The First Drop: Inking the Calendar

It’s early July as I write this but — I shudder to note — the fall industry shows are appearing on the horizon. Our travel coordinator is starting to yell at me about assigning team members to cover Expo East and a late-scheduled Fancy Food Show in Manhattan, both in September, while NACS is coming around in October.

Meanwhile, back at the BevNETCave, after a long haul of virtual conferences — thanks for tuning in! — we’re planning the lineups for the return of our own live winter event in Santa Monica. (Programming Note: Brewbound Live is happening Nov. 30 & Dec. 1; NOSH Live is Dec. 2 & 3, while BevNET Live is on Dec. 6 & 7 — check our sites for speaker announcements, ticket info, and the usual rah-rah. We can’t wait to see you.)

The return of live events by no means indicates anything is truly getting “back to normal” — one of my favorite e-lines of the pandemic was from a LinkedIn-er who asked if there had EVER been a time brands in retail businesses could consider “normal.” But the big gears are starting to turn. To wit: New York restaurants are back in business, all Major League Baseball parks are open at full capacity, and my kids have stopped reflexively putting their masks on when we hit the beach. While we travel to industry events, schools and colleges will be in session. Traffic is back.

It’s not so much a sense of getting back to things as they used to be — especially since one of the salient takeaways of this period has been that what “things used to be” means different things for different groups of Americans, and it’s not all positive. But at least with regard to COVID-19, there’s a sense that the marketplace is in the process of moving on.

Living in the shadow of risk, however, many brands faced a choice: evolve or die. So they developed habits, innovations, business patterns that have evolutionary potential. Some brands have learned to thrive in the last 18 months in a variety of arenas: many went online via direct to consumer or specialized e-marketplaces like Thrive; some developed different form factors — powders, bag-in-box; others zeroed in on diet specialization, particularly around ketogenic diets.

But like a heat-loving plant that endures a rainy season, although they survived the storm by drawing on unfamiliar resources, it’s not clear what the stress did to the rootstock.

Which of these changes will linger as evolution? I’d say it will take the next 18 months to truly see the marketplace unwind the effects of the past 18 months. We know the overall economy is picking back up, of course, but we also see inflation and equipment delays, worker shortages and other shocks that can easily cut the recovery momentum from under the feet of individual companies.

On the financing side, it seems like we can’t stop writing about deals — but the nature of those deals is evolving. It’s no secret that there’s a growing market for SPACs and other IPOs — both for mature food and beverage brands and for new companies that seem to be heavily in the direct-to-consumer space. But should DTC equal IPO? Are mature companies ready to go public, or are they just happening to satisfy investors? With a two-year time limit the general requirement for most SPACs to invest in an actual company, the next 18 months will either be a chorus of SPACquisitions or a string of “time’s up!” declarations.

Also under scrutiny: the precarious state of the long-established primrose path, the sale or partnership with a big strategic entity. In just the past two years, brands like Suja, Zico, ScharffenBerger, Peeled, Ballast Point and Bolthouse Farms have been sold back to the private markets from which they emerged, scraped off the balance sheet by the Big Food companies that thought they were investing in the next generation of brands. How do those companies create value for their next set of investors — and how much brand equity is there for a comeback? After 18 months, there should be a clearer understanding as to if those brands can return to form.

Other industry trends that will be clarified in the next 18 months include a reading on the ceiling for the flood of brands into the spiked seltzer category and the general direction of CBD-infused products. As regulatory agencies catch up to their pre-COVID backlog, we’ll see if these brands have to continue to pivot away from their initial core ingredient and toward other functional herbs, or if they’ll finally be able to get the retailers and distributors to stop backing away. For brands based in wellness, the move away from gyms and toward home exercise creates a new set of visibility challenges.

CPG brands were, for the most part, much luckier than other food sectors when it came to the past 18 months — one only needs to look at the restaurant business to see how bad it could have been. Nevertheless, survival came through clever pivots and hard work. Congratulations on not just surviving, but evolving your models and showing your worth to a community that needed nourishment and flavor. Just be aware: normal isn’t normal. Even as the calendar fills, the only certainty is that each day will bring new questions.