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Big Brands Embrace Direct-To-Consumer – A Sign Of Things to Come? Analysis

Published on May 14 2020 8:19 AM in Features tagged: Trending Posts / Nestlé / PepsiCo / Brands / Kraft Heinz / GlobalData / Direct-to-Consumer / D2C

Big Brands Embrace Direct-To-Consumer – A Sign Of Things to Come? Analysis

While major food brands and the grocery channel have been fundamentally aligned since the dawn of modern retail, changes to the consumer landscape have led many FMCG giants to turn to direct-to-consumer (D2C) sales, in what could be a sign of things to come.

That's according to GlobalData food correspondent Simon Harvey, who was commenting following PepsiCo's entry into the D2C market earlier this week.

Alternative Channel

Announcing the launch of PantryShop.com and Snacks.com, two new e-commerce platforms launched by the soft drinks giant, PepsiCo said that its move into D2C responds to its need to be 'laser focused on meeting consumer needs and winning in the marketplace', particularly amidst the ongoing COVID-19 epidemic.

"In these uncertain times, as more and more consumers are using e-eommerce channels to purchase food and beverage products, PantryShop.com and Snacks.com offer shoppers another alternative for easy and fast access to products they love," commented Gibu Thomas, senior vice president and head of e-commerce at PepsiCo.

As GlobalData's Harvey points out, with this move, PepsiCo has joined Nestlé and Kraft Heinz in setting up D2C services in recent months.

“The coronavirus outbreak has forced many consumers online, some out of fear of visiting stores and others just as a means of ticking off their shopping lists because supermarket shelves have often been left empty from pantry-loading," he says.

Major brands are also responding to the emergence of start-up enterprises in the D2C channel, which underline established businesses' need to be flexible, particularly during these uncertain times, Harvey adds.

“However, key here will be the reasoning behind launching into D2C – was it something being considered before the onset of the current crisis, which was revealed as the case by some, or just a reaction to it? It's probably a mixture of both, but it will be interesting to see how many of these services survive beyond these unprecedented times."

Longer-Term Shift

While it is too early to say what the lasting effect of the coronavirus will have on the retail landscape of the future, expectations are that the online channel will emerge out of the current crisis stronger than before – something that could embolden branded manufacturers to embrace D2C more thoroughly.

“One suspects D2C may become a new normal as both shoppers and producers alike realise its benefits," says Harvey.

"After all, who wants to lug heavy cans of food around the supermarket and then get them home? This is perhaps something Kraft Heinz considered when it launched its D2C service for bundles of baked beans and soups in April.

“D2C platforms are not expected to replace existing channels, at least among the big food manufacturers anyway, but are more intended to be complementary to them. And, given the new entrants we have seen in recent weeks, the market in serving the consumer directly is set to remain active.”

© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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