Keeping Up with the Changing World of Online Food Sales

With the purchase of Whole Foods by Amazon, the world of online food sales has been changing rapidly.  There have been a number of entities trying to determine what will work best to meet consumer needs, including grocery stores, restaurants, delivery companies, and meal kit companies.  Food manufacturers must understand the needs of these channels be able to adapt to the channel requirements.

Online food sales have come in a number of different forms including restaurants and delivery services (ie Grubhub) delivering restaurant foods, new food companies making and shipping meal kits, and  traditional supermarkets providing online ordering with either delivery or quick pickup.

This week, Amazon announced that they were introducing food delivery into 10 new cities to have a total of 38 cities where delivery is being offered.

But Amazon is a small player in overall grocery market, with its Whole Foods accounting for only about 2.5% of the sales.  Despite all the news involving Amazon, Walmart has the largest market share in the grocery arena, increasing it's total of the US market to a massive 25% share.  And Walmart has been pushing its on-line ordering with store pickup.  Currently, Walmart is testing kiosks that are essentially vending machines for customer pickup that allows the customer to pickup food ordered online without having to interact with any store employee.  Other chains selling grocery such as Target and Kroger are also moving further into developing systems for online ordering / delivery systems.

While full-time meal delivery companies, such as Blue Apron and Plated, have had a tough go at it on their own, some have come to find that being married to a grocery store may provide salvation.  Even Walmart has partnered with the meal kit company Gobble to sell meal kits online.  Peapod, an online grocery delivery service and subsidiary of Ahold Delhaize is slated to roll out 40 new meal kits over the coming months.

Fully prepared meals have been more of a challenge for grocery store online sales, and while that segment has done well for in-store sales, delivering prepared meals is a bit more of a challenge with regards to packaging and temperature control.

For those selling food within this online environment, it is hard to know what is going to stick with the consumer and what isn't, so there will continue to be a lot of experimentation. But is important for companies who do not want to get lost in the shuffle, so they must continually evolve through testing concepts and adapting to customer needs.

And customer needs will continue to change as well in term of how they want to purchase food.  Certainly, guessing what the Millennials will do as they reach the point where they become primary purchasers has been difficult.  For this segment, growing up in the digital age means that they are more reliant on technology for doing what they want to do.  And while many older consumers will still want to pick out their own broccoli or cut of meat, others may begin to opt for convenience that comes with online ordering.

For the food manufacturer, ongoing change requires that they are willing to adapt to fit what delivery channel stores choose to use.  This may be in terms of packaging that will fit into a store delivery system or meal kit.   Product quality may become a bigger factor in that the consumer will not be choosing the product at the store, but rather, will be paying a premium for delivered items.  Because of this, they may have higher expectations for what shows up at their door.

Customer-direct food sales from processors or online distributors is another online component that has found its mark in certain areas.    "Direct product sales by the manufacturer in the online marketplace has become an important channel for some companies. Those companies selling products like wine, balsamic vinegar or high-end olive oil can take advantage of additional volume sold through making their products available to a much broader audience. These types of products, especially ones with brand recognition, are likely to provide the larger price markup needed to support the costs associated with protective packaging and ground shipment. Since these products are shelf-stable, there is normally minimal risk with the exception of product damage or breakage."

"Direct sales are not limited to shelf-stable products as there are a number of companies who have
carved out a niche in the sale of perishable goods, including those selling high-end cuts of meat or specialty meat products."

Online direct sales is not without its challenges.  Package integrity, temperature control, and product recovery due to lost product or complaints can be a challenge.

Online food sales and delivery will continue to evolve.  It is not a matter of whether it will gain in terms of sales, but how much.  And who will be best positioned to take advantage.

CNN tech
https://money.cnn.com/2018/08/28/technology/business/amazon-whole-foods-365-walmart-kroger-costco-grocery/index.html
Amazon-Whole Foods one year later: The grocery business will never be the same
by Nathaniel Meyersohn @CNNMoney
August 28, 2018: 3:33 PM ET

FDA Releases Information for Companies Wishing to Claim 'Qualified Facility' Status

FDA released information for those facilities wishing to file as a Qualified Facility - very small business who only have to meet modified requirements (do not need to develop a formal Food Safety Plan) as defined within the Preventive Controls for Human (or Animal) Rule. 

Facilities must determine if they meet conditions for a Qualified facility and then must submit as attestation.   Starting October 1, 2018, facilities will be able to submit the qualified facility attestation forms electronically via the Qualified Facility Attestation Module.  Facilities must submit their first attestation to FDA by December 17, 2018, for facilities under Human Food and  December 16, 2019 for Animal Food.

1. Determine if you are a Qualified Facility - see this Guidance Document.
2. Follow instruction for submitting attestation form - See this FDA procedure
• Fill out this form for Human Food - Link to Human Food Attestation Form
• Fill out this form for Animal Food - Link to Animal Food Attestation Form

Or you can take a class and develop a Food Safety Plan like regular food companies.


FDA Releases Information for Qualified Facilities under Preventive Controls Rules
September 14, 2018
Today, the U.S. Food and Drug Administration issued documents designed to help food facilities subject to the preventive controls for human and animal food rules determine if they meet the definition of a “qualified facility” under those rules, and if so, what modified requirements are applicable to such facilities.

FDA and CDC Announce McDonald Salad Mix Linked Cyclospora Outbreak Over

The FDA and CDC announced that the Cyclospora outbreak associated with Fresh Express Salad Mix served at McDonalds is over.   (Note - this case is separate from the Cyclospora Outbreak Associated with Del Monte's Veggie Trays).  In the Fresh Express / McDonalds Salad related Cyclospora outbreak, there were 511 people infected with 24 hospitalizations. The last date for onset of illness was 7/23/18.

https://www.fda.gov/Food/RecallsOutbreaksEmergencies/Outbreaks/ucm613513.htm
FDA Investigation of a Multistate Outbreak of Cyclospora Illnesses Linked to Fresh Express Salad Mix Served at McDonald’s Ends

Pork Sausage Recalled Due to Foreign Material - Clear Hard Plastic

A Xenia, Ohio, establishment, is recalling approximately 46,734 pounds of pork sausage link products that may be contaminated with extraneous materials, specifically pieces of clear hard plastic.  The problem was discovered when the establishment received consumer complaints of extraneous material in the pork sausage products. There have been no confirmed reports of adverse reactions due to consumption of these products.

https://www.fsis.usda.gov/wps/portal/fsis/topics/recalls-and-public-health-alerts/recall-case-archive/archive/2018/recall-080-2018-release
Bob Evans Farms Inc. Recalls Pork Sausage Link Products due to Possible Foreign Matter Contamination 
Class II Recall 
080-2018 
Health Risk: Low 
Sep 13, 2018 

'Free From" Foods - The Extra Burden for Manufacturers

An interesting read in Bloomburg on the 'Free-From" foods and the impact on how food is being produced.  The 'Free-From' foods are those that foods that make label claims that include  'antibiotic free', 'gluten free', 'GMO free'.

The sales of these label-claim foods are increasing.  "Products labeled antibiotic free saw growth rates of nearly 20 percent, followed by soyfree at 19 percent and hormone and antibiotic-free at 15 percent."

As food scientists, we recognize that these claims may have little to no impact on health, and where there is a health impact, such as with gluten, there is a very limited number of people affected.  According to one report, 1 in five consumers are avoiding or reducing gluten in their diet, but more than a 1/3 of them have no reason for doing it, while only 8% are gluten sensitive with another 9% claiming inflammation from gluten.  The rest do it because they view it as healthy...more or less.

Regardless of whether we agree on the need for these label-claim items, people are increasingly purchasing them.

For manufacturer's of these types of foods, there are challenges. The first is having transparency.  People know want to know where their food is from, and if they are concerned about GMOs, they want to know the manufacturer is making their food without GMOs...saying so is not enough.

Sourcing is an issue for many of these producing.  Securing a steady source of antibiotic chickens in massive quantities can be difficult.   Chickens will get sick.  Farmers risk loosing a lot of chickens if illness is passed through the flock.  GMO free is difficult.  Grains for example can be hard not to have small amounts of GMO product getting mixed in when you consider the long supply chain from the field to processor with numerous silos and trucks all along the way.

For companies that handle 'free from' and traditional ingredients, managing inventories of numerous ingredients and applying controls to prevent cross contact can be difficult.  Then managing production to make sure there is proper handling of in-process materials, proper clean-out of equipment between production runs, and then labeling.

The positive is the added margin that goes along with these products.   If one is willing to put in  the extra controls, there are people willing to pay a premium.

Bloomburg
https://www.bloomberg.com/news/articles/2018-09-09/-free-from-foods-are-changing-the-way-your-meals-are-produced
‘Free-From’ Foods Are Changing the Way Your Meals Are Produced
By Jen Skerritt, Megan Durisin, and Craig Giammona
September 09, 2018 5:00 AM Updated on September 10, 2018 6:00 AM

RTE Sliced Steak Product Recalled After Samples Test Positive for Listeria

A Kentucky establishment is recalling approximately 6,720 pounds of ready-to-eat (RTE) Philly Beef Steak products that may be adulterated with Listeria monocytogenes.  "The problem was discovered on Sept. 7, 2018, when the establishment received results from their laboratory that four finished product samples from their Aug. 9, 2018 production were potentially positive for Listeria monocytogenes.:

This lot that tested positive had a production day nearly a month after that product was produced.  Not sure of the reason for delay, but it best to test immediately if a company is testing their own product.  Also, if this was the only lot of product tested, there may be additional lots of product that are positive as well.  Unless there is a specific reason how one lot can be positive and the others are not, then it may be expected that contamination may be present in other lots.

https://www.fsis.usda.gov/wps/portal/fsis/topics/recalls-and-public-health-alerts/recall-case-archive/archive/2018/recall-078-2018-release
CTI Foods LLC Recalls Ready-To-Eat Philly Steak Products Due To Possible Listeria Contamination
Class I Recall 
078-2018 
Health Risk: High 
Sep 11, 2018 

Spam - Carving Out A Niche for Canned Meat

An interesting read in FoodDive on Spam, a cured canned meat product developed 80 years ago.  At that time, it was claimed to be a miracle meat, and was a protein source for many during the Great Depression.  Over the past half century, it has been endlessly mocked, and used as a moniker for junk email.

But Spam has hung around and is finding a resurgence.   "Spam's sales have been helped by the growth of the Asian American population in the U.S. — they are more likely to consume the product than any other nationality.  Even some McDonald's in Hawaii and high-end restaurants in New York City and Los Angeles incorporate Spam into their dishes."

So could we see Spam-tizers on the menu next to the charcuterie plate?

https://www.fooddive.com/news/spamalot-consumers-cant-get-enough-of-the-mercilessly-mocked-meat/525327/
Spamalot: Consumers can't get enough of the mercilessly mocked meat 

Salmonella Outbreak at San Antonio Mediterranean Grill

A large Salmonella outbreak in San Antonio, TX where over 200 calls with the claim of becoming ill after eating at a Mediterranean grill.  The owner suggested that hummus may be the source.

https://www.mysanantonio.com/food/article/Pasha-Mediterranean-Grill-source-outbreak-13213466.php
Pasha Mediterranean Grill owner says he was told suspected source of outbreak
By S. M. Chavey, mySA.com / San Antonio Express-News and Peggy O'Hare
  Updated  5:50 pm CDT, Friday, September 7, 2018 

NPR on Why Not to Freak on Foodborne Illness

A report on NPR discusses the impact of technology on detecting foodborne illness.  While it may seem like there are more outbreaks, much of it is our ability to detect these illnesses.  

Some insight provided by Penn State's own, Dr. Ed Dudley.  (There are many who wish his name was spelled 'Dudely' instead of Dudley, because then he could be Dr. Dude...or the Dude..just our opinion man)

NPR Salt

https://www.npr.org/sections/thesalt/2018/09/10/645562083/food-safety-scares-are-up-in-2018-heres-why-you-shouldnt-freak-out
Food For Thought
Food Safety Scares Are Up In 2018. Here's Why You Shouldn't Freak Out