Monica Watrous 2019KANSAS CITY— The pandemic has upended many business plans and led to the closing of an untold number of companies. Despite economic challenges, hundreds of thousands of startups are launching across the country. The number of business applications filed in the United States in the week ended Aug. 29 exceeded 101,600, up 62% over the prior-year period, according to US Census Bureau data.

Drexel Food Lab, a product development and culinary innovation center at Philadelphia-based Drexel University, has received “more inquiries than ever” since the pandemic began in early spring, said its director, Jonathan Deutsch, PhD.

“I think that it’s a combination of retail really booming right now and a lot of chefs and hospitality professionals are rethinking the longevity of their hospitality career and looking to pivot into manufactured foods, CPG or foodservice ideas,” Dr. Deutsch said. “And people are gaining more time by working remotely. There’s been a lot of backburner projects from someone who has a 9-to-5 job, and now instead of leaving the house at 7 to get to their 9-to-5 job, they have two hours in the morning to work on their side business or a few hours in the evening to work on things, so I’m seeing a lot more of that kind of client as well.”

Startups created during times of crisis often are scrappy. Those that succeed in the current environment will come through much stronger. Premium packaged food and beverage represents an especially promising opportunity as consumers travel and dine out less due to the pandemic but continue to seek convenience, health and affordable luxury. Successful food brands that emerged a decade ago from the Great Recession include Chobani, Purely Elizabeth, Beyond Meat and Zevia.

“A lot of the small companies and brands that we saw in 2010 are here and powerful today,” said Larry Levin, executive vice president, market and shopper intelligence at Information Resources, Inc. “They positioned themselves well for continued survival or acquisition, and I think that is a light at the end of the tunnel for some of these small manufacturers who might be worried right now. They can look back and see what others did during the last recession. They were able to survive and come through relatively well.”

The past few months have seen several innovative food brands come to market.

Gregory Struck, a serial entrepreneur with a sweet tooth, is setting out to disrupt the refrigerated desserts category with the launch of Noops, a plant-based pudding formulated with organic oats, sunflower seed protein and organic dates.

“We’ve had to be very nimble and move into a digital realm where we can conduct Zoom meetings, send samples, take the sales process from offline to the digital world,” Mr. Struck said. “There was a slight delay in terms of the sales cycle, but the good news is retailers have been incredibly receptive to the idea of a plant-based indulgent oat milk pudding. We’re very lucky our sales process was reinvigorated in June, and we’re actively being courted by best-in-class accounts across the Northeast.”

No cows were milked in the making of Brave Robot, a new brand of ice cream formulated with animal-free dairy protein that was launched recently by Los Angeles startup The Urgent Co. The products feature the taste and texture of dairy-based ice cream but are lactose-free, cholesterol-free and vegan, said Paul Kollesoff, co-founder and general manager of The Urgent Co. The brand was developed in partnership with Perfect Day, a food technology company that produces milk proteins based on plants instead of animals.

“We find retailers are looking for innovation,” Mr. Kollesoff said. “Ice cream specifically is skyrocketing in terms of sales during the pandemic. The numbers are up phenomenally, and I think retailers are saying, ‘How do we keep that going?’ They’re asking and looking for innovation.” 

This commentary was featured in the September 15 edition of Food Entrepreneur. Read the full issue here.