2020 Year End Survey Results Summary
First, thank you to the 16 brands that responded to the survey. Your input was highly valuable and helpful, and I am taking your feedback into consideration as we plan our 2021 calendar.
Background
Food’NBev Connect asked its brand members in January to share proprietary data about their revenues, hiring, distribution and expansion plans (SKU growth) for the 2020 – 2021 period. We have aggregated the data to develop a snapshot of portfolio performance and an indicator of group success.
With 2020 being the pandemic year, the survey was geared to provide some insight into how deeply our brands were impacted, how we fared as a group and how we did vs. the market overall. We also wanted to gauge how you are feeling about the new year of 2021 and prospects for returning to more “normal” growth. I used the data from this year’s survey and compared and contrasted it to the responses to similar questions at the end of 2019 to get some further information on impact by type of product/category and on trends overall.
There is considerable noise in the broader data about the market overall, but anecdotal information and some survey and news reports indicate that emerging brands in particular faced many marketing, production and distribution challenges as the pandemic hit and that overall growth was minimal to flat in the overall space across food and beverage brands in this segment. Many faced raw material shortages, were shut out of distributors for a while, focused on restaurant or food service channels, or had increasing costs to address covid in general. This led many to sales declines and layoffs. Other brands, mostly those who had direct control over production or logistics, or those mostly focused on digital channels and DTC models, seemed to do well and increase sales during the pandemic. For those who had to develop new channels and DTC capabilities, it took some time for the pivot to take hold, and many didn’t make up ground sufficiently to drive growth in the period.
Summary and Key Findings
Here are some top line results based on the aggregate information:
- As a portfolio, we did experience overall revenue growth, though it certainly slowed from prior year – +4% (2020 v. 2019) vs. prior year of +19% (2019 v. 2018). I consider this an overall victory for the portfolio, though obviously, individual company performance was highly varied.
- Results here varied across brands from a low of – 45% to a top gain of over +29% (excluding our largest brands and new to market brands in 2020). Overall, five brands saw declines, 2 were flat and 8 brands saw growth.
- Beverages overall showed growth, but we excluded Rise (non-respondent), so total number is for only a portion of the portfolio and several of the brands were new to market in 2020.
- Snacks and seasonings had mixed results with four brands up vs. prior year and 4 brands down
- Frozen and dairy products were flat across the portfolio
- Brands expect to add staff over the 2-year period (2020 – 2021) and increase full-time staff by 50% and part-time roles by 35% — most growth being planned for 2021
- Avg. revenue per employee was approx. $ 22,700 in 2020 with expectation to grow to over $ 50,000 in 2021 as new brands start to mature.
- Digital has clearly become more prevalent in terms of distribution importance for our brands. On-line sales of all types now drive approx. 35% of all sales revenue, up from 20% in 2019. This trend is expected to continue in 2021, though hard to dimension overall growth
- Even as digital is growing in importance, store growth is very important to our brands. While store counts grew slightly in 2020, brands are expecting to add over 1,000 aggregate new store distribution sites in 2021, or over 50% growth from 2020.
- In terms of areas for future assistance and workshops or expanded contacts, four areas were clearly emphasized:
- Social and digital marketing
- How to gain more store distribution and address sampling issues
- How to better leverage PR
- More information about funding options and introductions to possible funding sources
Note: We have just added a new advisor who has a strong PR background and I am talking to several new social and ecom/digital marketing specialists who work with smaller, emerging brands…stay tuned as I keep investigating.
Let me know if you have any comments or questions.
All the best and stay safe!
Gary
Picking Up Speed: Better-for-You Continues to Win!
We have so much positive news going on across the Food’NBev Connect portfolio of brands – from Zesty Z now testing their popcorn in 30 Colorado Whole Foods stores, to several brands coming to market with their initial production runs (Patch Organic and Seir Hill), to Asarasi raising a record amount in the crowdfunding effort following their appearance on The Drapers, to a number of brands getting into new distribution arrangements and others in talks with strategic investors.
The Fall has seen an explosion of new activity and growth for most brands and our focus in workshops on how the world is changing under Covid–19 seems to have yielded some direct results. I am turning bullish going into 2021 that our brands have generally figured out the new normal and that the consumer is continuing to pursue the long-term trends we identified for better-for-you products, with better nutrition, cleaner labels, greater sustainability and healthier ingredients. In frozen, center aisle and beverages, better-for-you is continuing to win and our brands are overwhelmingly positioned in this space.
Changing Our Educational Workshop Approach For 4Q
Moving into late Fall and early Winter, I want to change our workshop and educational thematic to focus more on helping brands by emphasizing better execution. I have talked to a number of our CEOs and some of our advisers, and we are at a great point that such a focus, under a slightly altered presentation approach, can help us solve two issues that have been brought to my attention.
First, we have a number of new brands and advisers who have joined Food’NBev Connect since our last in-person meeting pre-covid in March. While I have worked with most of them to find places where our adviser team can add value, many brands don’t really know the other CEOs or all of our advisers, so the sense of community and peer assistance is slowed a bit, yet it remains so important to the value that the Food’NBev Connect model provides.
Secondly, our workshops need more interaction and we can add a greater problem solving emphasis than just general education or discussion of a topic. CEO’s have been calling me with their unique questions and issues, and my response is often, “Have you spoken with (fill in adviser or Brand CEO)…about that? They have worked that issue before or may know someone who can help.” Many of our brands have seen the synergistic value of working with and helping other brands in our portfolio and how the ease of peer group problem solving, sharing experience and success stories, amplifies everyone’s growth opportunities.
Proposed Format & Topics
Here is what I am proposing to the community for the next several workshops:
1) We will focus on one broad topic per workshop, such as the following:
– Front office/sales & marketing issues – including digital marketing and social media best practices, working with on-line and brick and mortar distributors & brokers, sampling and acquisition programs, public relations, new product development, etc.
– Finance and Ops – including software solutions, banking, merchant agreements, outsourcing partners and advice providers, forecasting and planning, developing a business financial model, preparing for fund raising, working with venture partners and affiliates, creating a data room, reporting, etc.
– Protecting the business – including legal issues, intellectual property, licensing, trademarks, patents, certifications, insurance, labor and hiring practices, overall risk management
2) Each session will feature sign-up pre-registration and will be limited to the first 12 brands for each session so that discussion can be maximized. This may even be too many, but let’s see how it goes. I will give some priority to newer brands, but otherwise, it will be first to respond by email to me once we send out the invite to sign up for each session. Not all brands will be interested in all topics, but your response will indicate interest and we can adjust as we go.
3) I will invite 2 – 3 of our advisers who have expertise in each area to join our call. I will ask them to first frame some key current topics and help us get conversation going, then it will be up to the brands to direct where it goes, with our advisers on the line to help us answer any tough questions or suggest improvements or fresh ideas on specific topics as CEOs with experience can share their approach to problem solving or which providers they used to solve a key problem. Brands, bring your tactical and executional questions and ask for help from the community.
Again, the goal is to provide a problem solving forum that is active vs. passive and to get community interaction increased and newer members to improve their involvement and assimilation. Each session will likely run 60 to 75 minutes in length, and we can always repeat sessions if they get oversubscribed or more conversation is needed.
Let me know your thoughts ASAP…I will get a schedule out for these meetings, hoping to have at least two of the three sessions done between now and Thanksgiving.
I will send out invites for each session as we get closer to these great events. Stay tuned!
Catching Up on Progress through the Covid Period!
Responding to the Pandemic…With Continued Growth and Innovation!
SUMMER 2020
So covid-19 hits in March right after our last community event and everyone panics…lines form at grocery, distributor flow is disrupted, workforce members stay home and everyone learns quickly what PPP and EIDL loans and grants are and how they were supposed to help everyone sustain. Certainly, brands that focused on B2B or sales to restaurants, bars and food service were immediately impacted the most and we saw very aggressive and active pivots to home delivery, curbside pick-up and expanded emphasis in social media and on-line direct to consumer models. The business plans for 2020 – 2021 that we all had were basically blown to bits and we actively helped brands go to zero-based budgeting and offered assistance on how to control cash burn and still move ahead.
It’s been bumpy, hectic and frustrating, but I am happy to report that most of our brands in the Food’NBev Connect community have survived and are getting used to the new “normal”. We have suggested that for new planning efforts, they should assume that this state will continue through to next summer, and to plan accordingly.
The great news is that some of our brand members have even managed growth during this period and unbelievably, 15 of our 20 brands have been very busy with innovation – bringing new products to market, updating packaging, pursuing new formulations, new distribution approaches and new partnerships. Several even bared all and re-entered or went through initial launch, with two more coming to market for the first time this September. Our brands have really responded and all deserve a huge hug (if we could give them one now!) and applause, too!