Retailers   //   March 18, 2020

Outside of grocery delivery, food startups are also seeing a bump in new subscriptions, DTC sales

Since the beginning of the coronavirus outbreak in the U.S., grocery delivery services like Instacart and Amazon Fresh have seen a huge spike in demand. But other food and beverage startups are also seeing an increase in sales, as many shoppers stockpile snacks and fresh food while they work from home for the foreseeable future.

Meal kit company Blue Apron has seen its stock price more than double this week while Daily Harvest, which sells smoothies and soups, posted on social media that it was doubling its inventory in response to an increase in demand. Subscription service Trade Coffee said it has seen a 10x increase in new subscriptions. And Real Good Foods, which sells a line of Keto friendly frozen foods, said it has seen a 20x increase in its direct-to-consumer business.

E-commerce food businesses, are facing a similar dilemma as makers of hand sanitizers, soap and other in-demand products. They have to figure out how to revamp their marketing strategy, in order to cater to shoppers who want to stockpile up on their company’s products, without driving customers to purchase products out of fear. And, how to keep up with demand. AJ Stiffelman, chief marketing officer of Real Good Foods, said that the whole company is pretty much working from 8 am to midnight right now to keep up with demand.

“There’s more at stake,” Stiffleman said, because of the increased demand.

Taylor Holiday, managing partner at marketing agency Common Thread Collective, said that food delivery startups should consider running ads at this time that focus on promoting their ability to get healthy food to customers without leaving their homes, and to allow them to avoid crowds at grocery stores. Common Thread Collective works primarily with direct-to-consumer brands that do under $30 million in revenue, and counts Real Good Foods as a client.

“The landing page we all had two weeks ago…does not speak to our state as human beings today,” Holiday said.  “They are in a very unique position as consumers in that many of us are quarantined in their stores, we are not going to any stores, brands should think about what the value proposition is [relative to that].” Real Good Foods, for example has been promoting in social media posts the fact that its products are available for delivery through Instacart, and has dropped its minimum order threshold for free shipping through the end of March.

Melissa Spencer Barnes, chief marketing officer of Trade Coffee, said normally the company runs posts on its Instagram page promoting coffee shops and roasters from around the world. But this week, as many of its customers are working from home, it instead asked its followers for questions they have about brewing coffee from home, and will be answering them on its social media pages in the coming days.

The shift to working from home in the wake of the coronavirus outbreak has also led Trade Coffee to rethink its offerings. Trade Coffee’s coffee bags come from roasters around the United States, and in total the company has more than 400 different bags of coffee grounds that subscribers can choose from. On Friday, Trade Coffee started selling five pound bags of coffee, which is the size that roasters normally sell to offices. Normally, its bags come in 12 ounce sizes. Spencer Barnes said that the company anticipated subscribers would want to stock up on more coffee now that they are working from home, but also wanted to help its roasters recoup any lost sales.

“So many of [our roasters] have a business that is reliant on retail sales, or a lot of them have wholesale sales to offices, they are just looking for new ways to drive sales,” Spencer Barnes said.

Trade Coffee declined to say how many subscribers it has, only that it is on track to ship its one millionth bag of coffee this year.

While many of these food and beverage startups have only seen a sales bump within the past week or two, they’re preparing for the unprecedented demand to continue for the foreseeable future.

“People with autoimmune issues — they are not going to be going to Chipotle in 6, 12, 18 months because they are just scared. This is going to change behaviors, for sure over the next 18-24 months,” Stiffelman said.