Why innovation will be key to post-Covid recovery

The economic shock of the Covid-19 pandemic will be felt by virtually all businesses across the world for years to come. A combination of lockdowns, store closures, physical distancing, home working and other essential measures changed consumer needs and behaviors overnight.

Trends that have been progressing steadily for years have been suddenly accelerated to a degree that no one could have predicted. At the same time, consumer demand and channel preferences have seen large and sudden shifts, challenging food and beverage makers to respond to highly variable demand patterns.

E-commerce on steroids

Just look at the dramatic increase in e-commerce. Accenture research found that people who previously shopped infrequently online – defined as those who used online channels for less than 25% of purchases prior to the outbreak – are four times more likely to purchase groceries, alcoholic beverages and takeaway from restaurants online now compared to pre-pandemic.

This channel shift is an opportunity to get creative about consumer experiences. With many still homebound, people are shifting to digital channels for the first time, making the potential audience for innovative brand experiences that much higher. Look at what brands like BrewDog are doing, for instance. The British beer company responded with agility and creativity throughout the crisis – shifting to produce hand sanitizer, creating virtual bars, setting up the Brewdog Drive-Thru, and repurposing physical locations to create co-working space with Desk Dog.

Consumption in the home is here to stay

One inevitable consequence of lockdowns is that the home has become the heart of the consumer experience. This was a trend we were already seeing, but with the Covid-19 outbreak, it has accelerated.

Consider how London-based celebrity chef and restaurant owner Tom Kerridge had to quickly pivot his business to re-invent an entertaining dining experience. Forced to close his restaurants, he created a Drive & Dine Theatre service containing (most of) what you need for a night out, including a menu of hot and cold meals, a range of drinks, sweets and popcorn – that people could order via an app – together with sanitised headsets and an in-car speaker safely delivered to the a dedicated parking space.

Companies need to follow the consumer

The pandemic has introduced people to new activities and ways of socialising – cooking, livestreaming, cocktail making and more – all amplified by digital tools and interactions. Not only do they enjoy these experiences, but they also plan to continue them over in the future. Our research showed more than half of people will continue to learn new skills, such as cooking online, at least once a week after the pandemic subsides. And with more people at home, 22% of people said that they are cooking from scratch more now, compared to before the pandemic, and 18% of people plan to purchase a meal kit directly from a restaurant to make at home at least once a week.

Consider how food and beverage companies accounted for this reality. It is a reversal of years of growth in out-of-home channels that were typically more profitable; it is a renewal of the art of cooking at home. It is a dramatic change in the food and beverage occasions which defined the past decades. Longer term, careful analysis will be needed to anticipate how many of these new consumer behaviours will stick.

Think safety, think small

How permanent is the shift to home consumption? It looks certain to outlive lockdowns and stay-at-home orders, at least. Our research shows that, even as economies start to reopen, many people remain uncomfortable about visiting public places. Brands, retailers, bars and restaurants will need to work together to engage people who are in – or close to – home. 

One way to do so might be to think small and local. Demand for local goods – and local brands – is growing. The research shows more consumers want to shop at neighbourhood stores and want to buy more locally sourced produce.

Brands can respond to this demand by looking to highlight the local provenance of their products. They should also continue working with small-format local stores and venues, helping them to adapt to new social-distancing and sanitisation requirements at the same time.

“Conscious consumption” is rising fast up the agenda

We have steadily seen people get more and more concerned about the environmental impact of their purchasing decisions. Covid-19 has now accelerated this trend, as global attention has been focused on the delicate balance of humanity’s relationship with the natural world.

The effect is that sustainability will become a dominant conversation over the next decade. Consumers will focus on areas like the provenance of ingredients and raw materials, working practices, the environmental impact of finished products and packaging, and the overall footprint of the whole food and beverage experience.

Let’s not pretend that the sustainability story is an easy one to tell. The industry is still working out how best to navigate this process. But we do know it needs to be a two-way dialogue, and an authentic one, if sustainability messages are to hit home with consumers.

Better collaboration between industry players will be an important part of this. Bringing industry players together in more collaborative ecosystems, just as they proved they could do during Covid-19, will be a highly effective way of engaging greater numbers of consumers on sustainability.

A bounce forward, not back

One conclusion is inescapable: the crisis will define consumption for the next decade. Many of the changes that we’re seeing are likely going to be permanent. There’s no going back to the pre-pandemic world.

For all the optimism, the fact remains that the pandemic has fundamentally changed the consumer landscape—in some ways permanently. Digital adoption, particularly ecommerce, has been accelerated by years in the space of a few months.

While we’re all yearning for a return to some kind of normality, the reality is that the world has changed, and with it, people’s attitudes, consumption preferences, and shopping behaviours.

Food and beverage brands and businesses can use this moment of unprecedented disruption as an opportunity: to reset and reinvent their businesses for a more uncertain world and a new set of consumer desires and expectations.