What to Know About the Disruption in the D2C Food & Beverage Industry

The food and beverage industry has changed since the world went through a global pandemic that left people terrified they would one day head to the grocery store and find nothing but empty stretches of shelves in sparse-looking aisles.

This was a reality for many shoppers during the height of the Covid-19 outbreak and added with the desire to avoid high contact surfaces and close proximity to other shoppers, consumers were glad to turn their sights to others options for their groceries. 

E-commerce food and beverage companies capitalized on this preference and society collectively stepped into the new wave of food distribution known as the direct-to-consumer model. Rather than supporting third-party distributors or middlemen through in-store shopping, D2C businesses are selling their products straight to the customers. 

Perhaps you are most familiar with this new business model from meal subscription boxes that are delivered straight to a person’s doorstep on a weekly, monthly, or even semi-weekly basis. Meal kit boxes like Blue Apron, Green Chef, Nature Box, and Hello Fresh have risen in popularity in the last year.

Hello Fresh now owns the top spot for meal kit subscriptions, as it is currently the #1 meal kit company in the world. 

Hello Fresh Founder and CEO Dominik Richter have spoken out about the way the Covid-19 pandemic radically accelerated the success of D2C meal subscription boxes, and he doesn’t anticipate that high to disappear any time soon.

“As consumers considered new ways to get their food, social distancing needs led many to experiment with digital food retail channels for the first time. While grocery store shelf shortages were resolved in a couple of weeks, they set in motion lasting changes,” said Hello Fresh Founder and CEO Dominik Richter.

“Increased cooking at home is here to stay – it is not a pandemic-era fad that will simply drop off after six months…[the forward momentum of remote work] points to more occasions for consumers to cook at home – and more demand for products and services to fill that need.”

The success of the D2C food and beverage industry is that it is built around a need that will never disappear: the need to fuel your body. And with priorities shifting to time spent at home with loved ones, the act of spending time cooking with others has become a focal point for families. D2C products sent straight to one’s house in various states of preparation save time.

“D2C meal kits are in such high demand because of how convenient they are,” says Jacques-Edouard Sabatier, Co-Founder, and CEO of JOW. “People have realized they want to spend as much time with their loved ones as possible, so any unnecessary routines, such as physically going out to the store to complete the shopping, can be cut.

Meal delivery saves time in so many ways: planning meals, shopping, prepping, and cooking–the time of the whole process is significantly reduced when a meal delivery service is used.

At JOW, we recommend a personalized menu based on your individual details like household size and dietary restrictions and provide meal options that once selected lead you to the choice of simply adding the correct amount of each ingredient to your online cart. Then, your order is delivered directly to you. It’s the simplicity that sells these days.”

People love D2C meal delivery because of the way it removes the barrier of not knowing what to shop for and how much to buy. For anyone who has ever aimlessly wandered around a grocery store, searching for inspiration about what to make for dinner, the meal delivery method is an appealing change.

“The beauty of D2C food and beverage delivery is the way it teaches customers: teaching them how to eat right as far as portion sizes, healthy meals, eating enough nutrients from the various food groups, and showing the importance of high-quality ingredients.

People have made it known that they not only want to avoid in-store shopping without purpose, but they also want to be taught how to eat to fuel their bodies,” says Seb Evans, Co-Founder of Banquist.

Direct-to-consumer food delivery also caters to unique food sensitivities and needs. Consumers who follow diverse lifestyles such as veganism, the keto diet, an organic diet, or a paleolithic diet, can be overwhelmed with finding ingredients and meals they can eat.

Rather than spending hours examining the nutrition guide on various products in-store, D2C businesses tailoring to unique food needs remove the hassle entirely by creating meal plans suited for even the most restrictive diet.

“At Uprising Food we offer superfoods that are low carb/keto, paleo-approved, gluten-free, preservative-free, dairy-free, and added sugar-free because we understand that people want to feed their bodies only the best ingredients,” says William Schumacher, Founder, and CEO of Uprising Food.

“We understand that people desire to eat healthily but that this looks like more than just getting enough vitamins and nutrients. D2C food offerings such as ours are a lifesaver for anyone who’s looking for products that allow them to fall back in love with their favorite foods.”

Jeremy King, CEO, and Founder of consumer research website Attest have surveyed the research in order to understand the widespread impact of the direct-to-consumer food and beverage industry. 

“D2C makes [consumerism] something that you control yourself and gives you huge advantages, particularly when you add large datasets,” said Jeremy King, CEO, and Founder of Attest state…“

There are lots of people doing interesting things here but the main themes are: taking away awkwardly; adding sustainability; adding customization and choice where you never had a choice before; jobs to be done; the simplest form of marketing; crazy new stuff; just making it easy to try new things.

The traits are the interesting things to copy, not the business model. The traits make these brands distinctive and I think that’s the fun part of them.”

His mention of the sustainability aspect is a huge selling feature considering that the target audience for food and beverage subscriptions is millennials. This generation has outlined that a top concern of theirs is sustainability.

However, many millennials will admit that they don’t know how to meet the requirements of total sustainability in their eating on their own. They are pleased with the concept of allowing experts to take care of this for them.  

“D2C food distribution options are not the same as going to the supermarket and buying the same ingredients; D2C companies offer novelty products and this is a huge part of their appeal.

You’re shopping for meals and ingredients online and suddenly you’re supporting a more environmentally friendly alternative, and being sent the right portion sizes to allow for no food waste, plus you’re caring for yourself in addition to the planet because you’re receiving fresh, responsibly sourced ingredients,” says Charlie McKenna, Chef & Founder of Lillie’s Q.

Sustainability also looks like shopping in a way that is more environmentally friendly. Removing all the unnecessary non-eco-friendly inclusions of shopping such as packaging is a major appeal of subscription boxes in particular, along with any D2C company invested in the planet.

Subscription boxes that pack produce straight into cardboard, biodegradable boxes skip unnecessary packaging and plastics, which consumers notice and appreciate.

“At JOI we care deeply about our environmental footprint. Every action taken today will impact the future of the planet, but as a majority, we decide if it will be in a positive or negative way. At JOI we take pride in the measures we follow in order to be a sustainable food source, but we also feel it is the least we, and any company, can do.

We have created products with reduced packaging waste, less food waste due to the long shelf life of our powder-form plant milk, and a reduced carbon footprint from not shipping heavy water weight due to our add-water formula,” says Hector Gutierrez, CEO of JOI.

And of course, sustainability includes striving for less food waste. The United States Department of Agriculture has estimated that 30-40% of food is wasted per year. Millennials are a generation dedicated to doing their part to cut back on waste, and one easy way they know of that provides this change is D2C food companies that focus specifically on this mission.

Subscription boxes like Misfits Market, Imperfect Foods, Perfectly Imperfect Produce, and The Rotten Fruit Box make it their goal to cut back on food waste by salvaging and selling the produce that doesn’t look uniform enough for grocery stores and is therefore thrown out, perfectly fresh and usable. 

“The younger generations, in particular, starting with millennials, are concerned about statistics surrounding food waste. They are dedicated to making the differences needed in the world by purchasing products that should never be discarded in the first place,” says Nicholas Vasiliou, CEO of BioHealth.

Millennials and the generations following are also not enamored with sugary, processed foods, and are willing to put their funds into purchasing healthier options of their favorite sweet treats from childhood. 

“There is a lot of necessary research and information today regarding the damaging effects of too much sugar, sodium, and saturated fats in your body,” says Melanie Bedwell, E-commerce Manager of OLIPOP. “That doesn’t mean people are boycotting the foods they grew up eating, but rather that they’re seeking healthier alternatives.

OLIPOP is a new kind of soda that tastes the same as your childhood favorites but with only 2-5 grams of sugar, with the inclusion of 9 grams of fiber and microbiome and digestive health support. We know your body can’t always handle treats the same as when you were younger. Our solution is to offer better-for-you alternatives, and believe me when I say there is a high demand for this.”

Although there is a desire for healthier versions of the foods they love, consumers don’t always know how to shop for this healthier lifestyle, and often appreciate guidance from brands they trust.

“People are in a sense looking for someone to tell them how to eat to live a healthy, sustainable lifestyle. They want to know what to eat but also what specific products to purchase that will fit into their goals. Subscriptions that offer a variety of different healthy products are the perfect way for small brands to spread the word of their products.

When people are purchasing subscriptions of their favorite products, they are expressing commitment to a lifestyle and to the brands they love and trust to care for their bodies,” says Ben Teicher, President, and CEO of Healthy Directions. 

There’s no way around it, direct-to-consumer companies are more convenient for the customers than putting their time towards shopping, meal prepping, and recipe researching. This is one aspect that D2C companies capitalize on.

“With the offering of products shipped or delivered straight to a person’s residence, businesses are selling ease as much as they are selling their actual products,” says Chris Vaughn, Founder, and CEO of Saucey. “Saucey offers alcohol delivery in 30 minutes or less, with an extensive collection of brands and products available.

Our customers love how their drinks are delivered directly to them, and they don’t have to worry if they’ve already had a few drinks when they order because they never have to leave their house.”

With delivery comes an added benefit of not needing to shop around for a particular brand or product.

“If the customer wants to find JuneShine Hard Kombucha, rather than searching all over at multiple stores they simply have to go to the “Find Us” link on our website and we locate a store that has our products in stock.

It’s the most convenient way to shop, and lets customers know where they can find us since our products might not be sold in the particular local grocery chain where they regularly shop,” says Justin Chan, Growth Manager of JuneShine.

There you have it, the wide expansion of offerings that the direct-to-consumer food and beverage industry offers. Based on the current climate and the success of D2C food companies, our projection for the industry’s future is rapid, steady growth for this business model and structure.

As long as companies keep listening to their audience’s desires for sustainability and healthy options, and continue to make the process of ordering and delivery simple and easy, the D2C model will be the growing future of food.

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