The ongoing effects of the global pandemic have swept aside traditional business projections and transformed the global marketplace. As vaccines roll out across Europe, what can we expect for 2021?
Covid precautions and restrictions have transformed daily life for millions of people around the world. Many people quickly (and perhaps permanently) transitioned to remote working. Others stayed at home and avoided going out, due to health concerns and local regulations. Still, others who might have gone out were prevented from doing so due to closures of cafes, retail shops, theatres, and recreational venues. As millions of people suddenly and dramatically changed their daily behaviours, spending habits, and recreational activities, nearly every industry had to dramatically change their production and distribution methods accordingly. What lasting effects can the FMCG expect, into this year and beyond?
Health Comes First
Never in a hundred years has health been more prominent in people’s day-to-day decision making. Every activity comes with some measure of risk, and people are making difficult choices for themselves, and having hard conversations with family and loved ones.
- The end of the gym? Although more than 50% of adults surveyed by WebMD said they had gained weight during the pandemic, many people won’t be returning to the gym. Instead, online sales of home exercise equipment skyrocketed by more than 170%. Having made the investment, many people will maintain their “work at home/work out at home” habits
- Healthy FMCG options are the new normal. Because of the need to stay healthy and avoid excess weight gains, more and more people are demanding healthy ingredients and healthy options in their food. People have become even more interested in food as a connection to health, seeking out immune-boosting nutrients and supplements to reduce their risk of illness.
- Pharma saves the day. As many governments and health agencies seemed to struggle with the effects of Covid, more and more people hung their hopes on a vaccine. The world’s drug companies responded in record time, rising to the challenge with innovative new technologies and an understanding of the historic significance of their work.
Food and Beverage Spending has Come Home
Even when bars, restaurants, and cafes have been open, they have widely been regarded as posing an increased risk of Covid exposure. Here are some of the effects:
- Cooking at home. More people than ever are buying food at the grocery store to eat at home. The realities of Covid prompted millions of people to learn to cook, and led to a revival of at-home baking and brewing. In the US, many depression-era recipes enjoyed viral popularity due to ingredient shortages. It is reasonable to expect that a significant percentage of these new cooking, baking, and brewing hobbyists will continue to enjoy these activities even after Covid restrictions lift. There may be a shift away from purchasing ready-made foods and drinks, and toward the supplies and ingredients that allow consumers to make their own food and beverage at home.
- Meal subscription plans. Naturally, Covid led to an explosion in home-delivery meal kits. In addition to the standard industry players like Hello Fresh, Blue Apron, and others, many restaurants shifted to a make-at-home meal kit model as a way to stay alive during lockdowns. The increased opportunity led to spectacular growth, with over 100 new meal kit delivery services added in 2020, and Hello Fresh reporting a 64.5% revenue growth in Q1 of 2020. However, it is likely that this explosion of growth will not last past Covid restrictions. In
2018-2019,the meal-delivery market showed very little growth at all, and once restrictions are lifted, consumers will return to their primary reasons for not using these services: the high prices and excessive packaging compared to simply buying their own groceries.
- Restaurant take out and delivery. Around the world, restaurants and cafes have engaged in a life-or-death struggle for survival. Transitioning to take out or delivery services, meal-delivery kits, and offering gift cards and other services have enabled some restaurants and bars to stay alive, while many will not. Unfortunately, even for the industry survivors, it may take a while for business to return to normal. When restrictions lift, many customers may still feel the need to avoid public spaces due to health concerns. It’s also likely that many coffee-and-lunch spots will experience lasting decreases in sales, as fewer people are engaging in a daily commute and lunch at the office.
Hygiene and Personal Care has Never Been More Critical
The global pandemic has been devastating for cosmetics and fragrances, but beauty FMCG brands that include hygiene, health, and skincare products in their portfolio have seen increased sales that offset losses in cosmetics and fragrances. Here are some of the lasting effects we’ll see long into the future:
- Increased germ awareness. As many healthcare workers have said, one good thing about 2020 is that people finally learned how to properly wash their hands. There is a whole generation of people who have internalized lifelong awareness of how diseases are transmitted and their effects on vulnerable populations. It is likely that the West will adopt the habit of regularly wearing masks when they aren’t feeling well, and will permanently change their hygiene habits.
- Home cleaning and sanitizing products. Naturally personal and home sanitizing products like antibacterial sanitisers and cleansers saw huge growth in 2020. Not only will vulnerable populations maintain these cleaning habits for years to come, but it is likely that consumers will have developed ingredient preferences and brand loyalties. While the sudden market spike these products saw in 2020 will subside, it is likely that many home and personal sanitizing products will see enduring market growth long after the pandemic.
- Pure, natural, organic brands dominate. As hygiene and personal care products are so closely linked to ideas about health and safety, consumers are drawn to brands and ingredients that make them feel safe and comfortable. While retail distribution was disrupted during 2020, organic skincare and personal care products are still expected to enjoy significant global growth in the coming years.
What Might a Post-Covid Recovery Look Like?
Most people do not want the world to return to “normal” – instead, they want a corona recovery that is permanently healthier, with greater social and financial equality, and greater environmental responsibility. In fact, over 86% of adults in 27 countries around the world want the post-covid world to be more sustainable and equitable.
In the absence of strong governmental regulations, brands are taking a stand themselves, by banning hate speech and conspiracy groups on their platforms, protecting the environment, and embracing social responsibility. FMCG brands that help consumers understand, anticipate, and co-create a new, just, healthy world will be the brands that lead us into a new future.