Which Categories Really Benefited from the Pandemic?

The premium food/beverage/alcohol space grew at a pace last year not seen since 2006.

Let that sink in a bit.

And ever since 2006, the sector has been steadily decelerating, though still growing in both market share and absolute $ sales (and ahead of inflation). See the Figure below.

As exciting as the far right bar is to fans of the natural/organic industry, it’s essentially an illusion, in my opinion. The long-term trend is that premium decelerates and may decelerate even further than the 2018-2019 growth yielded. It’s not going to accelerate again like the good ‘ole years.

However, some premium segments may be the exception to the sector trend. And one of those is premium frozen prepared foods, which explained a counter-trend surge last year (+14%) and gained market share overall by year’s end (+7.3%!). With millions of white-collar workers now permanently working remotely 2+ days a week, more lunches need to be at home or will be at home. And frozen handheld, healthy items had proliferated well in time for the pandemic to hit. 

Categories where innovation rests on a foundation of hyper-convenience (i.e., handheld frozen foods), will benefit long-term from the pandemic’s restructuring of meal locations (breakfast and lunch). Wherever there was a surge in premium, BUT the category’s foundational orientation is way from convenience (i.e., flour), expect a quick snap back to 2019 levels in 2021. I don’t see any gloating from baking companies this year, BTW. Hmmm….

If you’d like more of this analysis, please watch the recording of my Sept. 15 live event on this topic. 

Dr. James Richardson

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