As we slowly emerge into a new normal, the food industry is also preparing for possible pivots. Let us review some new trends and possible changes in food business with food experts and practitioners that I have invited to this interview.
Iga Czubak is the founder and CEO of Planteris, owner of Roślinny Qurczak brand. She is Master of neurocognitive science fascinated by food industry. She promotes scientific approach to food. Currently she is introducing the first plant-based analogue of poultry in Poland. Roślinny Qurczak allows people who like to eat meat to limit its consumption without having to change their eating habits. The greatest success of the startup so far has been turning the pandemic crisis which endangered all company’s operations into a successful, consumer educating venture giving them a tool to fight the environmental crisis.
Agnieszka Górska is CEO and co-founder of Ulala Chef – a digital platform for dinner parties’ bookings working with more than 150 chefs across Poland and Berlin, expanding to other German cities. Prior founding her own startup she worked for nearly twenty years for big corporations as a marketing executive and a board member (FMCG, Telco, Fashion Retail). Technology enthusiast.
Sveatoslav Vizitiu is the CEO and co-founder of Wello – an artificial intelligence platform in nutrition for overweight kids who can change the way families understand and relate to their health. Wello was awarded the Best Social Impact Startup from Romania. Sveatoslav is also foodtech Expert at CEPS (Centre of European Policy Studies), leading European think tank, constantly ranked among the top ten non-US think tanks, focusing on EU affairs.
Agnieszka Węglarz: As different sources report, consumers are changing their eating habits as a result of covid-19. People are still concerned about their safety and focused on self-protection, so they cook more at home than before, trying new cuisines and recipes and looking for immunity boosting products. Do you observe such behaviours among your consumers?
Iga Czubak: Ever since the beginning of the pandemic consumers have definitely been making more informed dietary choices. The state of permanent fear for their health and the health of their loved ones’ made them take more care of themselves, including more conscious nutrition. Therefore, on one hand, there is a definite shift towards healthy, organic and plant-based foods.
On the other hand, the pandemic has drawn attention of many people to the global supply and production network and their impact on the planet and the public health, increasing interest in local and sustainable food producers. Moreover, when leaving home is a health risk, e-commerce is flourishing, as online shopping also minimizes the risk of contamination. We observe all these changes among our customers and we try to adapt our activities in order to offer consumers a product that is not only tasty, but produced locally and consciously, without unnecessary costs for the planet, which can be easily ordered and safely delivered.
I believe that the sudden reality change caused by Covid-19 has a few bright sides, one of them being that consumers pay more attention to their health, and as a result we can observe a lot of changes in their behavior.
Sveatoslav Vizitiu: In our case, it’s 50/50, many people started to cook at home, but many have begun ordering the dishes online. But definitely, they are more cooking or eating at home than at restaurants or any other places.
Agnieszka Górska: Ulala Chef is not a typical food industry. We organize private parties with our private chefs at our customer’s homes. So we are involved more into special occasions than daily life of our customers. But some shifts in behaviors seem to be present also in this sector. We observed 30% growth in the private dining events in the period of June-August 2020 comparing to the same period last year. We think that this is due to the fact that some people prefer to stay at home and even meet with their friends to celebrate at home instead of going to the restaurant where they may not feel safe.
Agnieszka Węglarz: It is been said that consumers have increased demand for transparency. People are more interested in where the food comes from and pay more attention to healthy food than before. One potential effect of this can be the growing interest in plant-based food. Apparently there are more consumers eating plant-based meat alternatives. Do you believe this tendency will continue? What are your observations?
Iga Czubak: The increased interest in plant based products is a very strong trend that emerged even before the pandemic, but the pandemic undeniably strengthened it. Since the first recorded cases of coronavirus infection, we have observed an increase in sales of plant based products by 27% in the US, which is higher than for meat. Moreover, one of the organic food retail chains located mainly in shopping malls is observing an increase in sales of vegan products, despite a general decline in revenues.
Nowadays, customers expect the ultimate transparency. To deliver this, companies need to go beyond packaging. Consumers check the label for information such as ingredients, nutritional values, preservative content and product origin. However, they are also interested in what lies beyond the label, such as story of the product and the environmental impact of its production. The environmental responsibility of food producers has become a very important aspect for many consumers. Those are the information most often sought after on the Internet and companies that can tell their story well win the race. They show that they care about their customers and the planet more than their own profits, so they gain a consumer who comes back not only for the eating experience. I am convinced that this is a trend that will only grow stronger over time.
Agnieszka Górska: We see it definitely in Berlin and in Warsaw. This trend was present clearly before Covid-19. Now the pandemic could accelerate it even more.
Sveatoslav Vizitiu: Yes, everyone is trying to eat more healthy or “trying” to eat more healthy and people start to check more carefully what they are buying. However, this observation is divided by incomes in the families. Low-income families don’t care that much about healthy habits/food. On the other hand, the European Union or other governments are trying to bring new solutions for people to eat more healthily because overweight and obesity statistics are not very satisfactory in the world.
Agnieszka Węglarz: Browsing through worldwide internet shows that food supply chain was also under stress due do to covid-19. Farm production has been affected by bottlenecks on labour side – workers were sometime unable to travel to farms due to social distancing restrictions. Same applied to food processing. Distribution, i.e. transport and logistics have been disrupted and slowed down the movement of products along supply chains. Especially air freight has been severely disrupted. Food business consist of complex web of factors connecting food journey from farm to consumer table. How do you evaluate the influence of covid-19 on your supply chain?
Iga Czubak: This appeared to be a greater issue for big producers. The food production giants have logistic networks covering whole continents, involving thousands of people. The larger the company, the more extensive the network of relationships between contractors and the more extensive the logistics. Small companies rely on more local suppliers, are also more flexible and even in the event of a supply chain disruption they were able to quickly change their operations to deal with shortages and the resulting crises. This is one of the undeniable advantages of small businesses, which many have made good use of.
It is also easier for small food producers to sell D2C. Excluding intermediaries requires more effort, but is a model corresponding to customers’ needs during the pandemic crisis, not only because of the shortening of the supply chain, but also because of the obvious increase in interest in local products.
In the face of the pandemic we have completely changed our business model and switched from sales to HoReCa to D2C sales. The supply chain itself has not changed as we have been using products from local suppliers from the beginning. But the development of our e-commerce enabled us to shorten the route to the consumer, to get to know their needs better, and thus quickly increase the scale of distribution throughout Poland.
I really believe that Covid-19 will help to stop the seemingly unstoppable growth of globalism and allow us to return to local producers and sellers, with the benefit to both sides, and of course to the planet.
Sveatoslav Vizitiu: Our suppliers reported that their production started to grow up in the pandemic. Their challenge for them was to ensure smooth work of their employees in the lockdown. We have also found out that many suppliers started to work on automatization which they were avoiding before. Their answer was, “we have more time to think about our business, and before we didn’t have any time for it.”.
Agnieszka Górska: We do not buy food products directly, chefs that cooperate with us do. But from what we observe there was a dramatic increase of some food prices during pandemic, especially meat. Global and European supply chains’ work got disrupted. There will be a shift towards local produce as a result, wherever possible.
Agnieszka Węglarz: What are the possible pivots in food business as a result of covid-19 disruptions? What are possible further changes in eating, cooking and drinking habits? What can therefore be the next generations of foods and drinks?
Iga Czubak: Possible pivots that are not only temporary are, above all, the shift to sales through e-commerce for all – food producers, restaurants and retailers. Another thing is expanding services available with deliveries via cooperation with new operators, e.g. delivery of products from Biedronka by Glovo couriers. The transfer of experience to virtual reality also seems promising, like cooking courses online, when you get all the ingredients necessary ahead and then meet the chef online.
We predict that customers’ grocery shopping will be more conscious and informed. In terms of health, we will see a strong shift towards products that are new, that offer something more than what we are used to, that solve more problems than only providing food. Ease of preparation will also become more important, as many people don’t eat out as much as before, but have no time nor willingness to cook more at home. We will be looking for products that are not only nutritionally valuable, but quick in preparation, so there may be much more semi-finished products and ready-made meals. What’s more, buying more local products will certainly become more popular. The pandemic has made many people aware of the dependence of the Polish economy on foreign markets; for many, focusing on “our” products is good not only for the planet, but also for a country that has been hit by the crisis like everyone else.
Agnieszka Górska: We can expect some new types of services, shifts in behavior and acceleration of some pre-existing trends. For example: online events. Not only business meetings moved to Zoom, Google Meets or Teams. There is a huge rise of online cooking classes and other types of virtual meetings and even celebrations that include virtual parties.
We as Ulala Chef are taking advantage of this trend. In Q2 2020 we started to organize for our business customers big online events with participants cooking along the celebrity chefs. We did several big scale events like that with several hundreds participants from all over Poland taking part in each of the event. With ingredients packages delivered to their homes right before the event. We believe this pivot in our business segment customers will stay with us in the coming months and years as it proved to be a very attractive event format.
Another shift that has positive effect on our business is customers taking parties home back from restaurants. We hope that it will make new potential customers more open for trying private dining services for the first time and our current customer base will choose this form even more often. This is also tremendous opportunity for all food delivery businesses and we see how they thrive at the moment.
People are also moving out or planning to move out from big cities to suburbs or countryside as remote work and home schooling became the “new normal”. This will also influence behavior and needs of the customers when they stay away from big cities. Including meals and get-togethers.
Sveatoslav Vizitiu: I have read a study a year ago that the growth of the world’s population will stop between 2040-2050. The first reason for this will be that less developed countries, where reproduction is now higher will become like European countries with only 1-2 children in the family. Second reason is food factor: meaning that we will simply not have enough protein for everyone. The next source of protein for us might be the BUGS, and this may be one of the changing factors in the food industry.
Agnieszka Węglarz: To what extent businesses will have to design innovations in food supply chain to build resilience to covid like shocks in the future? What can be the role of digital technology in improving the sustainability and flexibility of food business? There are opinions that food processing will have to rely much more on robotics and automation, also to respond to food security concerns. It’s been also said that incentivizing the growth of small and medium sized, local agents that can act in a more agile way can help to increase the flexibility of the system. Do you agree?
Iga Czubak: The pandemic is definitely an opportunity for small businesses to grow, which will bring many benefits. Giants of the food industry have monopolized the market, the pandemic has imposed considerable restrictions, which for them are sometimes impossible to overcome, but small producers can manage. Ironically, we believe the pandemic helps small producers and makes consumers more aware of the real cost of buying only from big companies.
Small producers also have the advantage of being able to innovate very quickly, because it does not require a whole bureaucratic process. This has resulted in the rapid emergence of online shops of small manufacturers, while large companies had been still in the process of implementing new solutions.
Definitely the food production system should change. At some point we have crossed the threshold of production sustainability, now the costs of a globalised food system outweigh its benefits. The pandemic is a difficult situation for all of us, but it is a great opportunity to change the system, which would not have come so quickly if the current system had not started to collapse. If we seize the opportunity, we can create a system that is more sustainable, efficient, flexible and simply more human.
Agnieszka Górska: As I mentioned, we are not directly involved in food purchasing so I am not an expert here. But whatever proves to be more effective or fit better not only during pandemics but can be attractive for markets after the pandemic restriction period ends it has the potential to stay with us and be a new regular part of the landscape.
Agnieszka Węglarz: Technology can also intensively leverage distribution and consumption. Fast development of applications and www platforms changes the way people choose, access and buy food and enjoy food. To what extent do you use digital technology in your business model?
Iga Czubak: In the current situation, technology is the key to reaching the customer. Sticking to offline channels is a privilege of large corporations, which already have a huge base of loyal customers and significant brand recognition. Small manufacturers have to put a lot of effort into reaching the masses, but fortunately this can be achieved by smart use of technology.
What is more, it is not only about technology, but also communication plays a huge role – what and how the company communicates to consumers, who now, more than ever, have to make a purchase decision without being able to touch or see the product. Taste is the king, but experience is the queen – in the age of shopping without leaving home and therefore a completely different approach to consumer decision making, the objective is not only to provide a good product, but also to provide a new and interesting experience through technology, which will satisfy not only basic needs, but also curiosity and openness to novelties and innovations. Technology allows us to positively surprise the customer. A creative approach to something as fundamental as grocery shopping will allow the market to remain fresh and keep the attention of the client, who is overwhelmed by contents and is commercially overstimulated.
Sveatoslav Vizitiu: For us the pandemic turned to be an opportunity. We noticed a large number of downloads. In the beta version we already have over 11000 installs of the application and we are still growing. We are happy that many companies are currently digitalizing their operations. For us, it is an essential factor that everything is “online”, as we are we are a digital solution between health and nutrition.
Agnieszka Górska: Before covid-19 we have been using digital technology mainly to serve our private customers for selecting and booking our private chefs and for the event delivery process quality control. Now with the shelter-in-place we started to use digital platforms also for business events – online cooking along with chefs. So we are moving even more digital than before.
Agnieszka Węglarz: What can be further trends in using digital technology to innovate business models and value propositions in food industry in your opinion?
Iga Czubak: Research shows that customers expect products that are more and more tailored to their needs. The technology enables producers to use individual customer measurements – such as daily activities, lifestyle, but also, for example, blood tests or cholesterol levels – to create products that are even more personalized. ‘Personalization to the maximum’ should be the new motto of the industry.
Customers are also looking for next level experiences. One way to provide new, surprising experiences is technology. Using virtual reality or 3D printing can certainly improve the consumer experience. Examples include cappuccino with a printed design for the customer, using 3D printing to personalise the decoration of cakes and even to create dishes to meet specific consumer preferences. Another application of the technology may be, for example, the use of virtual reality projection in a restaurant to improve the culinary experience.
Technology also helps us to create brand new products that are more sustainable for the planet and more efficient for the producer. Extensive research, which aims to create plant based products with similar sensory properties to animal products, gives us hope for a future where we do not have to face the effects of the climate crisis on a daily basis. Let’s use technology to make solutions, which are more sustainable and have a positive impact on the climate and animal welfare, as attractive as possible to customers.
Agnieszka Górska: We will see further consolidation of food delivery giants. There will be cost / price war between them especially if they will not want to consolidate. This might be an opportunity to involve robotics into the process of food delivery or even in restaurant food production and packaging.
In restaurants we will probably see more automated and digitized ordering as pandemics and safety reasons will accelerate adoption of solutions like QR codes menu etc. You can already see it quite often in Berlin restaurants and this is a result of pandemic restrictions introduced by the government and safety reasons driven from the customers’ side.
Sveatoslav Vizitiu: In CEPS we are working on the suggestions to EU, the Member States, and the private sector in the food sector.
I would like to provide you with an abstract of our report ” DIGITISING AGRIFOOD: Pathways and Challenges”:
As climate change increasingly poses an existential risk for the Earth, scientists and policymakers turn to agriculture and food as areas for urgent and bold action, which need to return within acceptable Planet Boundaries. The links between agriculture, biodiversity and climate change have become so evident that scientists propose a Great Food Transformation towards a healthy diet by 2050 as a major way to save the planet.
Achieving these milestones, however, is not easy, both based on current indicators and on the gloomy state of global dialogue in this domain. This is why digital technologies such as wireless connectivity, the Internet of Things, Artificial Intelligence and blockchain can and should come to the rescue.
This report looks at the many ways in which digital solutions can be implemented on the ground to help the agrifood chain transform itself to achieve more sustainability. Together with the solution, we identify obstacles, challenges, gaps and possible policy recommendations.
Action items are addressed at the European Union both as an actor of change at home, and in global governance, and are spread across ten areas, from boosting connectivity and data governance to actions aimed at empowering small farmers and end users.
If you have time, I encourage you to read full report: https://www.ceps.eu/wp-content/uploads/2019/12/Digitising-Agrifood.pdf
Agnieszka Węglarz: thank you very much for interesting conversation and sharing your experiences with our readers.
About the author:
Agnieszka Węglarz is an independent consultant, business strategist and practitioner in B2B and B2C as well as lecturer, speaker and blogger. She has over 20 years of professional experience working as a manager in both large corporations and SMEs, where she was responsible for strategy, marketing and business development. She uses her long term executive experience and training expertise to assist companies and their managers in building their business development strategy through a series of workshops. She specializes in business modelling, segmentation, value proposition, sales and marketing strategies and consultative selling. She runs her business blog on www.agnieszkaweglarz.com and her own YouTube channel – Biznes Ring by Agnieszka Węglarz. You can contact her by writing to: email@example.com or by directly sending a message via LinkedIN.