Snaxshot #37: Progressive Produce

internet transformed the grocery shop

A newsletter on upcoming food and beverage trends that offers a curation of brands and aesthetics written by Andrea Hernández.

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🔮 Peek into the future:

  • scrolling is the new strolling

  • PDD & live streaming produce

  • Facily & group discount grocer

  • enter the GrocerGram

  • Delli & one stop F&B drops

  • meet the pantry "Kiths”

  • latest stop, cop and drop

  • spoonful of news

Come on in, the water’s warm, you know you want to!

Aisles, They-Are-A-Changing

If you’ve been here long enough you know we’ve been preaching about the changes happening in grocers for a while now, recall our CaaS (curation as a service) issue from back in March in which we detailed the rise of the curated grocer and niche marketplace as a global phenomenon. The aisles, they are a changing, and no we aren’t really going to be discussing 10-minute grocery deliveries because in our humble opinions, nothing really merits that much immediacy, unless of course, you are on the set of Chopped, and if that is the case, you better get going—good luck!

Can one unlearn convenience? Unlikely, and given that 2020 was a crash indoctrination for even the most internet deterrent citizen out there to adopt ecommerce, we can only go up from here. That is exactly what is happening with online groceries, consider that just in the first months of the pandemic, 40% of Americans were buying their products online, and despite it being almost. a full year since it started, this habit has only become increasingly more popular. It’s safe to say, that the time is coming where we no longer will walk down the grocery aisles, scrolling is the new strollingyou heard it here first.

—Online grocery sales will surpass 20% of the overall U.S. grocery retail market in the next five years, at least several years before pre-pandemic projections, a new Mercatus/Incisiv study predicts.

—Of nearly 42,000 grocery customers in 20 states polled for the study, 43% shopped online in 2020, up 80% from 24% in 2018. Still, even with relaxed restrictions and store re-openings, online grocery adoption rose 14% to 49% of respondents in 2021. 

—Online food and beverage sales grew 108.2% to $110.72 billion, compared with $53.19 billion in 2019,

U.S. online grocery customers have gravitated toward click-and-collect over home delivery as their preferred fulfillment method, the study noted. Seventy-six percent of respondents said they favor in-store (44%) and curbside (31%) pickup, compared with 24% preferring delivery. 

—What consumers are looking for re: online groceries:

  • Ease of use (for example, product selection, saved preferences, and order history for reordering)

  • self-serve access to information (such as stockouts, progress updates, and changes to orders)

—Walmart led the way in 2020, garnering a 32.1% market share the U.S. online grocery sales for the year. Amazon was in second place in 2020, with 28.9% of online grocery sales. Kroger, the largest standalone grocer in the United States, was a distant third, with a 12.6% share of online grocery sales.

—Fresh and frozen categories have gained the most traction in online demand.

—There is growing discomfort with third-party platforms for a variety of reasons, a study noted:

  • 81% of grocery retailers believe that third-party platforms will become their direct competitors in the future

  • 84% of grocery retailers believe they will lose touch with their customer base as third-party platforms become the front-end commerce brand and, in effect, “disintermediate them from their shoppers.”

—Driven by the growth of the internet, greater smartphone usage, more focused investment from retailers and shifting demographics, IGD forecasts online grocery in China to grow by almost 32% year on year by 2020.

Mexico and Brazil are cities that adopted online shopping in mass after 2020.

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Rise of Produce Influencers

You probably have heard of PDD, or Pinduoduo, a Chinese company that is less than a decade old but has already become larger than its predecessor, ecommerce giant Alibaba, all in the span of 5 years. PDD’s ambitions now go beyond just ecommerce, they want to become the world’s top grocer, and the way it is going to accomplish it, is through empowering the means of production. (ha!) Consider that agriculture in China looks a whole lot different than US, it’s vastly decentralized, that means, many farmers with smaller plot lands, as opposed to highly centralized, mass scale operations that make up the US food system. Groceries represent the tip of Pinduoduo’s efforts to modernize agriculture, they operate China’s largest agricultural platform, connecting more than 12 million farmers to its pool of customers.

In 2020, PDD did $20 billion on fresh produce sales alone on their platform, all by enabling farmers to go F2F, or farm to face —making it easy for them to be on-boarded unto platform, providing educational resources. The company also continues to explore potential collaboration with logistics companies to develop a nationwide logistics network optimized for the delivery of all these perishable agricultural goods. Another advantage of the PDD platform is that orders are matched to local farms, which cuts down on the time for transportation and ensures the freshness of the produce. By having consumers pick up their purchases at selected points (typically within a few hundred meters from their homes), the price is kept low by cutting out the last-mile delivery cost.

For farmers, the ease of use and low barrier to entry is what has proven profitable, PDD allows them to leverage something as common as livestream to sell something as mundane as pomegranate, that has the potential to turn a simple farmer into a produce influencer, with the potential to rake in millions, take the Pomegranate queen for example —He Shuang is a 25-year-old former flight attendant, who comes from a rural town in the Dailang mountains of Sichuan province, she quit her dream job to takeover her family’s pomegranate farm and become a seller through PDD’s platform, she is now a multi-million dollar business owner. She is known as the Pomegranate queen, famous for live streaming from the actual field, something she hadn’t seen before and saw as an opportunity to stand out. Filming from the orchard on mornings and evenings paid off as she rose in popularity, amassing thousands of new followers and buyers every single day. Her success became so well known, other growers and merchants started reaching out to her for help and support in selling their fruits. In less than 3 years, she went from unknown to building a multi-million dollar business all while leveraging PDD’s platform.

Providing tools to make it easier and more efficient for farmers to sell was just the beginning, PDD is now looking to share tools that will help farmers yield more efficiently, that will in turn result in more product being sold through their platform. Last year they tested an AI tool against actual farmers, the AI team won, producing a batch of 196% more strawberries by weight on average compared with traditional farmers and outperforming farmers in return on investment by an average of 75% having proved their point PDD announced it would roll out these tools to all farmers on their platform, doubling down investment in modernizing China’s agriculture. Other platforms have been paying close attention, consider the popular communications app, Whatsapp taking an interest and investing in ag tech in India, as the platform has become a utility and cornerstone for agriculture in the region—not to mention Whatsapp pay has been recently introduced not just in India but Latin America as well…

Watch this space, you heard it here first.

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Grocery Group Discount

Speaking of Latin America, there is a huge misconception that group buying hasn’t made it to the West yet, which is as inaccurate as the thought that social commerce is somehow novel…particularly in emerging markets— in Latin America alone, social commerce has matured in the past decade. In the region, Whatsapp is king, as WeChat is in China—but it’s not coincidence or luck —here’s the DL:

  • Emerging markets like LatAm are considered “mobile first” meaning majority of population operates via mobile phones, and in these regions most folks have never used or own a laptop (that tends to be a higher price point than a cheap smartphone)

  • In Latin America, most of the demographic skews lower income, most are unbanked which in turn leads most people to not have a monthly account, instead operate solely on what is called “recarga” —which is pre-paid amount you can pay at most places including gas stations, etc.

  • Whatsapp knew that in order to achieve mass distribution in a region like LatAm it would have to understand how it operates, and so they secured deals with the major telecoms that would ensure Whatsapp usage does not detract from “data” whenever folks buy their “recargas” in a way it becomes “free of use”

  • This is what has turned Whatsapp from a simple communications app into a commerce platform, way before they introduced the first commerce feature, Latin America runs on Whatsapp, it’s now considered a utility.

Native brands like Facily know this, based out of Sao Paulo, Brazil this social commerce marketplace leverages WhatsApp’s ecosystem and is seeking to re-invent the shopping experience for lower-income populations while connecting SMBs to larger audiences. Like PDD’s approach, Facily’s focus on everyday goods is key, hence groceries but it’s also seeking to fulfill for the masses, targeting the lowest income tiers in Brazil. Facily allows WhatsApp users to make group purchases for discounts, they offer a marketplace for consumers to purchase everyday goods at low prices, share purchase links with friends and family and receive items on demand or pick up at designated points. Not only are they being smart using pick up points (consider that pick-up model is also most popular in places like US) Facily makes it easy for even the unbanked to participate by accepting payments via cash and through PIX (Brazil’s Central bank digital payments platform) and they even accept “boletos” (vouchers) — they also have in-app games to enhance engagement virality, and to increase retention. By ensuring that their app is friendly to Brazilian masses, Facily has now become the 3rd most downloaded app in Brazil!

Who knew so much money can be made from serving the underserved? Facily is only 3 years old and well on its way to achieve unicorn status, they recently raised $366 million, and now are valued at $850 million. They are using an approach I call —”utility based building” that is solving for actual issues as opposed to creating a an option. Facily is smart about this approach, understanding that in mobile first cultures, websites are in a way obsolete, their app has become the new standard for grocer aisles, similar to what has happened in US with GoPuff etc. Being mobile first reduces the friction for those who only know mobile UI/UX in the first place, as opposed to trying to adapt web behavior into app. It’s also the reason why Whatsapp has recently launched catalogues and Instagram now has shops. Latin American consumers operate on “utility” modality, bargain is their language so it’s no surprise Facily has become so successful in such short time, there’s less individualism, the promise of savings is enough to entice folks to bring in their friends and family to buy in, not to mention, if you’re already connected, you already may have similar taste in the first place.

If you haven’t picked up on the trend already, the newest modus operandi is coming not from US, but from emerging markets, as these models are solving for friction in common everyday life, things that have become so bloated and competitive in more progressed markets, that they aren’t really replacing or solving for problems as much as providing yet another option. Group buying has been proven successful in Brazil, expect this model to hit other major Latin American markets like Mexico, Colombia, etc. Keep in mind that as Whatsapp Pay is introduced more throughout LatAm, this will only make the adoption of these models ever more easier.

Win, win.

Scrolling Through GrocerGram

Speaking of Instagram, mobile adoption is increasing amongst GenZ, bringing this mobile modality and its popularity to more developed markets like UK, US, and Australia. GoPuff, Gorillas and the rise of 10-minute grocery apps has shown you what the new “aisles” look like, and as they all rush to become the Adwords of CPG, offering a “new shelf life” for products —others are leveraging tools that are readily available to them, enter the GrocerGram.

Just like Whatsapp is killing the need for websites in LatAm through their integration of catalogues and checkout, the rise of Instagram shops has presented an opportunity for grocers alike, you think livestream produce is a wild idea? Try scrolling through grocers that are taking daily aesthetically pleasing photographs of their produce and linking it on their IG shops—like previously mentioned, scrolling is the new strolling. However, the GrocerGram has unspoken rules of sorts, for starters, we are speaking of Instagram, the most veteran of visual social commerce apps at the moment, meaning if you want to appeal, you have to abide by the rules.

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The anatomy of a GrocerGram is as follows:

  • products are bundled into a “collection” which is probably the equivalent of an aisle IRL

  • most product shots are aesthetically appealing, we are talking about Instagram nevertheless

  • most only list a curated version of their actual inventory on their IG shop as opposed to it being a clutter of many options

GrocerGram is a peek into the future where super apps rule, in a way similar to WeChat, and an example of shoptainment, what if one can shop their local grocer without having to leave one app entirely? What’s smart about this for grocers is that UI is native, it’s easy to use and it also allows for people to create “upcoming lists” similar to an Amazon wishlist, which comes handy when you’re talking groceries, all that is missing truly —is a reorder functionality. GrocerGram isn’t for all though, for now it remains popular amongst smaller, curated or specialty grocers that can fit natively within Instagram without it also feeling overwhelming like other online shops, think Amazon Fresh for example, can feel like.

The rise of curation in food and beverage alongside niche marketplaces will see the evolution of GrocerGrams, Instagram is already offering a Drops feature, which allows for brands to create hype around their product launched, as well for consumers to set reminders. For food and beverage companies who are now adopting that model—sounds like an opportunity to explore. Which leads me to another rabbit hole—let’s go!

Snaxbois Cop All the F&B Drops

Unless you have been living under a rock, (stoneage aesthetics are in tbh) you may have also noticed the rise of food and beverage pop ups after 2020, this movement born out of necessity since many spun out of the need to procure an income after being laid off, particularly if you were in the service industry. People went from just baking their sourdoughs in their homes, to selling them online, to procuring their own retail shops in the span of one year! I personally know at least 3 examples of this —one regarding bagels, another one is cakes and a popup turned actual restaurant. It has been incredible to watch this renaissance after the pandemic, and to see how folks have been able to find redemption, resilience and rebellion through food.

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Consider there is also the great resignation amongst us, a lot of folks in the industry have decided not to return and instead have applied their own set of skills and knowledge to create their own. The New York Times wrote about this recently, on “home bakers going pro” —I personally call it, the new DTC, direct-to-carbs, it’s not just bread, it’s pies, pizzas, pastas, croissants, taco kits, burget kits, etc. If you’ve been here long enough, then I don’t need to remind you what a snaxboi is, but for those of you who have just joined (no shame in that) think of a sneakerhead in terms of food and beverage, snaxbois cop all the latest food and beverage drops, it’s also fuckboy meets Erewhon, if that helps. You need to know about them because food and beverage became ever the more external signalers.

Promise I’ll do a deeper dive on this, but as someone who studied consumer psyche and communications, I view the resurgence of “drop” model in food and beverage, particularly stemming out of the pandemic, more so because F&B became a way to signal indoors. We used to not take pictures of our ketchup, but now we want everyone to know about our Dark Horse fermented organic ketchup that is sitting in our open shelf pantry, and for more deep dive on this please refer to our issue American Snaxboi” —more on that later. There’s also that friction, that in an economy of instant gratification, becomes a necessary buffer, and not to mention, as I’ve written about before, a way of “edging” or delaying gratification. In all honesty, small batch was the original drop model for this industry, but you know, times change and so does our lingo.

So at a time that there’s a boom of these popup, mom & pop, style businesses showing up across the world, as this phenomenon can be found from US to UK to Australia, Mexico, Philippines etc. —how does one leverage tools available to stand out or compete? How do people find out about you if you’re so niche and small, yes there’s websites but that cost money to upkeep, you’re a SMB so you gotta keep costs low. Do you leverage Instagram, Whatsapp —IG is saturated with not just food and beverage profiles, but every other category not to mention meme, gossip accounts etc. Whatsapp has just introduced local directories so that helps, but still, it seems that there is not a space particularly created to tailor to these kinds of businesses in a way that makes sense to them. That is until Delli.

Born out of the genius of former Depop founder, Simon Beckerman, Delli market is launching soon to create a utility based space for these businesses and the likes to thrive on —with the added benefit of curation and editorialization, think Coveteur meets Bon Appetit, we are talking about food and beverage as signalers after all. Delli is a new kind of space that is being built with focus around food community in particular. Delli is a place where you’ll be able to buy the latest sandwich popup’s dish and pair it with a trendy non-alcoholic beer, and it’s a place where you can learn more about the folks behind them. Their Kitchen Chronicles has taken off in which you can get a very BTS (behind the scenes) kind of vibe from your favorite restaurant to your favorite hot sauce maker, and also home to the trendy deli and grocers that have been popping up around the world.

The app is slated to do a soft launch in December, you can learn more about them here. Word to the wise, keep them on your radar.

Shopping at Pantry Kiths

In the Snaxverse, snaxbois cop all the food and beverage drops, they can be found spending too much time at the beverage aisle at Erewhon, it’s the new Dorsia of course, but you’ll also find them at the local Pantry Kith. What’s that you ask? Well, for those unaware, Kith is a luxury store that can be found in the trendiest spots from Tokyo to NYC, LA, Miami to Paris. As stated above, wherein food and beverage have become external signalers, comparable at times to hype of a Yeezy sneaker, the spots where these items live have become to morph themselves to add on to that “signaling”—hence the coined term of Pantry Kiths.

Again this is not something that is just restricted to US market, there are everywhere from Paris to Adelaide, CDMX and Seoul. The Pantry Kiths serve as a perfect backdrop for pantry items, that desperately want to be seen. At a time where consumers based their purchases on packaging alone, what better way to compliment these new trendy F&B products, than to create a scenario that emulates the same feeling? If Pop Up Grocer is ice cream museum meets grocer, where every corner and aisle is designed to promote UGC (user generated content) that helps dissipate as WOM (word of mouth) the Pantry Kiths come in the form of Natoora and Green Grocer in United Kingdom, Gjusta and Wine and Eggs in Los Angeles, Dada Biocoop and Satio in Paris, or Supercope in CDMX, Smalls Deli in Australia.

Pantry Kiths are an evolution of the ever blurring line between food and beverage and fashion and as lines blur, more of these items become external signalers for our generation. They signal a more upscale in the know for snaxbois, where else can you cop a mezcal infused, ethically grown chocolate bar from Cuna de Piedra (sick aesthetics) if not in the likes of Gjusta or Alimentari? Does your city have any Pantry Kiths, snaxbois would love to know!

Stop 🛑

  • And listen to us talk espresso martinis with our friends at Bon Appetit. Are you a fan of them or are you like me and hold them as your arch nemesis?

Drop 🔥

  • Maker Wines just dropped this amazing canned wine advent calendar.

  • PopUp Grocer just launched their GOODS boxes that give back.

Cop 🛒

  • Do yourself and your loved ones a favor and cop everything on Snaxshot’s coveted Holiday Guide!

Spoonful of News 🥄

Snax Concierge 🛎️

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