Insights
7 Growth Industries Your Small Business Can Leverage in the Future
By Patrick Lee
Be on the lookout for these up and coming businesses and products
It’s never too late to think of the future.
Small and midsize businesses should always be looking ahead, especially during tumultuous times like the ones we’re all living through at the moment.
“You’ve got to think beyond 12 months, because there can be things that are hot today and gone tomorrow,” advises author and strategic business adviser Daniel Burrus. “Anyone who's looking in the future—looking at opportunities—there's no shortage of trends.”
It may be hard to think beyond the current COVID-19-caused economic shutdown, which shows little sign of lifting, at least for the next few months. Even before that, the economy was showing signs of strain, says Laura Gonzalez, associate professor of finance at California State University, Long Beach. And the long-term effects of the virus on the economy are unclear.
“Bear markets usually last an average of two years, but this one is different,” Gonzalez says. “The effect of the pandemic is expected to last about one year, the time to produce the vaccine and treatment. When the economy bounces back, there will be opportunities in a new society and global markets.”
Here are seven growth industries that will only increase once we’re all able to leave our homes, according to experts.
1. CBD products
More states have legalized all uses of marijuana and weed-derived products, giving momentum to an industry that was burgeoning before everything closed down.
Retail sales of CBD consumer products in 2018 have been estimated between about $600 million and $2 billion, financial services firm Cowen reports. “By 2025, we believe CBD offerings could conservatively generate $16 [billion] in retail sales, assuming about a 40 percent increase in consumer incidence, to 10 percent, and a spend of less than $2 per day,” the firm indicates.
Cowen’s analysis also anticipates a diversification of CBD products, led by traditional health and wellness ones (including $6.4 billion in so-called “nutraceuticals” and $4 billion in topical products). Cowen also forecasts that CBD food, beverages, beauty and vapor products will generate sales of about $1 billion to $2.5 billion by 2025.
2. Vegan and vegetarian foods
Anyone who’s ever ordered an Impossible Whopper at Burger King knows that plant-based foods have broken through big time.
In 2018, only 5 percent of Americans identified as vegetarian, and even fewer as vegans. But demand for plant-based food has been growing as consumers shift to what they consider to be more healthy diets. That trend is likely to pick up once consumers are able to return to restaurants after months of cooking at home.
“Currently, the plant-based meat and cheese industries are experiencing accelerated growth following years of testing and experimentation,” CSULB’s Gonzalez says. “Plant-based alternatives are ready to satisfy many customers' palate and budget and deliver more sustainable solutions.”
Gallup reports that sales of plant-based food grew 8.1 to percent in 2017 and exceeded $3.1 billion that year. It adds that plant-based alternatives to dairy products were “expected to account for 40 percent of dairy beverage sales.”
“Increased sales of plant-based foods, without a corresponding increase in the percentage of Americans who say they are vegan or vegetarian, likely indicates a greater overall interest in these products,” the research firm concludes.
“Anyone who's looking in the future—looking at opportunities—there's no shortage of trends.”
3. Green and environmentally friendly businesses
The current COVID-19 lockdown is raising awareness among consumers of the environmental costs of old behaviors.
“With two-thirds of consumers now believing that we are reaching an environmental tipping point, consumers overwhelmingly see themselves as being directly responsible for the world around them, and for their own health,” a Tetra Pak/Ipsos 2019 study finds.
The study adds: “Consumers are therefore making more informed choices over packaging, they are looking for environmental information in labeling and are purchasing environmentally sound products, even if they cost more.”
The trend affects all industries, particularly food and beverage. “The number one change ambition for both health and environmental reasons is greater consumption of environmentally sound food and beverage products. … Packaging and recyclability specifically are critical.”
4. Gender-neutral and natural personal care
One trend that has emerged during stay-at-home orders: self-care and online makeup tutorials. That fits in with the movement toward new kinds of personal care products that predated COVID-19, such as a greater focus on “inclusive beauty.”
“Companies like ASOS, Calvin Klein, Yves Saint Laurent, Clinique and others offer makeup for men, while startups like Context and incumbent brands including MAC, Tom Ford and Marc Jacobs have all launched gender-neutral makeup lines,” reports CB Insights. “To cater to this trend, beauty incumbents like Maybelline and CoverGirl have also announced male brand ambassadors.”
A corollary trend is the growth of natural personal care products, according to Gene Hammett, a speaker, strategic adviser for growth and host of the “Growth Think Tank” podcast. “I've talked to a lot of people through my podcast [who] have taken [personal care] products and found ways to market them so that they're much better,” he says.
Hammett points to such products as toxin-free deodorant and charcoal toothpaste as examples of the trend.
5. Healthy snacks
Snacking has filled up a lot of downtime for those sheltering at home. Many of people are starting to think there are healthier options.
An aging and more health-conscious population had already begun thinking twice about snack foods.
“Another adaptive measure taken by major producers in recent years was a massive increase in the production and marketing of healthy snacks,” reports IBISWorld. “Oily, high-cholesterol snack foods had been the predominant products of the industry, but recent dietary trends were driving many American consumers away from these fats. Therefore, rather than continuing to flood the market with fried or cheesy quick bites, major players set out on a health initiative.”
Hammett cites the example of a client that jumped aboard the trend by creating new vegetable-based snacks out of its core products: pea pods and lentils. “They would flavor them with barbecue sauce and Sriracha and dill pickle and different things,” he says. “But it's a healthy kind of base, being a vegetable product.” The result? Booming sales in both the firm’s native Canada and the U.S.
6. Pet wearables
There has been a boom of pet fostering and adoptions recently, as single people and families take advantage of their time at home to rescue at-risk dogs, cats and other creatures.
That will only fuel the global pet wearables market, which was already expected to grow to $1.7 billion in 2024 from $703 million in 2019, according to data from research firm MarketsandMarkets.
“The growth of the market is attributed to the increasing concerns toward pet health and well-being, rising pet population and pet humanization, surging demand for [the Internet of Things] in pet tracking devices and growing expenditure on pets due to high disposal income,” MarketsandMarkets reports.
Smart collars—think of a Fitbit for Fido—are leading the trend. Such devices connect wirelessly to a smartphone to relay your pet’s location, activity level, health and more.
7. Tech and marketplace trends
“WFH”—working from home—has become the new acronym of the COVID-19 era. That has heightened awareness about remote working and communications apps, notably Zoom, which will likely carry over into the recovery period.
“Employees with technology skills and businesses that can sustain teleworking will have a brighter future,” Gonzalez says. “Therefore, this is a good time to start thinking how we can acquire and increase those technology-oriented skills, especially given the many new opportunities in online education. We will likely witness the birth of forward-looking flexible small businesses and franchises and a revitalized demand for a high-quality sustainable domestic supply chain.”
A.I. apps, such as Alexa, offer small and midsize businesses a tech opportunity, business adviser Burrus suggests. Businesses may be able to adapt certain open-source elements of Alexa, the A.I. assistant that powers Amazon’s Echo, for their own purposes, he says.
“I shared this with a company about a year and a half ago that is a small heating and air conditioning company in the Midwest,” Burrus says. He urged the company to incorporate Alexa-style voice commands into thermostats. “Well, he did that, and his company is now national, but then a year and a half [later], they exploded and are growing like crazy.”
Another opportunity exists for companies skilled in marketing their wares on Amazon’s online marketplace, Hammett says. “Dealing with Amazon as a marketplace, you've got to have some expertise and you've got to kind of know what works, and it changes over time,” he says. “And so, the one fast-growing industry is those people that have had the experience to really advise [other] companies on growth [strategies]” on that platform.
“How do you actually get your products to show up in the right places?” Hammett adds. “There is a sponsored or a paid portion for those products. How do you maximize your ability to stay there and minimize your costs? So that's kind of an industry that I've seen a lot of companies really soaring with.”
Whatever trend speaks to your business, you should pay attention, Gonzalez advises. “Information is always valuable, and small businesses need to anticipate market challenges and opportunities,” she says. “This also allows the development of a context to persuade investors and to deliver and sustain value.”