The Great Foodtech Revolution with HNGRY Founder Matt Newberg
After closely tracking the rise of ghost kitchens, Matt Newberg began studying global shifts in consumer behavior surrounding food. He’s now the founder of HNGRY, a new media company analyzing the impact of technology on our evolving relationship with food.
We sat down with Matt to dive deep on the future of food, opportunities in quick commerce, the role of performance analytics in modern retail, and the next generation of virtual storefronts.
Macro Shifts in the Future of Food
In Matt’s own words, we’re in the midst of a global food tech revolution.
From cloud kitchens and online grocery to last-mile delivery, a seemingly endless array of new companies are being born at the interaction of food consumption and technological advances.
Diving deeper on macro shifts, dedicated spaces within retail stores and detached third-party facilities have spread to service major metro areas and supply the rising demand for groceries.
In tandem, quick commerce platforms with GoPuff and the Ultra Fast Guys have exploded in popularity. On the product side of things, Matt points out the continual innovation in market niches like fungi-based proteins and brands in the coffee space like Cometeer and Blank St.
“The distribution of food and how it gets sold in a more convenient way is evolving. The technology behind CPG brands is shifting, but most of the value drivers lie at the intersection of physical distribution and retail.”
The Rapid Ascent of Quick Commerce
There’s a lot happening in the quick commerce space, but what’s most interesting to Matt is how brands are leveraging cloud retail solutions (another kind of micro-fulfillment option) and cloud kitchens to test new products and markets for prepared food. It’s also an opportunity to unlock new audiences.
These platforms are essentially incremental sales channels, helping brands find new markets and consumers. Over time, brands can drive consumers toward their own direct ordering, but more often than not, it doesn’t make sense for a subscription versus a one-off purchase.
According to Matt’s research at HNGRY, the brands that will thrive within these quick commerce channels are the ones who play toward convenience while also allowing for some degree of customization and prep on behalf of the consumer (e.g. Immi ramen). In turn, these products enable customers to customize their meals without making them from scratch in the kitchen.
“If you’re scaling a DTC food or beverage brand right now, you need to start thinking about how you can play in the next evolution of retail channels.”
Layering on Performance Analytics
From Matt’s vantage point, tracking metrics should be the same as doing so on Instagram or on any other channel. It’s all about looking at the CAC and whatever margins a brand gives up to a wholesaler. At the end of the day, performance data still needs to be tracked and analyzed so brands can gauge the effectiveness of new channels and compare relative acquisition success.
In terms of metrics, brands should expect to see higher volumes with lower margins in retail, higher margins in DTC, and somewhere in between when selling through channels like Instacart.
“You’re either selling wholesale, online, or via digital marketplaces like Instacart or GoPuff. Critically, all of these metrics need to be aligned.”
The Next Generation: Virtual Storefronts
As it relates to digital storefronts, basket sizes need to be quite large, according to Matt.
Or, in his words, you need to sell products that are of higher value and less time-sensitive for delivery. For example, frozen meat is the perfect fit for a virtual storefront since it’s a specialty product. Along the same vein, ButcherBox is unbundling the butcher or seafood counter of a grocery store by allowing users to shop from a virtual storefront on the Instacart platform for their monthly stock up.
For the new sauce and spice brands that have continued to pop up, next-gen bodegas make a lot of sense since they can deliver in fifteen to thirty minutes in most major cities. According to Matt, more and more products will get pushed to the last mile and housed alongside each other, which will force DTC brands to collectively shift towards wholesalers and quickly enter retail.
“Brands are just realizing they need more and better touch points with their customers to build deep relationships. That’s where the future is heading.”
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