According, to IRi, during this pandemic people seem to be reaching for easier options, and meals that require fewer ingredients to create. The basic must-haves for staples such as pasta sheets for lasagne, are being left on the shelf.  This will come as good news for brands offering convenience foods, like pouches and nutritious ready meals.

Although we offer a choice of snacks and nutritious ready meals such as Fiid tagine pouches, we are encouraging our users to take advantage of this time amongst their family, partners and friends to explore and enjoy cooking from scratch. 

Here at GreenJinn, we’re planning to share simple recipes from our partner brands to encourage our users to take this opportunity to be with their families and #StayHomeStayFoodie. Follow our Instagram page @greenjinnapp to find out more.

Cooking at home #quarantine

How Can Your Food Brand Prepare for Coronavirus?

  1. Get ready for online shopping, potentially via Direct to Consumer channels
  2. Boost co-marketing activities with complementary and like-minded brands 
  3. Show shoppers how your products are safe and boost their health 
  4. Invest in advertising with verifiable ROI 

If any of this resonates with you, get in touch with our team at hello@greenjinn.com. 

Our aim is to collaborate with challenger brands in an effort to recommend the best course of action during this uncertain time and promote your products alongside your peers. Consumers are still buying, and if anything, more than ever, so we wish to ensure your products get in the hands of the consumer. With strength in numbers, the more brands onboard, the better chance we all have to grab their attention at large. With this in mind GreenJinn will be offering our service entirely free of charge until the 15th of April for any Young Foodies members. #UnitedWeStand  and #UnitedWeShare.

With love – the GreenJinn Team

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