June 7, 2016 – To those still clinging to the idea that people will never stop going to the grocery store, Justin Shimek, Ph.D., CEO, Mattson, has a few examples of companies who said something similar: Borders and Blockbuster. “It’s not quite as dire as that, but there will be fundamental new ways that consumers source significant parts of their food basket every week,” he added in his presentation “Behaviors, Products & Services Creating the Future of Food.”
As an independent product developer, Mattson is paying close attention to these seismic shifts in distribution channels. Many innovative businesses and services are reframing the system to meet consumer needs in new ways. “This presents new opportunities, as well as challenges,” Shimek added.
Gevalia Coffee’s mail-order subscription service didn’t light the world on fire in the early 80s, but perhaps it was ahead of its time.
Everything from beauty products to collectable “nerd items” have successful subscription services today. In the food sector, examples include curated snack companies, like NatureBox, Graze and Nibblr. Brick-and-mortars have started to notice, such as Wal-Mart, Safeway and Fresh Direct, plus brands like Starbucks, Crock-Pot and Soylent.
“When you think about it from a set-it [up]-and-forget-it perspective,” Shimek said, these new food distribution systems are becoming huge, in terms of volume and revenue potential, and shouldn’t only be opportunities for entrepreneurs.
This also applies to an area he refers to as “new scratch cooking.” From a consumer perspective, cooking from scratch is more about an experience. Blue Apron, Plated and Fresh Realm are popular meal-subscription services that send entire packages of groceries for consumers to create specific meals.
“It’s a kit and a facilitated experience,” he said, where everything is already measured out, portioned and ready to be created—so you don’t have to engage in the tedious parts of the experience. “There can still be some deep cooking, but you have a sous chef helping you with the prep.”
Technomic predicts the meal-kit service market to grow between $3-5 billion in the next decade. Blue Apron and Plated started in 2012 and have made roughly $80 million. HelloFresh, a European equivalent, delivers more than 4 million meals a month.
Food delivery has also crossed into the digital, on-demand realm. UberEats, GrubHub, Postmates, Seamless and Caviar are examples of food-delivery companies that make restaurants and sometimes even stores accessible for delivery. You interact with them, usually through an app. They handle the order and pickup, and they deliver to your door. Even high-end restaurants are increasingly offering takeout to accommodate this trend, Shimek said.
Munchery is an example of a food delivery company that not only delivers meals, but also prepares them. The model started as a way for chefs to make food in restaurants during off-hours but has since moved to a commercial kitchen for delivering same-day chilled meals. SpoonRocket offered fresh, locally made hot meals for under $10. Each vehicle in their fleet was stocked with warming ovens containing the meals; these vehicles patrolled their service area awaiting orders. It has since closed, but the platform will soon live on in Latin America.
On-demand has also spread to groceries. Instacart and Google Shopping Express are essentially personal shoppers that can handle several stores in one trip. Curbside is a similar service, where they do all your shopping at a store; you pull up to the curb, they load everything in, and you drive away. All essentially serve as distribution centers that don’t hold any inventory.
Increasingly, food products will not be found sitting on a shelf. The decision as to what foods to eat will be researched and made online by consumers. In this one location, they will have most all store brands and customers will be able to shop 365 days a year. There will be interesting collisions of how food is prepared and distributed, Shimek said. Packaged food must still be shelf-evident, but now it’s a “new shelf” with a new set of competitors.
Amazon is a cross-section of many of these trends, with its Amazon Prime, Amazon Fresh, Prime Pantry and Prime Now services.
“What this means is taste, convenience, fresh, local, service and other expectations are all being reset by new competitors,” Shimek said.
“What’s for Dinner? Behaviors, Products and Services Creating the New Future of Food,” Justin Shimek, Ph.D., CEO, Mattson
The summary above is from the “2016 Protein Trends & Technologies Seminar: Business Highlights Magazine.”
