The Tetra Pak 2018 Index highlights the ‘unique opportunities’ coming to the food and beverage industry with the rise in popularity of people purchasing their groceries online.
In the beverage industry, direct-to-consumer sales are particularly important for startup brands who may struggle for brick-and-mortar shelf space.
Key growth factors
It is an entirely different market and set of logistics to ship perishable foods and liquids direct-to-consumer rather than in bulk to stores, and retailers are rising to the challenge.
Dennis Jonsson, president and CEO of Tetra Pak Group, said: “There were some initial challenges. But with most of these now addressed, online grocery shopping is on an unstoppable march, taking an ever-greater share of the food retail market.”
Several key areas are driving growth in the industry, including convenience of delivery, increased interest in sustainability, desire for personalization and improved technology and performance.
Convenience is the main inspiration for shopping across all industries, but it’s particularly helpful in eliminating the chore of grocery shopping. Consumers use their smart devices to order and can set up recurring purchases that replenish their most-used items. Tetra Pak says that China and South Korea are leading the auto-replenishment market.
E-commerce also thrives using the promise of exclusivity. According to Alexandre Carvalho, Global Marketing Services Director at Tetra Pak, most newer companies, and beverage startups in particular, launch direct-to-consumer from their websites. Brick-and-mortar shelf space isn’t seen as the only way to reach customers, but just one way.
Brands that are exclusively sold online, or products from brands that are only sold on certain websites, drive growth from desirability. Consumers increasingly want personalization from their shopping experience, and they are finding it by connecting with brands online.
Bottled water has seen a surge in popularity within e-commerce, particularly in North America and the UK. Even alcohol is seeing growth online when paired with meal kits and subscription boxes, according to Carvalho.
Barriers to expansion
The explosion of the online grocery market hasn’t come without challenges. Consumers are mainly deterred from shopping online because they can’t see or touch the product before purchasing. The Tetra Pak Index report indicates that improved augmented reality (AR) technology will be a solution to this.
Complementary AR can teach consumers more about the product, give them exact visuals and even incorporate promotions and exclusive deals through the unique code scans.
The key takeaways from the report are experience and efficiency, says Carvalho. Personal connections with brands and enhanced AR technology offer the experience while convenience and smart packaging deliver the efficiency.
Manufacturers are constantly developing new packaging to deal with the added transportation that comes with direct-to-consumer purchases.
“Efficiency becomes crucial because this is a channel where we’ll have some incremental cost, but it’s driven by the convenience for the consumers. Brands, manufacturers and the package industry need to work on solutions that drive efficiency,” said Carvalho.