What’s Next for Startups? New Opportunities and Challenges Arise from Covid-19

The recent pandemic has taken consumers back a couple of decades with their purchasing habits. COVID-19 flipped a switch in shopper behaviour which saw consumers rely on the bigger, established brands to be there for them when they needed. This major shift in consumer priorities is at the opposite end of the scale from where the industry was just a few months prior to the pandemic where shoppers wanted to try new food and beverage products. Consumers were willing to take a chance on startups and spend a little more on premium, more sustainable products.

However, priorities have changed and the tables have turned with consumers focusing on familiarity and budget which has seen significant growth for the bigger, legacy brands. Pre-COVID-19, it was always the threat of startups. Post-COVID-19, top brands are halting NPD plans for cutting edge products that were planned to compete with the startups, instead, they are focussing on core brands and products that consumers know and trust.

The once 'forgotten' categories of frozen and ambient have seen a resurgence, getting a lot of attention by consumers who are seeking out shelf-stable products that can be stockpiled or have at home for a 'rainy day'. With any categories facing growth, innovation follows, and there is most certainly room for innovation in ambient and frozen which has been traditionally dominated by older, well-established brands. This resurgence in 'most trusted' has seen a loss of engagement with startups and new brands. So how can startups and even newer brands break the 'familiarity' chain and get on-shelf and into the trolley?

There is a real opportunity for brands and startups to cater to the occasions that have typically been satisfied by restaurants and cafes. With strong desires for occasional dining, the restaurant and cafe experience is now in-home. Premium products that offer a 'next level' experience have the potential to see huge growth. Examples can be seen with the alcohol category, with products and brands that empower consumers to replicate speciality drinks at home. Others could be seen in the sauces category, allowing consumers to create a meal that gives them a 'restaurant' quality experience at home. Even though the immediate threat of contracting the virus has decreased in New Zealand, it is not eliminated as yet and consumers remain cautious. These premium products that can be purchased at the supermarket give consumers the ability to become more of a foodie provide an alternative to dining out, whether that be from worries of contracting the virus or budgeting restrictions.

COVID-19 also meant that almost everyone went online in search of products, whether it be from direct-to-consumer or via big grocery banner e-commerce sites, and with all that time at home, allowed them to explore brands and products in front of them online, an opportunity to learn more about what they were buying, a process that can level the playing field for brands. From this online exploration, it is also a chance for brands to address packaging and product claims. Is this a good time to highlight wellness benefits? Does your product contain Vitamin C but it wasn't communicated with the customer previously?

The whole pandemic has seen consumers become more science-savvy, understanding more about transmission rates, how viruses work and the effects it can have on your health. Will this translate to the food and beverage industry? Will the grey area of food and beverage product claims like 'this will make you feel better' be tossed aside in favour of those brands who can scientifically back up their product? Consumers will move into a new space where they want to know that the product claims are backed by science. Brands that have that legitimacy, will stand out on the shelf.

In New Zealand, recent research carried out confirmed an increase in mental focus and cognitive performance from consuming Arepa - the New Zealand blackcurrant nootropic beverage. Drinking Arepa significantly improves mental performance in physically fatigued subjects, according to a new peer-reviewed and published study conducted by The University of Auckland.

The Kiwi food-technology company Ārepa, has gained significant global attention for its groundbreaking patented ‘smart drink’ that combines a unique variety of New Zealand blackcurrants with an extract of NZ pine bark. These specialised ingredients are often referred to as ‘nootropics’, a buzz word to describe compounds that support cognitive function.

In the short term though, it can be tricky for consumers to make that giant mental leap during a crisis or while times are tough. It will take a long-term approach from brands to see the increased growth when consumers are ready to shift their mindset to preventative measures and seek out products with real health benefits.