Top 2020 Food and Beverage Trends

Top 2020 Food and Beverage Trends

Denis Storey
January 11, 2021

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2020 upended nearly everything we know about the food and beverage business. As the pandemic spread across the globe, keeping consumers at home and putting pressure on the supply chain, manufacturers, retailers, and consumers have all had to adjust to a new way of doing business.

 

As we start a new year, with the promise of a vaccine – and economic improvement – on the horizon, we thought we’d reflect on the storylines that dominated 2020.

 

Dairy

Despite reports to the contrary, the U.S. dairy business thrived in 2020. Consumers attracted to healthier snack options turned to dairy alternatives, such as cheese, yogurt, and smoothies. But consumers also sought comfort offerings, with ice cream sales up more than 15% in 2020, according to market research firm IRI.

 

The industry also benefited from a boom in export demand. Shipments were up 16% for the first 10 months of the year, according to The U.S. Dairy Export Council.

 

The whey segment, which saw 24% growth for the year, performed particularly well, with exports to China up more than 100%.

 

“U.S. dairy exports continue to post strong gains in value and volume to destinations around the world, with surging demand from Asian nations accounting for most of the growth,” International Dairy Foods Association President and CEO Michael Dykes explained. “The demand is evident around the world for high-quality, safe, affordable U.S. dairy products. After being a net importer of dairy products a decade ago, the United States is now the world’s third-largest dairy product exporter, sending American dairy products to more than 140 countries and supporting thousands of American jobs.”

 

Eating Out

Restaurants bore the brunt of the economic devastation of 2020. According to the National Restaurant Association, the pandemic shut down dining establishments for months, which led to the closure of more than 110,000 restaurants – one out of every six in the United States. Nearly 90% of full-service restaurants reported declines, the association stated, with a revenue shortfall of 36% on average.

 

To make matters worse, the industry lost another 372,000 jobs in December, based on the latest Labor Department data. Overall, the restaurant industry lost 2.5 million jobs since February 2020.

 

Ecommerce

With consumers stuck at home, they had little choice but to start ordering food and beverages online. Grocery sales saw 10% growth in 2020, fueled in large part by online orders. Nearly a third of consumers say they’ve been shopping for food and beverage online more during the pandemic, based on a New Consumer survey. Retail giants Amazon, Instacart, and Walmart lead the way.

 

But this growth in online shopping hasn’t been limited to grocery stores. Overall, Nielsen data shows that the percentage of U.S. consumers who shopped “heavily or exclusively” online grew by 133% from September 2019 to September 2020.

 

Meal kit services also took off in 2020. For example, Blue Apron racked up 20,000 new customers in the second quarter, reaching nearly 396,000, on 8% sales growth. The third quarter saw Blue Apron’s revenue jump 13%, and analysts expect the company’s fourth-quarter numbers to be even more substantial.

 

Finally, direct-to-consumer sales soared. According to research from data analytics firm Second Measure, online meat sales saw double-digit growth between March and October. Both Omaha Steaks and Crowd Cow saw sales growth exceed 100% for the year.

 

“Spending trends during the pandemic suggest that instead of viewing DTC meat as a one-off holiday gift, consumers now see it as a necessary service like meal kits and grocery delivery,” Second Measure’s Janine Perri wrote.

 

Stockpiling

While stories of paper product shortages made the most headlines, consumer stockpiling extended to food and beverage staples as well. The first wave hit in March, with 93% of consumers stocking up on food and water, according to a nationwide ShopKick survey. In November, as infections ticked backed up, so did the stockpiling, as 85% of consumers in a follow-up survey said they planned to shore up on staples.

 

Food remains the most stockpiled item, while consumers remain on the lookout for sanitizers and cleaning supplies.

 

And as consumers struggled to find their favorite brands on store shelves, they increasingly turned to private label brands to supplement their pantries. According to Nielsen research, the segment saw more than 14% dollar volume growth in the first quarter alone, outpacing national brand sales.

 

The strain on the supply chain has forced many manufacturers to tweak and increase production line runs. Companies also spent much of the year tracking down additional suppliers to ease production bottlenecks.

 

Transparency

As consumers have turned to healthier food and beverage options, they’ve also started to demand greater transparency into the products they’re buying. Innova Market Insights found that six out of 10 global consumers want to know more about where their food comes from. Companies have responded in kind, with a focus on increased transparency “to meet evolving ethical, environmental and clean label consumer demands.”

 

Archer Daniels Midland Co. expects demand for locally sourced products to increase, with 26% of consumers admitting that they look for the country-of-origin labels on packages.

 

It’s a trend that industry analysts expect to only increase in the new year.

 

“Transparency will be crucial in helping consumers understand and accept the products,” Lu Ann Williams, director of insights and innovation at Innova Market Insights, told Food Dive.

 

The trend extends to the beverage market. More than 60% of consumers prefer beverage products with “no artificial ingredients” and “no preservatives” and as being “all-natural,” according to LEK Consulting research.

 

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