Food and beverage e-commerce could hit $109B in 2021

11 Feb 2021

This year, U.S. online sales of packaged food and beverages are forecast to reach between $90 billion and $109 billion, according to recent research from the Food Industry Association (FMI) and NielsenIQ. The final dollar figure will be contingent on the vaccine rollout and economic recovery in the U.S., among other factors.

Surging demand for e-commerce grocery is largely attributable to the pandemic, but researchers say that this is a trend that is liable to stick around for the long term.

Food and beverage e-commerce could hit $109B in 2021

Grocery sales drove a notable increase in e-commerce traffic with sales rising 125% for the year ending Nov. 30. Click-and-collect services like curbside pickup were a particularly large force behind this uptick in demand for online grocery shopping solutions. But not all products are equally as popular. Within the food category, the largest growth segments by dollars were beverages, wine and coffee.

Despite this substantial increase in sales, the two market research firms found that companies still have a $58 billion opportunity to get shoppers to spend a similar share of dollars for online food orders as they do for non-food items.

E-commerce, while not a new concept, experienced meteoric growth over the last year as manufacturers across categories rapidly adapted to demands for direct-to-consumer and ship-to-home solutions. Companies ranging from Beyond Meat and Perdue Farms to Mondelez and PepsiCo rolled out their own independent e-commerce portals to tap into this trend. Nevertheless, last March, industry research firm Profitero and Kantar found that only 17% of the 200 companies were fully prepared to lead in e-commerce strategies. Many firms lacked dedicated e-commerce pricing and supply chain strategies although four in 10 identified having an online DTC platform as a strategic priority.

Since then, the focus has continued to be fixed on online shopping. Although many more models centered on the distribution of boxed and bottled goods are available, companies are continuing to work to make online fulfillment a more profitable arm of their businesses rather than an appendage that functions out of necessity. To accomplish this, many companies have made workforce and warehouse adjustments, invested in new digital tools to specifically allow for e-commerce growth and are renegotiating with third-party companies like Instacart, a company that FMI and Nielsen identified as the main point of entry for online shoppers. The company posted $15.7 billion in online food and beverage dollar sales for 2020. Amazon, Walmart and Kroger were the other leading online platforms pulling in $17.4 billion, $6.5 billion and $6.1 billion respectively.

But proprietary e-commerce platforms continue to gain steam alongside those hosted by grocers. Kellogg’s e-commerce business represented 6% of its global retail sales in Q2, after doubling its share of business during the pandemic. By optimizing an online presence, McKinsey research found that brands can get ahead as shoppers are switching brands at an unprecedented rate, causing them to be more dependent on online inventories that list available products.

Related news

Chinese food brand wants to give customers ‘the full experience’

Chinese food brand wants to give customers ‘the full experience’

16 Dec 2022

Food brand Xiao Chi Jie is revamping Chinese cuisine for the modern American consumer. The Washington-based company sells regional Chinese specialties like soup dumplings, noodle kits, and barbeque skewers direct-to-consumer in the US.

Read more 
Regulations spur healthy snacking in Europe

Regulations spur healthy snacking in Europe

15 Dec 2022

Healthy snack demand is on an upward trajectory in Europe, fuelled by products attaching health halos to their products, according to latest figures by Euromonitor – but regulations may be the real driver.

Read more 
Could the EU-Mercosur trade deal be revived?

Could the EU-Mercosur trade deal be revived?

14 Dec 2022

The re-election of Luiz Inácio da Silva, or Lula, as president of Brazil has prompted speculation that the free-trade agreement between the EU and South American Mercosur bloc could be revived – but the European farming sector has concerns.

Read more 
Novozymes and Chr. Hansen to merge

Novozymes and Chr. Hansen to merge

13 Dec 2022

Danish enzyme suppliers Novozymes and Chr. Hansen are to merge in a strategic alliance that will "show the world the true power of biosolutions", according to the CEO of the continuing company, Novozymes.

Read more 
Could menopause-supporting products be the next big opportunity?

Could menopause-supporting products be the next big opportunity?

13 Dec 2022

As supplement brands launch products to relieve the symptoms of menopausal women such as nutraceutical gummies, the unmet needs of this group is attracting government attention in the UK.

Read more 
Plant-based fish and seafood launches around the world

Plant-based fish and seafood launches around the world

12 Dec 2022

From pea protein-based prawns to microalgae-based tuna alternatives, plant-based alternatives to fish and seafood are on the rise around the world.

Read more 
Editors’ choice: Our roundup of the most innovative sweets, snacks and bakery products

Editors’ choice: Our roundup of the most innovative sweets, snacks and bakery products

9 Dec 2022

The sweets, snacks, and bakery categories are an exciting area, full of fresh and innovative products which are constantly adding meaningful value to the sector.

Read more 
Functional food in Japan centres on health and proving claims

Functional food in Japan centres on health and proving claims

8 Dec 2022

The latest Japanese functional food and drink trends put health and product efficacy firmly on the production agenda for new releases.

Read more 
Swedish food agency: One in 10 coffee brands contain excess acrylamide

Swedish food agency: One in 10 coffee brands contain excess acrylamide

7 Dec 2022

New findings from the Swedish Food Agency have revealed three of 29 coffee products sampled contained acrylamide above limits, reinforcing the link between levels and degree of roasting.

Read more 
‘Super nut’? Indonesia’s ‘best kept secret’ wins EU novel food approval

‘Super nut’? Indonesia’s ‘best kept secret’ wins EU novel food approval

6 Dec 2022

A previously obscure, nutrient-rich Indonesian nut is set to hit European shelves after winning EU novel foods approval that could also help protect under-threat kenari forests on the archipelago.

Read more