Impact of Economic Factors on the Meal Replacement Market
While it is still too early for precise statistics concerning consumer purchase behavior for meal replacement products, the information that is available points to an increased demand for meal replacement products as a result of the COVID-19 pandemic. This is demonstrated by news and press reports of increased sales of meal replacement products, the inclusion of these products on COVID-19 shopping list suggestions, and increased demand in related industries.
Signs of Increased Demand
- In the wake of the COVID-19 outbreak, there has been a significant increase in demand for shelf-stable products, which includes meal replacement products. According to research completed by Nielsen, as reported by Time, Americans have increasingly purchased non-perishable food items, particularly in "health food" categories related to meal replacement products such as alternative milks, powdered milk, and meat alternatives which are up 477%, 245%, and 280% respectively.
- Additionally, Nielsen reports that sales for dietary supplements have increased 9.7%. Extensive crossover between dietary supplements and meal replacement products may point to an increase in sales for meal replacement products as well.
- Various news sources such as Food Navigator and Erie County News report that stores have had to limit quantities of meal replacement products allowed to be purchased as a result of the products selling out quickly.
- According to Food Navigator, industry experts predict that products in the plant-based and healthy food market are likely to remain important shopping staples.
- Soylent, a key player in the meal replacement industry, reports increased sales and higher demand as a result of COVID-19.
- In the event of a recession, meal replacement products may still increase in demand, as demonstrated by the growth of the industry since the 2008 recession.
- Meal replacement mixes and powders are being touted by experts as an easy way to get a complete meal in these uncertain times. The Prepared, a publication that helps others prepare for emergency situations, suggests in their coronavirus guide that meal replacement products are essential.
- Good Housekeeping has also created a list of what to buy according to experts. Included on this list are protein shakes and meal replacement shakes.
- News publication The Daily Caller remarks that during the COVID-19 outbreak, consumers are purchasing products as a result of what they learn from social media. Compiling its own list of suggestions, The Daily Caller includes meal-replacement protein products at the top of the list.
Potential Industry Threats
- Amazon's recent decision to ban shipping of non-essential goods will impact smaller meal replacement brands who rely on Amazon for a large portion of their sales.
- McKinsey warns of the potential implications and economic impact for companies that produce goods, particularly those whose supply chain includes China. Factory shutdowns have impacted the ability to match the demand with ample supply.
- Online shopping has increased, and may potentially increase permanently, even after the COVID-19 crisis has passed. Companies who struggle with the supply chain, leading to 'sold-out' products on Amazon, risk negative impacts to the Amazon algorithm.
A multi-hour search was conducted in order to assess the effects of COVID-19 on the meal replacement product industry. As yet, no quantitative data is publicly available regarding the sales of meal replacement products. In order to determine the current consumer behavior regarding meal replacement products, we have carried out several research strategies. The first strategy was to search consumer research reports and databases for the information regarding the meal replacement industry. We found that a report will eventually be released concerning the impact of COVID-19 on the meal replacement powder market. Following this search, we sifted through the websites and press releases of companies considered to be major players in the meal replacement market to attempt to find data released by companies themselves. Finally, we sought information and news articles which suggested information about the demand for meal replacement products or tangential industries such as dietary supplements and alternative healthy foods. This information has been included in the key findings above.