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The fine food sector has seen its fair share of challenges over the last year, but the industry’s passionate entrepreneurs have proved that there are still opportunities to be explored for those who are willing to innovate and adapt.
In fact, these businesses have shown they’re well-equipped to handle the ‘new normal’. “Covid-19 has fast-tracked the digital channel shift, and start-ups have been the quickest out of the starting blocks,” says Jason Gibb, founder of Bread & Jam, a business that supports food and drink start-ups.
E-commerce has boomed throughout the pandemic, and experts believe consumer habits won’t bounce back post-Covid. In fact, January marked the highest online sales since the pandemic began, up 74% year-on-year, according to the IMRG Capgemini Online Retail Index.
“We’ve seen real innovation amongst small food businesses over the course of the pandemic, many of whom have had to pivot online, often for the first time,” echoed Emma Jones, founder of small business network and business support provider Enterprise Nation.
Start-ups are not only adapting, but they’re welcoming this new way of working with open arms. “The things that have stood out to us are the brands that have embraced the new world – selling via powerful platforms to reach a much broader audience, via Uber Eats or Amazon – and the enduring resilience of business,” Emma told Speciality Food.
“Many have seen opportunity and taken it – such as the trend towards increased nutrition and health,” continued Emma. It’s no surprise that a renewed focus on healthy foods has been a hugely significant trend during the Covid-19 pandemic, and start-ups are wasting no time in getting stuck into these profitable ventures.
“I’m seeing lots of immunity boosting, gut-health-type products coming onto the market, and the no and low alcohol trends are accelerating,” Jason added. Indeed, these sectors are full of potential for new entrants. IWSR Drinks Market Analysis predicts the no/low category will rise by 31% by 2024. Meanwhile, the global immunity boosting food products market is expected to reach a value of $24.bn by 2023 as demand grows.
Start-up brands are also maximising sales from the rise in home eating due to the closure of the hospitality industry. “I’ve seen dozens of new businesses or products that replicate the out-of-home experiences in the home – things like DIY vegan burger kits and cocktail and canape packs,” Jason told Speciality Food. “Especially in light of the crisis the restaurant industry is in, these are a godsend.”
With consumers stuck at home for the time being, new food and drink start-ups are focusing on making the most of the home cooking trend by exploring every avenue of innovation. “Because there has been such a focus on food in the home, we are seeing more products spinning off, from foraging and pickling, fermenting and preserving, and also slow-cooked meat,” Jason said.
These quick pivots have helped start-ups not just survive Covid, but thrive during the pandemic. “Ayesha Grover, founder of STRP’D was about to launch her range of tiger nut drinks via hipster cafés in March,” Emma said. “When the pandemic struck, she quickly pivoted to producing gluten and allergen-free flour for baking.
“Or Lauren O’Donnell, who founded breakfast overnight-oats brand Oatsu just before the pandemic hit. She quickly pivoted her B2B sales strategy to B2C and partnered with a courier to work with on UK-wide delivery.”
The quick thinking of start-ups has seen businesses catering to new demand for home delivery, leading entrepreneurs to learn new skills such as developing packaging and handling logistics, as well as consumers’ ever-changing desires. For instance, Jason has seen start-ups begin to push their British ingredient credentials as demand for home-grown products rises.
There is much that established food and drink businesses can learn by looking to the start-ups that are reshaping the food sector today. From pivoting to the most in-demand markets to reworking a business plan around a pandemic, they offer retailers a taste of things to come.