People are changing their habits and Amazon is paving its way into it TOPIC: FOOD & BEVERAGE
Author: Lorenzo Bonfanti, Asset Management, Research Senior Associate
On April 13th Amazon declared via its official channels the launch of Aplenty, a new private label food brand that focuses on snack foods as chips, crackers, and cookies. This move doesn’t come as unexpected; as a matter of fact, Amazon is planning on surfing some new consumer trends that have been growing since the starting of the pandemic. Covid 19 reshaped everyday life in a drastic way; the changes in routine led also to a change in customs and habits: eating has been one of the most discussed. This general perception is reflected by the 2020 IFIC survey on eating habits in the United States: American citizens reported cooking more at home (60%), 27% confessed they are thinking about food more than usual and 32% are snacking more.
Although a rise in snacking and binge eating due to various factors has been registered, another important focus for customers is health. In early 2020 42% of Americans stated they changed their eating and drinking habits such as reducing sugars, eating clean, or following a diet. In a more recent survey however, only 15% said they were planning on 2021 resolutions. Americans showed a shift towards general health rather than drastic diet changes. An increase in snacking and eating throughout the day may be reconduced to different causes: 33% of the interviewed said they eat more because of boredom or stress, while 32% are eating more often snacks alone mostly due to personal or professional lifestyle shifts.
After all, this snacking trend is not always negative: people’s interest towards “cleaner” nutrition led to a search for healthy snacks and increased consumption of fruits and vegetables as snacks. In 2021, experts from the IFIC council “expect to see more substantial snacks serving as meal replacement”: this trend, in particular, is where Amazon wants to insert itself into. Furthermore, Aplenty adds up to a series of new launches aiming to facilitate and enhance online grocery shopping, another consumer trend that exploded during quarantine times. Jointly with other consumer goods offers as Mama Bear and Solimo, the products will be available both online and in Amazon’s physical stores (Amazon Go and Amazon Fresh shops).
This move comes on top of the remarkable growth of the company, which massively benefited from the lockdown in terms of growth in business. The fourth quarterly results of 2020 depicted the impressive milestones Amazon recently accomplished: net sales of over 125 billion dollars (+44%) jointly with a net income increased to 7.2 billion.
Amazon proved many times its excellence and efficiency (reflected by the seemingly uncontrolled growth it’s registering); there are however several issues following this path of continuous innovation and success. Reported stories from official sources as the NY Times outline the mistreatment workers suffered in the covid period to get to those results: many reported extremely hard-working shifts and initial negligences with respect to covid prevention measures. Labor force treatment isn’t Amazon’s only problem; there are many more issues relating to fair competition and market power abuse. Regarding this matter, we need to remember the accusation publicly made by EU Commission in November 2020: Amazon has been charged for using “big data” for illegally distorting competition in the European Marketplace.