By Jeremy Adams, Executive Director, Category Management, KeHE
Remember the fable about the ant and the grasshopper? The ant thinks ahead by stockpiling grain and enjoys a comfortable winter, while the grasshopper takes a more cavalier approach that backfires. For food and beverage suppliers, especially emerging brands, the moral of this fable shows up in real life a thousand times every day: fail to prepare, and you prepare to fail.
By the same token, not failing to prepare lets suppliers overcome challenges they might otherwise fold against and seize opportunities they might otherwise miss. Based on recent industry data and observations from inside the nation’s largest distributor of natural and organic, specialty, and fresh products, the following are my recommendations, cautions, and FYIs for brands wanting to be ready for the future.
Challenges and opportunities
The food and beverage forecast for 2024 and beyond shows a market drastically changed in recent years and poised for further change. A number of challenges will likely affect the industry indefinitely:
- The labor market is as competitive as ever, and along with strict supply deadlines, this could lead to disruption in production and schedules.
- Climate change and harsh seasons have led to crop issues. This impact can be seen across many categories (for example, the cost of olive oil is at an all-time high due to multiple consecutive poor harvests).
- Capital is drying up as buying patterns shift and investors respond to uncertainty in the market, making it harder for brands to secure funding to grow.
- Quick traction is key. Many retailers have shortened the period that they allow products to find consumer support while on their shelves. New and emerging brands may have half the time to show performance compared to traditional timelines.
Alongside these cautionary patterns, I’m seeing several neutral trends that could open big opportunities for well-positioned brands:
- Sustainability continues to grow as a priority across all categories. Today’s consumer wants to support brands aligned with eco-friendly practices, such as regenerative and organic farming.
- Short, wholesome ingredient lists continue to be a growth driver. We’re seeing consumers prefer natural ingredients and real foods, as opposed to alternatives and substitutes. One major trend in this vein: honey as a sweetener.
- Diversity credentials are highly sought-after by retailers choosing new products. It appears that companies with attributes such as woman-owned, minority-owned, LGBTQ+-owned, locally-owned, and B-Corp emphasized on packaging are resonating on the shelf.
- RTE (ready-to-eat) is back! As many consumers leave the virtual environment and return to work in person, RTE and grab-n-go options have become a greater focus for retail partners. A key difference with these options from times past is that consumers are choosing clean, wholesome ingredients whenever possible (see above).
What to do and what not to do
With these trends in mind, what strategies should brands prioritize in the near future, and what pitfalls should they take care to avoid?
Dos:
- Promote, promote, promote. Currently we see massive success with suppliers that are investing in their brand. By supplying your retailer base with competitive promotions, you can increase your turns and retain your shelf space much longer.
- Focus on unit sales over dollar sales. With inflation high, units are now the key metric to quantifying growth and success.
- Attend trade shows to get your products into the hands of a captive audience and make deals directly with buyers from some of the largest retailers.
- Focus on trial. In-store demos, local trade shows, sampling programs, and subscription box partnerships are all good ways to increase brand familiarity and build loyalty.
Do-nots:
- The shotgun approach. Don’t weaken your efforts by dispersing them too widely. Most emerging brands have limited bandwidth and the sales process can quickly get away from them if they don’t have a target market. Know your targeted consumers, identify which retailers cater to those consumers, then develop a sales strategy to gain distribution within those retailers. Does your product work best in a natural, specialty, or conventional category? Are you focused regionally or nationally? Answering questions like these will help pinpoint where you should be selling and to whom.
- Lack of research can lead to unwanted surprises. The biggest pain point we hear about with emerging brands is being unprepared for the financial requirements when gaining new distribution with retailers. For each partnership, be sure to gain clarity about details such as slotting fees, free-fills, promotional expectations, fill rates, and production requirements.
Helpful technologies
As a final mention, take note of the powerful new analytics platforms available for suppliers. New platforms make it much easier to perform market research and get detailed analyses of sales, spoilage, and inventory. That information can help you fine-tune your business and unlock efficiencies. Adding these platforms into your existing processes can seem daunting and disorienting, but remember you don’t have to do everything overnight. Patience and persistence can yield dramatic results over time.
As you and your partners survey the industry landscape of 2024 and beyond, take your cue from the ant in the fable. Setting aside time to prepare your brand for the future can make all the difference in the world during hard times, and it can make the good times even better. Here’s to the years ahead and everything that comes with them!
Jeremy Adams has been with KeHE for four years. His work centers on discovering opportunities for suppliers, especially new and emerging brands, to gain footholds and flourish in the marketplace.
