HOW COVID-19 IS CHANGING The food and beverage industry

A data-based report with a focus on new opportunities driven by a digitalised ‘new normal’

PRELIMINARY REMARKS

Reply leverages Data and Analytics to gain insight into the impact of the novel Coronavirus on society, consumers and industries. This report focuses on how COVID-19 impacts the 2021 Food & Beverage industry in Europe using the Quentin search data tool developed by TD Reply, which aggregates data from Google Trends and Google Ads.

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This report in no way intends to distract from the fact that the outbreak of the novel coronavirus is first and foremost a human tragedy affecting hundreds of thousands of people.

As the situation is evolving rapidly, please note that this page reflects the data collected up until 15 February 2021.

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A CRISIS CAN ALSO DRIVE INNOVATION

Until recently, the transition of the European retail industry from bricks-and-mortar to digital has been constrained by many factors, such as an abundance of conventional choices alongside limited digital infrastructure. Coupled with logistical hurdles characterised by razor-sharp production margins, the Food & Beverage Industry in contrast has been slow to embrace digital solutions.

But innovation is underway, and COVID-19 as a digitisation catalyst is now providing unprecedented opportunity to create new business models for the Food and Beverage (F&B) Industries across Europe.

1.

SHOPPING HABITS

Will the world ever go back to ‘normal’ food shopping?

COVID-19 created massive spikes in online grocery delivery. In the early stages of the pandemic, F&B supermarkets and grocery stores across Europe were closed as people were instructed by Governments to stay indoors. Consumers stopped going out, eating out and visiting packed supermarkets and other F&B outlets. But consumers still needed to eat, and with the new normal of confinement, consumers turned to online grocery in massive volumes.

+140%

The average increase in consumer interest in online grocery delivery in 2020 across Europe.

SOURCE: Data retrieved from Quentin, TD Reply’s Search Data tool, 2019 vs 2020 in Europe.

FINDING THE ALTERNATIVE

GROCERY DELIVERY IN GERMANY

Peak: +370%

Annual: +68%

GROCERY DELIVERY IN ITALY

Peak: +1312%

Annual: +180%

GROCERY DELIVERY IN FRANCE

Peak: +621%

Annual: +113%

GROCERY DELIVERY IN THE UK

Peak: +844%

Annual: +198%

SOURCE: Data retrieved from Quentin, TD Reply’s Search Data tool, across 4 countries (DE, IT, FR and UK) 2019 vs 2020.

Interest in online grocery had an average peak of 787%

WHAT the Data indicates

Consumers turned online in massive volumes to satisfy their needs. This will re-structure the F&B industry in different ways.

RE-THINKING REAL ESTATE

If online grocery shopping continues to grow, fewer consumers will have reasons to visit supermarkets. Which questions the value of big supermarket real-estate and the logistics that supplies them.

RE-THINKING MARKETING

With the in-store ‘stumble upon’ marketing method for new products diminished, F&B will need to pivot hard to creative online marketing methods to bring new products and brands in front of consumers.

BACK TO BASICS

Having the best and freshest range in-store will soon be matched by the need to have the best delivery and fulfilment services. Consumers will want groceries on their terms – not the suppliers.

THE LONG AND SHORT

If home delivery continues to grow, companies can expect a push for regional fresh products matched by a desire for foreign delicacies. This means supply chains will become more of an issue as fresh products, for example, require efficient organisation.

2.

DINING OUT

Will consumers bounce back to old dining habits post-COVID?

The early stages of the 2020 COVID-19 pandemic led to an 80% reduction in F&B open rates in some markets. Restaurants, bars, cafes and eateries were forced to turn customers away. But that story is changing, now that vaccines and warmer Spring weather is bringing hope of easing lockdown restrictions. Food aggregators and food delivery services stepped in early to fill the gaps. Across Europe, existing and emerging food delivery services mobilised to keep consumers connected with F&B outlets.

+53%

The average share price increase of the biggest food aggregator services in Europe in 2020.

Google Finance share data, average price increase calculated by averaging the price increase between Jan. 2020-Jan. 2021; GWI (Q3 2020), figures are the result of a broad-based global online survey.

EATING IN BY ORDERING OUT

Percentage of internet users aged 16 to 64 who have used an online service to order takeaway food for delivery during summer 2020.

GERMANY

29%

ITALY

35%

FRANCE

27%

UK

46%

SOURCE: gwi (q3 2020). Figures represent the findings of a broad global survey of internet users aged 16 to 64. See globalwebindex.Com for more details.

Only around 34% of European consumers ordered out in late 2020, while the global average was 56%

WHAT the Data indicates

European Consumers feel like they cannot replicate the eating out experience, online. With a continued lockdown-and-lift rhythm, this is a chance for the industry to recuperate, but also provides a challenge.

MORE THAN A MEAL

The lower number of food delivery orders in Europe demonstrates that F&B provides an experience on top of a meal or drink - an experience that cannot be replicated at home.

CITIES ALIVE AGAIN?

If a mass vaccination of European populations in 2021 creates the circumstances for F&B reopening, then expect a snap back in behaviour as consumers re-visit bars, cafes and restaurants leading to a revitalisation of cities that spent 2020 in lockdown.

MANAGING THE NEW NORMAL

A return to normal is no guarantee and the F&B industry should plan for a new normal that involves snap shut downs. The entire F&B supply chain may have to re-think its mid-term future.

3.

TECH LED RECOVERY

What is needed for tech to bring innovation to F&B?

The shutdown of conventional means to acquire food and beverages created a need for more consumer tech. This opened the door to long-term innovative alternatives even after the crisis. Mobile-first tech has already shaken up multiple other industries. Mass market F&B chains have offered mobile and app first offers, discounts, ordering and payment functionality for some time. But with COVID-19 forcing an open ended approach to customer service, new tech solutions could offer the way forward for F&B in Europe.

+87%

of Europeans are willing to pay less with cash in the near future.

SOURCE: ECB

BLENDING F&B AND TECH

“Wie lesen QR” IN GERMANY

Peak: +2200%

Annual: +57%

"Come funziona il QR" IN ITALY

Peak: +5700%

Annual: +34%

“Lire QR Code” IN FRANCE

Peak: +316%

Annual: +105%

“How to Use QR” IN THE UK

Peak: +321%

Annual: +131%

SOURCE: Data retrieved from Quentin, TD Reply’s Search Data tool, across 4 countries (DE, IT, FR and UK) 2019 vs 2020.

Hygiene reasons at restaurants and shopping areas caused a noticeable growth in QR technology, which had been a latent tool in the European market. The use of QR Codes is just one example of a payment tool that grew noticeably as a result of COVID-19.

WHAT the Data indicates

Consumers and employees alike were forced to familiarise themselves with new technical features in 2020. This means they will expect and welcome these benefits in the future, opening up possibilities for digitally-driven efficiency in service and logistics areas.

GREAT EXPECTATIONS

Consumers have had a taste of how mobile led solutions can innovate in the F&B industry. From check-ins, to ordering to payments – The role of cash for tips and service will need to catch up.

ONLINE SIZZLE

The dining and F&B event will extend to a pre and post experience that lives online. Pre-order, meal kits, post payment loyalty etc – more and more of the F&B industry will need to work online.

DIGITAL REVOLUTION

Prior to COVID-19, parts of the F&B industry were mainly face-to-face, traditional and in some instances, inefficient. A new normal logistics chain is needed to bring bars, clubs and restaurant supply into 2021.

Opportunities for F&B businesses

BUILDING FOR DIGITAL LOGISTICS

Providing an omni-channel approach for the consumer journey - from discovery to delivery - will be key. More efficiency for businesses will mean improving digital logistics on the backend of F&B supply chains. Data throughout the supply and delivery chain can close the loop within the B2B2C pipeline.

MAKING THE DINING EXPERIENCE UNIQUE

F&B companies that have more control on end-to-end consumer experiences through data strategy create opportunities for hyper-personalisation. This tailors to custom-made preferences, which not only contributes to additional revenue streams, but also consumer loyalty.

INVESTING IN TECH SOLUTIONS TODAY

F&B companies that embrace tech-enabled efficiencies and cost-saving management tools (such as menu management platforms) are developing product and service innovation. Learning demand patterns and consumer preferences gives a forward-looking perspective on ways for brands to grow in the future.