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The State of the Beverage Industry by Kara Goldin

Originally posted by hint founder & CEO Kara Goldin on LinkedIn Pulse here.

Home late from work for the third night in a row, Blaire’s in no mood to cook, but that’s not a problem. She’s got dinner ready – a tasty light meal picked up on the way home from one of her favorite places. Nothing too heavy – a perfectly prepared indulgence that won’t weigh her down the next morning at the gym.

Jeff drops by his favorite grocer on the way home, to grab a nice piece of fish for dinner. He selects a perfect medallion of salmon and picks up some spices and olive oil. Together with locally grown vegetables he bought this past weekend at the farmers’ market, Jeff’s got the makings of a tasty meal and it won’t take him long to make.

Blaire and Jeff and millions of other hard working young people don’t shop the grocery stores like their parents used to. They buy many of the staple items at warehouse clubs and they pick up prepared or almost-prepared meals at restaurants or the local natural or specialty grocery.

The grocery stores that are thriving instead of just surviving have realized that the challenge goes way beyond the items the store carries and cuts to the reason that people visit the store and the type of experience that will drive them to buy more products.

Traditional grocery stores were built for their parents’ (or grandparents’) generation, when almost all meals were prepared at home and people needed to buy a lot more ingredients. My mom used to love going to the grocery store and walking the store aisles. She went every day at 4pm. Part of that may have been that she had to have enough food to feed five kids, but part of it was that it was her hour to be out of the house and socialize. Nida was her favorite checkout woman and would ask how the soccer game went the night before or if my mom liked the recipe she gave her. Going to the grocery store was a fun part of the day.

Today, as we go through hectic lives, we prioritize convenience and seek high quality foods and beverages as a bright spot in our day. When we cook, it’s often simply because we enjoy the experience, so we look for products that reduce or eliminate prep work.

The smartest grocers are building stores around ready-to-eat food, delis or restaurants and are turning the center of the store into a smaller part of the business. They are optimizing the selection of products around higher margin items that delight the consumer. They are not allowing big food and beverage companies to take up vast amounts of space with run of the mill staple items like soda pop.

At hint, we see high levels of first time trial among Millennials shopping the prepared food section at places like Whole Foods. Once the consumer has tried our products in that setting, they know they can stock up in the grocery aisle, but visibility in the prepared food section is a big driver of growth.

Of course, as the grocers adapt, the world continues to change. From Fresh Direct in Manhattan, to Munchery in San Francisco, to nationwide, a broad range of delivery services are bringing quality prepared foods direct to the home. Those services also strive to deliver staple items and indulgences, so it’s going to be an interesting decade for the grocery industry.