Disrupting D2C: the F&B brands skipping the middleman and selling straight to their consumers

Disrupting D2C: the F&B brands skipping the middleman and selling straight to their consumers

By
Louise Burfitt
December 1, 2020

D2C (direct-to-consumer) sales are nothing new, but the coronavirus pandemic has meant that many food and beverage companies have scrambled to develop D2C sales channels to make up for lost revenue as restaurants and traditional retailers have shut their doors.

That’s alongside a surge of startups who have structured their business model around a D2C strategy from the get-go, using e-commerce and the power of email marketing and social media to sell their products straight to end customers.

Food & beverage is the fastest-growing D2C category and the global food and drink e-commerce market is expected to grow from $14.9 billion in 2019 to $22.4 billion by the end of 2020. Recent statistics predict that D2C e-commerce will account for 50% of the growth in sales of CPGs in the USA by 2025, which would suggest a bounty of opportunities for food and drink companies adopting a D2C strategy. So let’s take a closer look at the brands already doing exactly that.

Direct-to-consumer (D2C) sales: what are they?

A D2C business model is as the name suggests: a company sells its product or service directly to end consumers, rather than through a distributor or retail outlet, such as a supermarket.

A D2C food business might, for example, sell its plant-based meat through its own webshop. And it’s not either/or: many brands, like the much-lauded Beyond Meat, have shown how to successfully sell a product through multiple channels, blending traditional retail and restaurant sales with D2C dealings.

Trend drivers: the pandemic, lower costs and increased insights

The pandemic has significantly accelerated a shift to D2C sales that was already underway. The closure of shops and restaurants, combined with shoppers visiting grocery stores less often, meant that many brands that followed a more traditional distribution model needed to start selling their wares online to survive. E-commerce sales rose as much between April and June 2020 as they did in the previous seven years - and food and beverage products have been one of the top-growing categories.

Selling directly to your end consumers also means that you cut out the middle man. Brands can avoid the high overheads related to warehousing, transportation and commission fees. Setting up an e-commerce site is a lot cheaper than it used to be, and with the global economy fluctuating wildly, finding ways to cut costs is especially welcome.

In addition to higher profit margins, D2C sales allow brands more control over how they interact with their consumers - which is something lots of companies like the sound of. Rather than relinquishing control of how the product is displayed and sold as soon as it leaves the warehouse, D2C brands have a unique opportunity to build customer loyalty and fine-tune their messaging.

Enhanced consumer relationships also means an opportunity to gather data, which can lead to new insights into what’s driving sales and what customers want. Unlike traditional retail, D2C companies can gather customer data points throughout the sales process, with digital analytics tools and services like Malomo and Blueprint helping D2C brands drive customer engagement with personalised experiences. For many brands, this is increasingly important in a competitive market.

Exploring the trend: e-commerce, social media and quirky packaging

With coronavirus restrictions shuttering the doors of restaurants, canteens and other foodservice outlets, many established brands have set up their own e-commerce sites to sell directly to consumers online. Beyond Meat, PepsiCo and Impossible Foods launched their own online D2C shops this summer. PepsiCo’s snacks.com site was the company’s first foray into D2C sales in its 127-year history, and it’s not by chance that it has happened in 2020.

Restaurant and catering food suppliers have also pivoted - temporarily, at least for now - to D2C strategies to make up for lost revenue during the pandemic. Take Bidfood, one of the biggest suppliers of fresh food to the catering industry in the UK, which set up a D2C sales channel on its website this spring. In the US, restaurant food suppliers Cheetah, DineMarket and Choco all shifted to sell to consumers while QSR Chipotle launched its own D2C ‘virtual farmers’ market’ to link up its consumers with fruit and vegetable suppliers caught short by 2020’s mass closures. Food Circle Supermarket, the online ‘surplus healthy food retailer’ has achieved £1.1 million in turnover since March 2020 – and credits its active online presence as part of the reason for its success.

Brands that have leveraged the power of social media, particularly TikTok, have a lot of lessons to offer to F&B businesses moving into the D2C space. Social media is the top acquisition channel for D2C companies, with food and drink the third most commonly searched interest on Instagram. Businesses with little to no online presence found themselves at risk during periods of lockdown, with many still scrambling to catch up. My Cookie Dough, which sells bake-at-home cookie dough packs through its website, shows how food brands can utilise social media sites effectively and inexpensively: most of its content is created by one or two staff members. The homespun videos are a prime example of ‘food porn’, with smartphone shots of just-baked cookie dough and indulgent, oozing sauces. Despite (or perhaps because of) the DIY feel to its content, the brand has garnered almost 3 million likes in less than a year.

Packaging is now a crucial part of a D2C brand’s product offering and customer experience – and it’s incredibly entwined with the power of social media. So-called ‘unboxing’ videos are an unstoppable online phenomenon so brands with quirky packaging or particularly Instagrammable artwork are more likely to stand out and gain traction online. Brewdog, Graze and SIMULATE’s Nuggs are all examples of brands that understand the vital importance of appearances in a virtual world.

Case Studies: Nerdy Nuts and Ugly Drinks  

Nerdy Nuts, a family-run startup that sells small-batch peanut butter in the USA, illustrates the perks and potential pitfalls of a successful D2C model. Founded in 2015, the founders started selling two flavours of their home-ground peanut butter at a local farmer’s market. Intended as a side hustle, the quirkily-flavoured peanut butter routinely sold out every weekend. After some national publicity and an improved website, Nerdy Nuts was making around $8k a month in early 2020 as customers turned to online options during the pandemic. By the summer, the brand sold over $160k jars’ worth in a single month after the founders experimented with ‘product drops’ on TikTok. Unprepared to deal with such a massive influx of orders, the company was forced to close its site 6 days a week to restrict sales - though this only seemed to increase the hype, with an extraordinary $500k worth of sales in August. By focusing on fun, offbeat flavours and leveraging the power of social media, Nerdy Nuts shows how quickly D2C brands can win customers - and how logistically challenging becoming an overnight viral success can be. The business is still suppressing sales to get ahead of log-jammed orders and hopes to grow slower and steadier in the coming years as the founders try to balance their D2C hit with raising a family.

Ugly Drinks makes sugar-free sparkling water and has also experienced stratospheric growth in just a few years. While the brand is already stocked in thousands of UK supermarkets, its slick and efficient e-commerce site has been the key to its continued success during the pandemic in the US. Their pop art-inspired packaging and cheeky marketing has made them a millennial hit and lends itself excellently to social media marketing. Ugly’s online sales have shot up 400% during the lockdown period. The brand is a great example of a company that balances D2C success with traditional retail sales. Although Ugly’s founders believe retail is where the drinks will go truly mainstream, having their own D2C marketplace allows them to connect directly with digitally native customers and craft a memorable, unique message that might get lost on supermarket shelves. Future plans include introducing a merchandise range, including hats and tote bags, that will be added to online purchases and should go down well on social media.

What’s next in the D2C space?

In the coming months and years, particularly if Covid-linked limitations continue, we’re likely to see more and more traditional brands shifting some of their supply to a D2C model. For brands without an established e-commerce site and supply chain, establishing the necessary infrastructure to pivot their sales can be time-consuming and require investment. For some, partnering with a third-party fulfilment vendor will be the most cost-effective way to sell straight to consumers in the short term.

While the D2C delivery model functions excellently for CPGs and frozen foods, it’s not as attractive for perishable items (unless sold hyper-locally) or bulky goods that are costly to transport. Smaller, easy-to-deliver products that can be sold in bundles and delivered in bulk or through a subscription model are a better bet for a purely D2C business model.

As we’ve learnt, having an active online presence can pay dividends for D2C brands. Cultivating an engaged community online is a way to tap into a whole generation of digitally native customers as well as locking in future marketing opportunities: the brands that convince with appealing content and quirky packaging or products will find their community self-generating content online, increasing word-of-mouth reach and ultimately, sales. D2C, it would seem, could be the place to be for forward-thinking F&B brands in the years to come.

The 30-second pitch: D2C food and beverage sales

📦 What

  • Many food and drinks brands are launching D2C (direct-to-consumer) sites to make up for lost revenue during coronavirus shutdowns. They’re taking notes from a raft of digitally native startups in the D2C F&B sphere, who are paving the way for rapid growth in the direct-to-consumer arena.


🤷‍♂️ Why

  • While D2C sales are nothing new, the COVID-19 crisis has accelerated the shift towards e-commerce food and drink sales. Many brands that previously sold via restaurants or retail have recognised the benefits of a D2C webshop for the first time, while a surge of D2C startups have experienced sudden growth as traditional outlets have closed to customers due to the pandemic.


🚚 How

  • E-commerce food and drink sales
  • Restaurant suppliers pivoting to D2C models
  • Selling and marketing via social media
  • Attracting customers online with quirky packaging


👀 Who


👍 The good

  • Selling directly to end consumers means brands can cut out the high overheads related to warehousing, transportation and commission fees.
  • D2C sales allow brands more control over how they interact with their consumers and offer opportunities for data collection for increased, direct insights into consumer preferences and desires.
  • E-commerce sales are experiencing rapid growth, particularly this year, and digitally engaged brands can benefit from the move towards online grocery shopping.


👎 The bad

  • The D2C model does not work as well for perishable goods or those that cannot be transported easily.
  • The pandemic has seen some companies pivot to a B2B model, which some see as more secure.
  • Companies without an online presence found themselves extremely vulnerable during the initial COVID-19 lockdowns, with many still struggling to make up for lost time and earnings.


💡 The bottom line

  • The coronavirus pandemic is driving shoppers to actively hunt for new ways to purchase food and beverages: while online e-commerce was already a growing market for food and drinks brands, 2020 may mark a turning point that will forever change the way people buy the foods they love. Brands that recognise this shift, and the benefits that accompany it, by including a D2C channel as part of their sales strategy are likely to reap the rewards that come with it.
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D2C (direct-to-consumer) sales are nothing new, but the coronavirus pandemic has meant that many food and beverage companies have scrambled to develop D2C sales channels to make up for lost revenue as restaurants and traditional retailers have shut their doors.

That’s alongside a surge of startups who have structured their business model around a D2C strategy from the get-go, using e-commerce and the power of email marketing and social media to sell their products straight to end customers.

Food & beverage is the fastest-growing D2C category and the global food and drink e-commerce market is expected to grow from $14.9 billion in 2019 to $22.4 billion by the end of 2020. Recent statistics predict that D2C e-commerce will account for 50% of the growth in sales of CPGs in the USA by 2025, which would suggest a bounty of opportunities for food and drink companies adopting a D2C strategy. So let’s take a closer look at the brands already doing exactly that.

Direct-to-consumer (D2C) sales: what are they?

A D2C business model is as the name suggests: a company sells its product or service directly to end consumers, rather than through a distributor or retail outlet, such as a supermarket.

A D2C food business might, for example, sell its plant-based meat through its own webshop. And it’s not either/or: many brands, like the much-lauded Beyond Meat, have shown how to successfully sell a product through multiple channels, blending traditional retail and restaurant sales with D2C dealings.

Trend drivers: the pandemic, lower costs and increased insights

The pandemic has significantly accelerated a shift to D2C sales that was already underway. The closure of shops and restaurants, combined with shoppers visiting grocery stores less often, meant that many brands that followed a more traditional distribution model needed to start selling their wares online to survive. E-commerce sales rose as much between April and June 2020 as they did in the previous seven years - and food and beverage products have been one of the top-growing categories.

Selling directly to your end consumers also means that you cut out the middle man. Brands can avoid the high overheads related to warehousing, transportation and commission fees. Setting up an e-commerce site is a lot cheaper than it used to be, and with the global economy fluctuating wildly, finding ways to cut costs is especially welcome.

In addition to higher profit margins, D2C sales allow brands more control over how they interact with their consumers - which is something lots of companies like the sound of. Rather than relinquishing control of how the product is displayed and sold as soon as it leaves the warehouse, D2C brands have a unique opportunity to build customer loyalty and fine-tune their messaging.

Enhanced consumer relationships also means an opportunity to gather data, which can lead to new insights into what’s driving sales and what customers want. Unlike traditional retail, D2C companies can gather customer data points throughout the sales process, with digital analytics tools and services like Malomo and Blueprint helping D2C brands drive customer engagement with personalised experiences. For many brands, this is increasingly important in a competitive market.

Exploring the trend: e-commerce, social media and quirky packaging

With coronavirus restrictions shuttering the doors of restaurants, canteens and other foodservice outlets, many established brands have set up their own e-commerce sites to sell directly to consumers online. Beyond Meat, PepsiCo and Impossible Foods launched their own online D2C shops this summer. PepsiCo’s snacks.com site was the company’s first foray into D2C sales in its 127-year history, and it’s not by chance that it has happened in 2020.

Restaurant and catering food suppliers have also pivoted - temporarily, at least for now - to D2C strategies to make up for lost revenue during the pandemic. Take Bidfood, one of the biggest suppliers of fresh food to the catering industry in the UK, which set up a D2C sales channel on its website this spring. In the US, restaurant food suppliers Cheetah, DineMarket and Choco all shifted to sell to consumers while QSR Chipotle launched its own D2C ‘virtual farmers’ market’ to link up its consumers with fruit and vegetable suppliers caught short by 2020’s mass closures. Food Circle Supermarket, the online ‘surplus healthy food retailer’ has achieved £1.1 million in turnover since March 2020 – and credits its active online presence as part of the reason for its success.

Brands that have leveraged the power of social media, particularly TikTok, have a lot of lessons to offer to F&B businesses moving into the D2C space. Social media is the top acquisition channel for D2C companies, with food and drink the third most commonly searched interest on Instagram. Businesses with little to no online presence found themselves at risk during periods of lockdown, with many still scrambling to catch up. My Cookie Dough, which sells bake-at-home cookie dough packs through its website, shows how food brands can utilise social media sites effectively and inexpensively: most of its content is created by one or two staff members. The homespun videos are a prime example of ‘food porn’, with smartphone shots of just-baked cookie dough and indulgent, oozing sauces. Despite (or perhaps because of) the DIY feel to its content, the brand has garnered almost 3 million likes in less than a year.

Packaging is now a crucial part of a D2C brand’s product offering and customer experience – and it’s incredibly entwined with the power of social media. So-called ‘unboxing’ videos are an unstoppable online phenomenon so brands with quirky packaging or particularly Instagrammable artwork are more likely to stand out and gain traction online. Brewdog, Graze and SIMULATE’s Nuggs are all examples of brands that understand the vital importance of appearances in a virtual world.

Case Studies: Nerdy Nuts and Ugly Drinks  

Nerdy Nuts, a family-run startup that sells small-batch peanut butter in the USA, illustrates the perks and potential pitfalls of a successful D2C model. Founded in 2015, the founders started selling two flavours of their home-ground peanut butter at a local farmer’s market. Intended as a side hustle, the quirkily-flavoured peanut butter routinely sold out every weekend. After some national publicity and an improved website, Nerdy Nuts was making around $8k a month in early 2020 as customers turned to online options during the pandemic. By the summer, the brand sold over $160k jars’ worth in a single month after the founders experimented with ‘product drops’ on TikTok. Unprepared to deal with such a massive influx of orders, the company was forced to close its site 6 days a week to restrict sales - though this only seemed to increase the hype, with an extraordinary $500k worth of sales in August. By focusing on fun, offbeat flavours and leveraging the power of social media, Nerdy Nuts shows how quickly D2C brands can win customers - and how logistically challenging becoming an overnight viral success can be. The business is still suppressing sales to get ahead of log-jammed orders and hopes to grow slower and steadier in the coming years as the founders try to balance their D2C hit with raising a family.

Ugly Drinks makes sugar-free sparkling water and has also experienced stratospheric growth in just a few years. While the brand is already stocked in thousands of UK supermarkets, its slick and efficient e-commerce site has been the key to its continued success during the pandemic in the US. Their pop art-inspired packaging and cheeky marketing has made them a millennial hit and lends itself excellently to social media marketing. Ugly’s online sales have shot up 400% during the lockdown period. The brand is a great example of a company that balances D2C success with traditional retail sales. Although Ugly’s founders believe retail is where the drinks will go truly mainstream, having their own D2C marketplace allows them to connect directly with digitally native customers and craft a memorable, unique message that might get lost on supermarket shelves. Future plans include introducing a merchandise range, including hats and tote bags, that will be added to online purchases and should go down well on social media.

What’s next in the D2C space?

In the coming months and years, particularly if Covid-linked limitations continue, we’re likely to see more and more traditional brands shifting some of their supply to a D2C model. For brands without an established e-commerce site and supply chain, establishing the necessary infrastructure to pivot their sales can be time-consuming and require investment. For some, partnering with a third-party fulfilment vendor will be the most cost-effective way to sell straight to consumers in the short term.

While the D2C delivery model functions excellently for CPGs and frozen foods, it’s not as attractive for perishable items (unless sold hyper-locally) or bulky goods that are costly to transport. Smaller, easy-to-deliver products that can be sold in bundles and delivered in bulk or through a subscription model are a better bet for a purely D2C business model.

As we’ve learnt, having an active online presence can pay dividends for D2C brands. Cultivating an engaged community online is a way to tap into a whole generation of digitally native customers as well as locking in future marketing opportunities: the brands that convince with appealing content and quirky packaging or products will find their community self-generating content online, increasing word-of-mouth reach and ultimately, sales. D2C, it would seem, could be the place to be for forward-thinking F&B brands in the years to come.

The 30-second pitch: D2C food and beverage sales

📦 What

  • Many food and drinks brands are launching D2C (direct-to-consumer) sites to make up for lost revenue during coronavirus shutdowns. They’re taking notes from a raft of digitally native startups in the D2C F&B sphere, who are paving the way for rapid growth in the direct-to-consumer arena.


🤷‍♂️ Why

  • While D2C sales are nothing new, the COVID-19 crisis has accelerated the shift towards e-commerce food and drink sales. Many brands that previously sold via restaurants or retail have recognised the benefits of a D2C webshop for the first time, while a surge of D2C startups have experienced sudden growth as traditional outlets have closed to customers due to the pandemic.


🚚 How

  • E-commerce food and drink sales
  • Restaurant suppliers pivoting to D2C models
  • Selling and marketing via social media
  • Attracting customers online with quirky packaging


👀 Who


👍 The good

  • Selling directly to end consumers means brands can cut out the high overheads related to warehousing, transportation and commission fees.
  • D2C sales allow brands more control over how they interact with their consumers and offer opportunities for data collection for increased, direct insights into consumer preferences and desires.
  • E-commerce sales are experiencing rapid growth, particularly this year, and digitally engaged brands can benefit from the move towards online grocery shopping.


👎 The bad

  • The D2C model does not work as well for perishable goods or those that cannot be transported easily.
  • The pandemic has seen some companies pivot to a B2B model, which some see as more secure.
  • Companies without an online presence found themselves extremely vulnerable during the initial COVID-19 lockdowns, with many still struggling to make up for lost time and earnings.


💡 The bottom line

  • The coronavirus pandemic is driving shoppers to actively hunt for new ways to purchase food and beverages: while online e-commerce was already a growing market for food and drinks brands, 2020 may mark a turning point that will forever change the way people buy the foods they love. Brands that recognise this shift, and the benefits that accompany it, by including a D2C channel as part of their sales strategy are likely to reap the rewards that come with it.

D2C (direct-to-consumer) sales are nothing new, but the coronavirus pandemic has meant that many food and beverage companies have scrambled to develop D2C sales channels to make up for lost revenue as restaurants and traditional retailers have shut their doors.

That’s alongside a surge of startups who have structured their business model around a D2C strategy from the get-go, using e-commerce and the power of email marketing and social media to sell their products straight to end customers.

Food & beverage is the fastest-growing D2C category and the global food and drink e-commerce market is expected to grow from $14.9 billion in 2019 to $22.4 billion by the end of 2020. Recent statistics predict that D2C e-commerce will account for 50% of the growth in sales of CPGs in the USA by 2025, which would suggest a bounty of opportunities for food and drink companies adopting a D2C strategy. So let’s take a closer look at the brands already doing exactly that.

Direct-to-consumer (D2C) sales: what are they?

A D2C business model is as the name suggests: a company sells its product or service directly to end consumers, rather than through a distributor or retail outlet, such as a supermarket.

A D2C food business might, for example, sell its plant-based meat through its own webshop. And it’s not either/or: many brands, like the much-lauded Beyond Meat, have shown how to successfully sell a product through multiple channels, blending traditional retail and restaurant sales with D2C dealings.

Trend drivers: the pandemic, lower costs and increased insights

The pandemic has significantly accelerated a shift to D2C sales that was already underway. The closure of shops and restaurants, combined with shoppers visiting grocery stores less often, meant that many brands that followed a more traditional distribution model needed to start selling their wares online to survive. E-commerce sales rose as much between April and June 2020 as they did in the previous seven years - and food and beverage products have been one of the top-growing categories.

Selling directly to your end consumers also means that you cut out the middle man. Brands can avoid the high overheads related to warehousing, transportation and commission fees. Setting up an e-commerce site is a lot cheaper than it used to be, and with the global economy fluctuating wildly, finding ways to cut costs is especially welcome.

In addition to higher profit margins, D2C sales allow brands more control over how they interact with their consumers - which is something lots of companies like the sound of. Rather than relinquishing control of how the product is displayed and sold as soon as it leaves the warehouse, D2C brands have a unique opportunity to build customer loyalty and fine-tune their messaging.

Enhanced consumer relationships also means an opportunity to gather data, which can lead to new insights into what’s driving sales and what customers want. Unlike traditional retail, D2C companies can gather customer data points throughout the sales process, with digital analytics tools and services like Malomo and Blueprint helping D2C brands drive customer engagement with personalised experiences. For many brands, this is increasingly important in a competitive market.

Exploring the trend: e-commerce, social media and quirky packaging

With coronavirus restrictions shuttering the doors of restaurants, canteens and other foodservice outlets, many established brands have set up their own e-commerce sites to sell directly to consumers online. Beyond Meat, PepsiCo and Impossible Foods launched their own online D2C shops this summer. PepsiCo’s snacks.com site was the company’s first foray into D2C sales in its 127-year history, and it’s not by chance that it has happened in 2020.

Restaurant and catering food suppliers have also pivoted - temporarily, at least for now - to D2C strategies to make up for lost revenue during the pandemic. Take Bidfood, one of the biggest suppliers of fresh food to the catering industry in the UK, which set up a D2C sales channel on its website this spring. In the US, restaurant food suppliers Cheetah, DineMarket and Choco all shifted to sell to consumers while QSR Chipotle launched its own D2C ‘virtual farmers’ market’ to link up its consumers with fruit and vegetable suppliers caught short by 2020’s mass closures. Food Circle Supermarket, the online ‘surplus healthy food retailer’ has achieved £1.1 million in turnover since March 2020 – and credits its active online presence as part of the reason for its success.

Brands that have leveraged the power of social media, particularly TikTok, have a lot of lessons to offer to F&B businesses moving into the D2C space. Social media is the top acquisition channel for D2C companies, with food and drink the third most commonly searched interest on Instagram. Businesses with little to no online presence found themselves at risk during periods of lockdown, with many still scrambling to catch up. My Cookie Dough, which sells bake-at-home cookie dough packs through its website, shows how food brands can utilise social media sites effectively and inexpensively: most of its content is created by one or two staff members. The homespun videos are a prime example of ‘food porn’, with smartphone shots of just-baked cookie dough and indulgent, oozing sauces. Despite (or perhaps because of) the DIY feel to its content, the brand has garnered almost 3 million likes in less than a year.

Packaging is now a crucial part of a D2C brand’s product offering and customer experience – and it’s incredibly entwined with the power of social media. So-called ‘unboxing’ videos are an unstoppable online phenomenon so brands with quirky packaging or particularly Instagrammable artwork are more likely to stand out and gain traction online. Brewdog, Graze and SIMULATE’s Nuggs are all examples of brands that understand the vital importance of appearances in a virtual world.

Case Studies: Nerdy Nuts and Ugly Drinks  

Nerdy Nuts, a family-run startup that sells small-batch peanut butter in the USA, illustrates the perks and potential pitfalls of a successful D2C model. Founded in 2015, the founders started selling two flavours of their home-ground peanut butter at a local farmer’s market. Intended as a side hustle, the quirkily-flavoured peanut butter routinely sold out every weekend. After some national publicity and an improved website, Nerdy Nuts was making around $8k a month in early 2020 as customers turned to online options during the pandemic. By the summer, the brand sold over $160k jars’ worth in a single month after the founders experimented with ‘product drops’ on TikTok. Unprepared to deal with such a massive influx of orders, the company was forced to close its site 6 days a week to restrict sales - though this only seemed to increase the hype, with an extraordinary $500k worth of sales in August. By focusing on fun, offbeat flavours and leveraging the power of social media, Nerdy Nuts shows how quickly D2C brands can win customers - and how logistically challenging becoming an overnight viral success can be. The business is still suppressing sales to get ahead of log-jammed orders and hopes to grow slower and steadier in the coming years as the founders try to balance their D2C hit with raising a family.

Ugly Drinks makes sugar-free sparkling water and has also experienced stratospheric growth in just a few years. While the brand is already stocked in thousands of UK supermarkets, its slick and efficient e-commerce site has been the key to its continued success during the pandemic in the US. Their pop art-inspired packaging and cheeky marketing has made them a millennial hit and lends itself excellently to social media marketing. Ugly’s online sales have shot up 400% during the lockdown period. The brand is a great example of a company that balances D2C success with traditional retail sales. Although Ugly’s founders believe retail is where the drinks will go truly mainstream, having their own D2C marketplace allows them to connect directly with digitally native customers and craft a memorable, unique message that might get lost on supermarket shelves. Future plans include introducing a merchandise range, including hats and tote bags, that will be added to online purchases and should go down well on social media.

What’s next in the D2C space?

In the coming months and years, particularly if Covid-linked limitations continue, we’re likely to see more and more traditional brands shifting some of their supply to a D2C model. For brands without an established e-commerce site and supply chain, establishing the necessary infrastructure to pivot their sales can be time-consuming and require investment. For some, partnering with a third-party fulfilment vendor will be the most cost-effective way to sell straight to consumers in the short term.

While the D2C delivery model functions excellently for CPGs and frozen foods, it’s not as attractive for perishable items (unless sold hyper-locally) or bulky goods that are costly to transport. Smaller, easy-to-deliver products that can be sold in bundles and delivered in bulk or through a subscription model are a better bet for a purely D2C business model.

As we’ve learnt, having an active online presence can pay dividends for D2C brands. Cultivating an engaged community online is a way to tap into a whole generation of digitally native customers as well as locking in future marketing opportunities: the brands that convince with appealing content and quirky packaging or products will find their community self-generating content online, increasing word-of-mouth reach and ultimately, sales. D2C, it would seem, could be the place to be for forward-thinking F&B brands in the years to come.

The 30-second pitch: D2C food and beverage sales

📦 What

  • Many food and drinks brands are launching D2C (direct-to-consumer) sites to make up for lost revenue during coronavirus shutdowns. They’re taking notes from a raft of digitally native startups in the D2C F&B sphere, who are paving the way for rapid growth in the direct-to-consumer arena.


🤷‍♂️ Why

  • While D2C sales are nothing new, the COVID-19 crisis has accelerated the shift towards e-commerce food and drink sales. Many brands that previously sold via restaurants or retail have recognised the benefits of a D2C webshop for the first time, while a surge of D2C startups have experienced sudden growth as traditional outlets have closed to customers due to the pandemic.


🚚 How

  • E-commerce food and drink sales
  • Restaurant suppliers pivoting to D2C models
  • Selling and marketing via social media
  • Attracting customers online with quirky packaging


👀 Who


👍 The good

  • Selling directly to end consumers means brands can cut out the high overheads related to warehousing, transportation and commission fees.
  • D2C sales allow brands more control over how they interact with their consumers and offer opportunities for data collection for increased, direct insights into consumer preferences and desires.
  • E-commerce sales are experiencing rapid growth, particularly this year, and digitally engaged brands can benefit from the move towards online grocery shopping.


👎 The bad

  • The D2C model does not work as well for perishable goods or those that cannot be transported easily.
  • The pandemic has seen some companies pivot to a B2B model, which some see as more secure.
  • Companies without an online presence found themselves extremely vulnerable during the initial COVID-19 lockdowns, with many still struggling to make up for lost time and earnings.


💡 The bottom line

  • The coronavirus pandemic is driving shoppers to actively hunt for new ways to purchase food and beverages: while online e-commerce was already a growing market for food and drinks brands, 2020 may mark a turning point that will forever change the way people buy the foods they love. Brands that recognise this shift, and the benefits that accompany it, by including a D2C channel as part of their sales strategy are likely to reap the rewards that come with it.

D2C (direct-to-consumer) sales are nothing new, but the coronavirus pandemic has meant that many food and beverage companies have scrambled to develop D2C sales channels to make up for lost revenue as restaurants and traditional retailers have shut their doors.

That’s alongside a surge of startups who have structured their business model around a D2C strategy from the get-go, using e-commerce and the power of email marketing and social media to sell their products straight to end customers.

Food & beverage is the fastest-growing D2C category and the global food and drink e-commerce market is expected to grow from $14.9 billion in 2019 to $22.4 billion by the end of 2020. Recent statistics predict that D2C e-commerce will account for 50% of the growth in sales of CPGs in the USA by 2025, which would suggest a bounty of opportunities for food and drink companies adopting a D2C strategy. So let’s take a closer look at the brands already doing exactly that.

Direct-to-consumer (D2C) sales: what are they?

A D2C business model is as the name suggests: a company sells its product or service directly to end consumers, rather than through a distributor or retail outlet, such as a supermarket.

A D2C food business might, for example, sell its plant-based meat through its own webshop. And it’s not either/or: many brands, like the much-lauded Beyond Meat, have shown how to successfully sell a product through multiple channels, blending traditional retail and restaurant sales with D2C dealings.

Trend drivers: the pandemic, lower costs and increased insights

The pandemic has significantly accelerated a shift to D2C sales that was already underway. The closure of shops and restaurants, combined with shoppers visiting grocery stores less often, meant that many brands that followed a more traditional distribution model needed to start selling their wares online to survive. E-commerce sales rose as much between April and June 2020 as they did in the previous seven years - and food and beverage products have been one of the top-growing categories.

Selling directly to your end consumers also means that you cut out the middle man. Brands can avoid the high overheads related to warehousing, transportation and commission fees. Setting up an e-commerce site is a lot cheaper than it used to be, and with the global economy fluctuating wildly, finding ways to cut costs is especially welcome.

In addition to higher profit margins, D2C sales allow brands more control over how they interact with their consumers - which is something lots of companies like the sound of. Rather than relinquishing control of how the product is displayed and sold as soon as it leaves the warehouse, D2C brands have a unique opportunity to build customer loyalty and fine-tune their messaging.

Enhanced consumer relationships also means an opportunity to gather data, which can lead to new insights into what’s driving sales and what customers want. Unlike traditional retail, D2C companies can gather customer data points throughout the sales process, with digital analytics tools and services like Malomo and Blueprint helping D2C brands drive customer engagement with personalised experiences. For many brands, this is increasingly important in a competitive market.

Exploring the trend: e-commerce, social media and quirky packaging

With coronavirus restrictions shuttering the doors of restaurants, canteens and other foodservice outlets, many established brands have set up their own e-commerce sites to sell directly to consumers online. Beyond Meat, PepsiCo and Impossible Foods launched their own online D2C shops this summer. PepsiCo’s snacks.com site was the company’s first foray into D2C sales in its 127-year history, and it’s not by chance that it has happened in 2020.

Restaurant and catering food suppliers have also pivoted - temporarily, at least for now - to D2C strategies to make up for lost revenue during the pandemic. Take Bidfood, one of the biggest suppliers of fresh food to the catering industry in the UK, which set up a D2C sales channel on its website this spring. In the US, restaurant food suppliers Cheetah, DineMarket and Choco all shifted to sell to consumers while QSR Chipotle launched its own D2C ‘virtual farmers’ market’ to link up its consumers with fruit and vegetable suppliers caught short by 2020’s mass closures. Food Circle Supermarket, the online ‘surplus healthy food retailer’ has achieved £1.1 million in turnover since March 2020 – and credits its active online presence as part of the reason for its success.

Brands that have leveraged the power of social media, particularly TikTok, have a lot of lessons to offer to F&B businesses moving into the D2C space. Social media is the top acquisition channel for D2C companies, with food and drink the third most commonly searched interest on Instagram. Businesses with little to no online presence found themselves at risk during periods of lockdown, with many still scrambling to catch up. My Cookie Dough, which sells bake-at-home cookie dough packs through its website, shows how food brands can utilise social media sites effectively and inexpensively: most of its content is created by one or two staff members. The homespun videos are a prime example of ‘food porn’, with smartphone shots of just-baked cookie dough and indulgent, oozing sauces. Despite (or perhaps because of) the DIY feel to its content, the brand has garnered almost 3 million likes in less than a year.

Packaging is now a crucial part of a D2C brand’s product offering and customer experience – and it’s incredibly entwined with the power of social media. So-called ‘unboxing’ videos are an unstoppable online phenomenon so brands with quirky packaging or particularly Instagrammable artwork are more likely to stand out and gain traction online. Brewdog, Graze and SIMULATE’s Nuggs are all examples of brands that understand the vital importance of appearances in a virtual world.

Case Studies: Nerdy Nuts and Ugly Drinks  

Nerdy Nuts, a family-run startup that sells small-batch peanut butter in the USA, illustrates the perks and potential pitfalls of a successful D2C model. Founded in 2015, the founders started selling two flavours of their home-ground peanut butter at a local farmer’s market. Intended as a side hustle, the quirkily-flavoured peanut butter routinely sold out every weekend. After some national publicity and an improved website, Nerdy Nuts was making around $8k a month in early 2020 as customers turned to online options during the pandemic. By the summer, the brand sold over $160k jars’ worth in a single month after the founders experimented with ‘product drops’ on TikTok. Unprepared to deal with such a massive influx of orders, the company was forced to close its site 6 days a week to restrict sales - though this only seemed to increase the hype, with an extraordinary $500k worth of sales in August. By focusing on fun, offbeat flavours and leveraging the power of social media, Nerdy Nuts shows how quickly D2C brands can win customers - and how logistically challenging becoming an overnight viral success can be. The business is still suppressing sales to get ahead of log-jammed orders and hopes to grow slower and steadier in the coming years as the founders try to balance their D2C hit with raising a family.

Ugly Drinks makes sugar-free sparkling water and has also experienced stratospheric growth in just a few years. While the brand is already stocked in thousands of UK supermarkets, its slick and efficient e-commerce site has been the key to its continued success during the pandemic in the US. Their pop art-inspired packaging and cheeky marketing has made them a millennial hit and lends itself excellently to social media marketing. Ugly’s online sales have shot up 400% during the lockdown period. The brand is a great example of a company that balances D2C success with traditional retail sales. Although Ugly’s founders believe retail is where the drinks will go truly mainstream, having their own D2C marketplace allows them to connect directly with digitally native customers and craft a memorable, unique message that might get lost on supermarket shelves. Future plans include introducing a merchandise range, including hats and tote bags, that will be added to online purchases and should go down well on social media.

What’s next in the D2C space?

In the coming months and years, particularly if Covid-linked limitations continue, we’re likely to see more and more traditional brands shifting some of their supply to a D2C model. For brands without an established e-commerce site and supply chain, establishing the necessary infrastructure to pivot their sales can be time-consuming and require investment. For some, partnering with a third-party fulfilment vendor will be the most cost-effective way to sell straight to consumers in the short term.

While the D2C delivery model functions excellently for CPGs and frozen foods, it’s not as attractive for perishable items (unless sold hyper-locally) or bulky goods that are costly to transport. Smaller, easy-to-deliver products that can be sold in bundles and delivered in bulk or through a subscription model are a better bet for a purely D2C business model.

As we’ve learnt, having an active online presence can pay dividends for D2C brands. Cultivating an engaged community online is a way to tap into a whole generation of digitally native customers as well as locking in future marketing opportunities: the brands that convince with appealing content and quirky packaging or products will find their community self-generating content online, increasing word-of-mouth reach and ultimately, sales. D2C, it would seem, could be the place to be for forward-thinking F&B brands in the years to come.

The 30-second pitch: D2C food and beverage sales

📦 What

  • Many food and drinks brands are launching D2C (direct-to-consumer) sites to make up for lost revenue during coronavirus shutdowns. They’re taking notes from a raft of digitally native startups in the D2C F&B sphere, who are paving the way for rapid growth in the direct-to-consumer arena.


🤷‍♂️ Why

  • While D2C sales are nothing new, the COVID-19 crisis has accelerated the shift towards e-commerce food and drink sales. Many brands that previously sold via restaurants or retail have recognised the benefits of a D2C webshop for the first time, while a surge of D2C startups have experienced sudden growth as traditional outlets have closed to customers due to the pandemic.


🚚 How

  • E-commerce food and drink sales
  • Restaurant suppliers pivoting to D2C models
  • Selling and marketing via social media
  • Attracting customers online with quirky packaging


👀 Who


👍 The good

  • Selling directly to end consumers means brands can cut out the high overheads related to warehousing, transportation and commission fees.
  • D2C sales allow brands more control over how they interact with their consumers and offer opportunities for data collection for increased, direct insights into consumer preferences and desires.
  • E-commerce sales are experiencing rapid growth, particularly this year, and digitally engaged brands can benefit from the move towards online grocery shopping.


👎 The bad

  • The D2C model does not work as well for perishable goods or those that cannot be transported easily.
  • The pandemic has seen some companies pivot to a B2B model, which some see as more secure.
  • Companies without an online presence found themselves extremely vulnerable during the initial COVID-19 lockdowns, with many still struggling to make up for lost time and earnings.


💡 The bottom line

  • The coronavirus pandemic is driving shoppers to actively hunt for new ways to purchase food and beverages: while online e-commerce was already a growing market for food and drinks brands, 2020 may mark a turning point that will forever change the way people buy the foods they love. Brands that recognise this shift, and the benefits that accompany it, by including a D2C channel as part of their sales strategy are likely to reap the rewards that come with it.
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