The Banana Bread Files

May 21, 2020


Born - The Banana Bread Files


Covid has resulted in massive changes in Grocery choices – often forced but also through new choices. Alongside our thinking about new fitness choices during lockdown last week, we wanted to start exploring the opportunities that these shifts will offer for CPG businesses in the coming months.

Most grocers are being very careful about what statistics are released about brand choices, and the story is very complex. Shoppers have bought more premium food product during lockdown, but also more “own brand”, more single ingredients and also more packaged family food. In short – MORE.

At the same time as consumption of home grocery has rocketed, so has the need for a faultless delivery mechanism. Grocers are rushing to invest in online fulfilment, not only to meet short-term demand but also to try to turn delivery into a profitable channel. The higher margin “out of home” hospitality sector of course has been decimated... so overall revenues will no doubt be impacted for many grocery brands exposed there.

A number of CPG brand owners are seeing both risk and opportunity in these shifts. “Heinz to Home” is clearly never going to be either profitable or sustainable in the long-term. The bulk of the tinned food product and low price signal how unsustainable a D2C model is, but we are hearing whispers in certain places about “unpacked” product, from Sodastream competitors through to drinks syrups being supplied for ‘In-Home production” by some businesses.

Business model aside, the reality is that CPG as a sector is lagging behind most brand owners in being able to sell to and engage directly with consumers. This isn’t actually always about product criteria (weight, bulk, value), but more fundamental factors such as organisational structure, business agility and scale. One critical disconnect being exposed is a need for commercial and marketing functions to work more closely together in the next phase – so that consumer insight is developed in parallel with the development of new business models that might be more direct. If the sector is going to become more agile and responsive… this seems essential.

Most CPG’s customer datasets were culled around the time of GDPR, and so this current opportunity to engage directly is (for some) signalling the need for a rebuilding of data, possibly in-line with a series of pilot d2c programs. We still see a reluctance for many brand owners in the sector to invest in programmatic eCommerce – but clearly knowing the consumer better and selling to them at the same time is the next big challenge.

How will it be done? Where to start? That’s our next instalment – but the people to learn from will be the leaders in data-driven eCommerce, NOT the Supermarkets.

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