Global CPGs Kellogg and PepsiCo Grow Grocery E-Commerce During the Pandemic | Emerging Brand E-Commerce Spotlight

E-commerce grocery sales have increased during the pandemic, and the number of consumers ordering online is expected to remain elevated. Both large CPGs and smaller emerging brands are taking steps to meet the growing demand and utilize online retail.


Quick hits:

  • By 2025, online grocery sales will account for almost 22 percent of total grocery sales, a 60% increase over pre-pandemic estimates.
  • PepsiCo’s e-commerce sales doubled in 2020, by selling through retailers such as Amazon, Walmart.com, e-grocery stores, or concierge services that deliver, such as Instacart.
  • Retailers must create efficiencies such as zone picking, wave picking, curbside notification, or implementing other picking and fulfillment solutions. More grocers and CPGs are expected to adopt automation and mechanization.
  • Smaller CPGs like Real Treat are also maximizing e-commerce channels for niche markets like the gift industry and are targeting their packaging to stand out online.

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   Read the transcript below:

Hi, I'm Kim Overstreet, Senior Content Strategist with PMMI Media Group.

Recently, Packaging World shared content from Digital Commerce 360, and they had some interesting insights that I'd like to share with you. The first is how two large CPGs, Kellogg and PepsiCo, handled the shift to online shopping during the pandemic. For both companies, eCommerce sales are made through retailers, such as amazon.com, walmart.com, or through e-grocery stores or services that deliver, such as Instacart. Both companies say prior investments were key to moving quickly to meet the increased demand for online shopping. Back in 2015, PepsiCo set up a dedicated eCommerce team, seeing online shopping as a vital part of its future. Vince Jones, the Head of the PepsiCo Global eCommerce team, said the company recognized that eCommerce disruption was coming, they just didn't know exactly when.

Working with retailers to develop online sales and make proper investments ensured that they were well positioned in 2020 when online sales doubled. Kellogg started preparing in 2018 by bringing in eCommerce experts, and training its leaders and Sales teams. PepsiCo's strategy also included setting up a dedicated customer team for each online retailer, with a cross-functional mix of data and technology, sales and marketing, and supply chain professionals. This allowed the company to be flexible, and respond quickly to marketplace changes. Both companies invested in analytics technology to ensure products were always in stock and available, and also to be able to interact and adjust to retailers' advertising platforms. Kellogg also invested in sponsored listings, so that their products are in the top search results. Another strategy was to set up a specific skew for eCommerce, such as variety and multi-packs, that were more suited to ship in own container, or that created a better margin for the higher cost of eCommerce.

In a separate article, Sylvain Perrier, CEO of online grocery retail platform Mercatus said that by 2025 online grocery sales will account for almost 22% of total grocery sales, more than a 60% increase over pre-pandemic estimates. He said that retailers must create efficiencies such as zone picking, wave picking, curbside notification, or implementing other picking and fulfillment solutions. Also, more grocers and CPGs will adopt automation and mechanization. Meal kits are expected to become even more mainstream, and direct-to-consumer sales will expand into grocery retail. Perrier also said that every retailer of every size should ask, "How do we scale to meet the growing demand for eCommerce pickup and delivery? What services can be farmed out, and which need to be owned by the retailer? And finally, where can digital offerings be improved?"

Since we talked about grocery eCommerce for large CPGs in the first segment, I thought I'd also talk about a small company called Real Treat Kitchen, and how they are using eCommerce to promote sales of Top Shelf Cookies that cater to adult pallets with ingredients like fresh lemons, spices, chocolate, and smoked nuts, and real butter. Real Kitchen has really designed its product packaging with the internet in mind. Its packages are designed not only to be functional, but also to look good on Instagram and other outlets where those in the gift industry we'll see them.

Jacquelyn Day, owner of Real Treat, said that the gift industry has been a substantial part of the business from the early days, but it's really grown tremendously alongside the boom in eCommerce in the last 18 months. Day said that during the pandemic, she started exploring channels that the company hadn't been maximizing previously. And, whereas they had previously been very retail-focused, they had to shift attention to eCommerce. Real Treat partnered with Shopify at the end of 2020, and day said that they are now channeling most wholesale business through the Shopify website. Day also said that they now have six different eCommerce channels, with partners like Fare, and the Specialty Food Association's Infinite Aisle Program Platform, in addition to several grocery retailers that exist only online. She said, "Brick and mortar continues to be an important piece, but it is not the whole pie anymore, not by a long shot."

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