Andreas – 6 Seeds

For CPG, AI is emerging as a game-changing technology, offering CPG companies the tools to stay ahead of the curve.

Current Adoption Rates

The uptake of AI in the CPG sector is gathering momentum. According to recent studies:

Over 50% of companies have begun their AI journey
Around 30% have tested proof of concepts

It’s worth noting that many are still in the early stages, with only a select few having deployed AI at scale across their operations.

Benefits Across the Value Chain

AI’s potential in CPG spans the entire value chain, such as:

Enhanced Product Development

AI can accelerate innovation cycles, helping companies bring products to market faster and with greater consumer relevance.

Mars Wrigley used AI to develop a Maltesers cake with Marmite-infused buttercream frosting, based on consumer insights.

Optimized Operations

From predictive maintenance to quality control, AI is streamlining production processes and boosting efficiency.

PepsiCo is using machine learning to create the ‘perfect Cheeto’, optimizing variables like size, shape, and flavor consistency.

Smarter Marketing

AI-powered analytics are enabling more targeted, personalized marketing strategies and improving customer engagement.

Mondelez International used AI to create personalized Diwali ad campaigns in India, featuring digital avatars of celebrity Shahrukh Khan speaking uniquely to individual vendors.

Personalized Customer Experiences:

From product recommendations to customized formulations, AI is helping CPG companies deliver tailored experiences at scale.

L’Oréal’s AI-powered Perso device creates on-the-spot skincare and cosmetics formulations for personalized products.

The impact of these benefits is substantial. Forbes reports that top AI applications could unlock at least $490 billion in value for CPG companies by 2023.

Case Study: Unilever’s AI-Driven Sustainability Initiative

Unilever has successfully leveraged AI to support its sustainability goals and drive innovation in its Knorr range. As part of its Future Foods Strategy, Unilever aimed to identify novel plant-based ingredients to support dietary diversification.

Working with AI solution provider Foodpairing, Unilever used advanced algorithms to analyze and identify new ingredient combinations. This AI-driven approach allowed Unilever to:

Rapidly explore a vast range of potential ingredients
Identify unexpected flavor pairings that human experts might overlook
Accelerate the product development process

The result? Unilever is on track to meet its target of making 25% of Knorr products plant-based by 2025, demonstrating how AI can drive both innovation and sustainability in CPG.

Looking Ahead

As we move forward, the successful implementation of AI will be a key differentiator in the CPG industry. Companies that can effectively harness AI’s potential will be well-positioned to meet evolving consumer needs, drive innovation, and maintain a competitive edge in an increasingly digital marketplace.

However, challenges remain. Many companies struggle with scaling AI initiatives beyond the pilot phase, and issues around data quality and organizational culture can hinder progress. In the coming articles, we’ll delve deeper into specific applications of AI in CPG, explore more success stories, and discuss strategies for overcoming implementation challenges.

Stay tuned as we continue to unpack the AI opportunity in CPG, providing you with the insights needed to navigate this exciting technological frontier.

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Get in touch and let’s implement these business changing solutions for yourself. Our clients perform over 60% stronger than the average and you could be one of them.

How to Leverage AI for Accelerated Product Development in CPG

Every day, I witness how CPG companies grapple with adapting to ever-evolving consumer demands.

It’s a colossal challenge, contributing significantly to the high failure rate of CPG products – up to 85% according to Nielsen.

It can feel like a never-ending hamster wheel.

5 Key Challenges in CPG R&D

Here’s what I see as the top challenges in the industry:

Cost Pressures: Rising costs and stagnant budgets are ubiquitous. Budgets are tight and get squeezed daily.
Supply Chain Complexity: Diverse and fragmented supply chains face issues from weather events to global conflicts.
Changing Consumer Preferences: Quickly adapting to changing consumer preferences is tough. Social media drives change at a pace never experienced before.
Short Product Life Cycles: Rapid innovation is essential to keep pace with evolving trends and recoup development costs.
Duplicated Efforts: Lack of coordination among global R&D teams leads to redundant work and wasted resources, becoming a significant money sink.

AI’s Benefits in CPG Product Development

Here’s where AI can help. It’s not a silver bullet that will make all your problems disappear, but used correctly, it will accelerate and support your teams:

Faster Product Development: AI enhances data analysis, generating insights that help predict successful products.
Improved Product Quality: AI-driven analysis identifies optimal design, ingredients, and formulations.
Reduced R&D Costs: Generative AI enables rapid prototyping and cost-effective evaluations.
Enhanced Automation: AI automates quality-control testing, data collection, and decision-making processes.
Better Regulatory Compliance: AI tools like RegAsk analyze regulatory data, ensuring companies stay compliant.

AI Use Cases in CPG R&D

Personalized Products: AI leverages internal and external data to develop products tailored to individual preferences.
Market Research: Predictive analytics tools gauge consumer preferences, driving targeted R&D and marketing efforts.
Product Testing: AI automates extensive testing processes, identifying defects and suggesting improvements.
Organizational Knowledge: AI-powered directories capture and organize tacit knowledge, enhancing innovation and efficiency.

AI and Future Growth

CPG companies must integrate AI to stay competitive and accelerate R&D efforts. All the global brands are already heavily invested, and AI is rapidly becoming table stakes.

By leveraging AI, companies can streamline the entire product life cycle, from ideation to launch, ensuring they meet and exceed consumer expectations.

Our Ecosystem at 6 Seeds

We’ve created an ecosystem of services that work towards the same goal: helping our clients sell more food and make more money. This is how we do it:

Product Creation: We use data and AI to help our clients create products that sell and have a product-market fit. Currently, 82% of all newly launched CPG products fail within a year. We think this is unacceptable.
Marketing Communications: According to a recent Nielsen study, 70% of all marketing activations in CPG fail to return the budget invested. We use data and AI to craft marketing strategies that earn you money, not cost it. Our approach is highly focused, often personalized, and built on the data we observe.
Investment Readiness: We get our clients ready for investments by using data to prove that their business model will be profitable.

The difference this makes

This ecosystem ensures that our clients experience a far higher success rate than their competition. Here are some of our key performance metrics:

35% Faster: Get your products from idea to market in 35% of the time it takes you now.
43% Cheaper: Marketing and innovation budgets can be reduced by up to 43% while achieving better outcomes.
67% Stronger: Our clients perform 67% stronger than the industry average.

As AI technology continues to evolve, we will lead the way in integrating AI into every facet of R&D, resulting in more personalized, sustainable, and innovative products that cater to the ever-changing consumer landscape.

Novo Nordisk, makers of Ozempic and Wegovy is seeing growth of up to 27% in 2024 driven by soaring demand. Ozempic itself saw a 52% sales increase in 2024 while the obesity drug segment containing Wegovy grew by a staggering 154%.

As the use of weight loss medications like Ozempic becomes more prevalent, CPG companies are already stepping up to meet the unique nutritional needs of this growing segment.

Nestlé’s Vital Pursuit: Tailored for GLP-1 Users

Nestlé has launched Vital Pursuit, a brand designed specifically for those on GLP-1 drugs or managing their weight.

These frozen meals are high in protein, a good source of fiber, and packed with essential nutrients like vitamin A, potassium, calcium, and iron.

Recognizing that GLP-1 users often have a reduced appetite, Nestlé has adjusted portion sizes accordingly.

Abbott Laboratories’ Protality: Supporting Muscle Maintenance

Abbott Laboratories introduced Protality, a protein shake brand aimed at helping adults lose weight while maintaining muscle mass.

This product addresses the challenge of consuming enough protein and nutrients to support muscle function, which can be a concern for those on weight loss medications. Abbott is committed to developing more science-backed products and conducting research to meet the specific nutritional requirements of this group.

General Mills’ Super Mac: A Healthier Twist on a Classic

General Mills has revamped Annie’s Mac & Cheese with the introduction of “Super Mac,” a protein-packed version containing 15g of protein compared to the regular 9g.

In addition, they plan to offer lower sodium and sugar options in their Betty Crocker baked goods portfolio to cater to evolving weight management needs.

Common Themes

Across the board, these companies are focusing on products that are higher in protein, fiber, and essential micronutrients but lower in calories, sodium, and sugar.

Portion control remains a crucial consideration.

By investing in understanding the dietary patterns and nutritional needs of GLP-1 users, CPG companies are innovating and adapting.

Looking Forward

As the trend towards personalized nutrition continues, we can expect more targeted products from CPG companies.

The future will likely see even greater emphasis on portion-controlled, nutrient-dense foods that cater to specific health and wellness needs. This approach not only supports consumers’ weight management goals but also fosters long-term brand loyalty and trust.

Five ideas on how to profit from these developments

Personalized Nutrition Solutions

Develop AI-driven platforms or apps that provide personalized meal plans and product recommendations based on individual dietary needs, health goals, and preferences.

This can help consumers navigate their nutritional choices more effectively while on GLP-1 drugs.

Enhanced Nutrient Density

Focus on creating products that are not only high in protein and fiber but also rich in essential micronutrients like vitamins and minerals.

Consider fortifying products with nutrients commonly needed by GLP-1 users to ensure they meet their daily requirements despite reduced appetite.

Smaller, Convenient Portions

Offer smaller, single-serving packages that are convenient for on-the-go consumption.

These should be designed to meet the reduced appetite and portion control needs of consumers using weight loss medications.

Flavor Innovation

Innovate with bold and diverse flavors to keep meals and snacks exciting and enjoyable, even with reduced portion sizes. This can help maintain consumer interest and satisfaction.

Work with us

We have the data, the insight and the knowledge to help you understand and profit from the needs of the Ozempic consumer.

We work with investors and companies looking for investment, seeing both sides of the coin. Part of our job is to stop entrepreneurs from going after investment too early, in the process burning bridges they may well need at a later time.

Here are 7 issues we see time after time and what to do about them:

Lack of a Unique Value Proposition: Investors want to see a product or service that stands out in the crowded CPG market. If your offering is too similar to existing options, you need to differentiate it by highlighting its unique features, benefits, or target audience. The world doesn’t need another gluten-free cookie.

Weak Financial Projections: Investors look for startups with a solid financial plan and realistic projections – including pre-revenue startups. Ensure that your financial forecasts are well-researched, backed by data, and demonstrate a path to profitability. If you don’t have a financial expert on your team, hire one today.

Inexperienced Management Team: The experience and expertise of the management team is hugely important. If your team lacks relevant industry experience or a track record of success, consider bringing on advisors or mentors to strengthen your credibility.

Unclear Go-to-Market Strategy: Everybody wants to see a clear and well-defined plan for how you will bring your product to market, including distribution channels, marketing strategies, and sales tactics. Be vague or unrealistic to raise instant red flags..

Inadequate Intellectual Property Protection: I cannot possibly stress enough how important this is. If your product or service is easily replicable, if your brand is your only moat, investment will be harder to come by. Ideally, you’ll have patents, trademarks, or other intellectual property protections in place to demonstrate your competitive advantage.

Poor Branding and Packaging: Repeat after me: Canva doesn’t cut it. Your neighbour’s kid with a design degree doesn’t cut it. Branding and packaging that’s optimized for the industry are essential for attracting consumers and standing out on store shelves. If your branding and packaging are lacklustre or fail to resonate with your target audience, it will deter investors.

Insufficient Passion and Commitment: Investors need to see that you and your team are passionate about your product and committed to the long-term success of the business. “Great product, not sure about the team” is feedback we hear far too often from potential investment partners. If you don’t believe in yourself, nobody will.

Somehow, somewhere, an 82% failure rate for CPG products has become normalized. We don’t think that’s acceptable, so we decided to build a system that makes success in CPG predictable.

Restaurant prices have been soaring 7.1% YoY compared to a 3.6% rise at grocery stores, and consumers are shifting their dining habits towards more affordable, but still convenient options.

→ Enter “Grocerants” – ready-to-eat meals served by grocery stores like Loblaws, Kroger and CostCo are taking a bite out of the restaurant industry’s profits.

→ Deli 2.0: Kroger has expanded its prepared-meal section, bundling entrées with sides and drinks. Giant Eagle is tripling the number of its prepared meals on offer , and Walmart is innovating with in-store ghost kitchens. In Canada, Loblaw Companies Limited are expanding into the market.

→ Pushing the Cart: Prepared-food sales grew 12% last year to over $23B, led by lunch favourites like soup and chilli. Convenience is key!

→ Convenience vs. Experience: Fast food restaurants like Taco Bell, KFC, and Chipotle are upping their game with unique offerings and improved interiors. But can they beat the convenience of a premade meal placed right by pantry staples?

THE TAKEAWAY: Fast food thrived on speed and predictability, but grocers are now encroaching on that turf. And with the cost of food at an all-time high, price will continue to drive decisions.

Recent research from Kerry (5000 consumers in 10 countries) revealed a an interesting consensus across countries: 98% of us are actively seeking ways to reduce food waste, mostly driven by environmental, social, and financial concerns.

Key Insights:

→ 70% of consumers are interested in products designed to minimize food waste.

→ A significant 72% believe longer shelf-life products are crucial in waste reduction.

→ Stance on preservatives: 82% prefer natural options, highlighting a shift towards healthier, more sustainable choices.

→ Changes in purchasing habits, with 91% of consumers willing to switch brands for better sustainability practices.

Opportunities for Innovation and Marketing Strategy:

With 70% of consumers interested in products designed to minimize food waste, there’s a clear demand for innovative solutions.

This could mean creating products that have a longer shelf life or utilizing ingredients that are typically discarded. For instance, developing products that use “ugly” fruits and vegetables, or creating new foods from by-products of processing, can appeal to environmentally conscious consumers.

Natural Preservatives:

The consumer preference for natural preservatives over artificial ones (82%) means that if your brands leverage natural preservatives they not only cater to the demand for cleaner labels but also position themselves as champions of sustainability.

Marketing and Brand Positioning:

Food waste reduction and shelf life efforts should inform marketing strategies.

Messaging that highlights the sustainability efforts of a brand, especially in terms of reducing food waste will resonate with consumers.

Packaging Innovations:

With consumers willing to switch brands for better shelf life, there’s a substantial opportunity in rethinking packaging. Innovations in packaging that extend the shelf life of products or allow for better portion control can meet consumer demands and reduce food waste.

Smart packaging solutions that incorporate technology to indicate freshness or optimal consumption periods can also be a significant draw.

Consumer Education:

Beyond product and packaging innovations, there’s a role for consumer education in reducing food waste. Brands can engage consumers with tips on storing and preserving food at home, understanding expiration dates, and creatively using leftovers.

This not only helps in building a relationship with consumers but also positions a brand as a thought leader in sustainability.

The Nostalgic Secret Ingredient

Spam, the iconic canned meat, is making a comeback in the culinary world, and it’s not just for nostalgia’s sake.

From Spam musubi to Spam sliders, in 2024, chefs and food enthusiasts alike are rediscovering it.

Spam musubi is a Hawaiian staple, combining elements of Japanese sushi with Spam. The origin is a little murky, with some claiming that it was created by Barbara Funamura, a Japanese-American woman from Kauai, or during the Japanese internment camps during World War II. It’s simple to make and highly customizable.

Want to try? Here’s a recipe to get you started:

Ingredients:

1 can of Spam (12 oz)
5 cups of cooked sushi rice or short-grain rice
5 sheets of nori (seaweed wrap)
3 tablespoons of soy sauce
2 tablespoons of oyster sauce
1 tablespoon of sugar
Furikake (Japanese rice seasoning, optional)
1 Musubi mold (or an empty Spam can, cleaned and with both ends removed)

Instructions:

Prepare the Rice: Cook the rice according to the package instructions. Sushi rice is preferred for its stickiness and ability to hold its shape. Once cooked, optionally season the rice with furikake for added flavor.

Cook the Spam: Open the Spam can, remove the Spam, and slice it into 8-10 even slices. In a skillet over medium heat, fry the Spam slices until they are slightly crispy on both sides. This usually takes about 2 minutes per side. In a small bowl, mix the soy sauce, oyster sauce, and sugar. Once the Spam slices are cooked, pour the mixture over them and continue cooking until the slices are well-coated and the sauce thickens. This caramelization process adds a rich flavor to the Spam.

Assemble the Musubi: Cut the nori sheets in half lengthwise. Place the musubi mold (or the empty Spam can) in the center of a strip of nori. Scoop a layer of rice into the mold, pressing it down to about 1/2 inch thick. If you’re using furikake, sprinkle a bit over the rice. Place a slice of the cooked Spam on top of the rice. Add another layer of rice on top of the Spam, pressing firmly. If using a mold, press the plunger down to compress the layers. If using a Spam can, use a spoon or similar object to press down and compact the layers.

Wrap the Nori: Remove the musubi from the mold and place it at the edge of the nori strip. Wrap the nori tightly around the rice and Spam, moistening the edge of the nori with a little water to seal it.

Serve: Cut the musubi into halves or thirds, depending on your preference. Serve immediately or wrap them individually for a portable snack or meal.
Customize your Spam Musubi with additional ingredients like avocado, scrambled egg, or pickled radish.

If you want to win in our industry, you need to beat the odds. Thankfully, we have the data to make that possible.

What consumers want and need

Last month we talked about indulgence, this month we’re highlighting nostalgia as a major consumer need in food and drink.

Just like the desire for indulgent treats, nostalgia is an emotion we see most of in times of unrest and insecurity. The three main drivers for these feelings are:

climate change
global conflicts
inflation

But nostalgia is not just a fleeting moment of reminiscence – it’s a significant movement driven by Gen Xers and Millennials.

As these generations start families, there’s a desire to share the tastes of their youth with their own kids, sparking a renaissance of once-forgotten flavours.

The Hi-C’s Ecto Cooler

The comeback of Hi-C’s Ecto Cooler is a prime example of nostalgia’s power. Originally launched in 1987 in partnership with the Ghostbusters franchise, Ecto Cooler became a childhood staple throughout the late ’80s and early ’90s.

But as the Ghostbusters fever waned, so did Ecto Cooler’s presence on store shelves—until 2021.

Coinciding with the release of a new Ghostbusters film, a surge of nostalgia-driven demand among Millennials led to the drink’s return. This revival not only allowed parents to relive their youth but also introduced a new generation to a taste blast from the past.

This trend keeps on giving

From Dunkaroos to classic kiddie cereals, Taco Bell treats, and long-forgotten chip flavours, the market is witnessing a massive renaissance of retro products.

These comebacks are largely fuelled by social media, where nostalgic parents share their yearnings for childhood favorites and mobilize campaigns for their return. Brands keen to leverage this movement are rediscovering the potential of ’80s sweets and ’90s pizza-inspired products, finding that these flavors can captivate both those who remember them fondly and newcomers alike.

How to profit from this

Re-imagine food from 50-30 years ago – be sure to maintain the flavor and consumption experience that made the products a success originally.
Work with us to identify the most appealing flavors to score a nostalgic home run.
Consider updating the ingredients to make them relevant to today’s consumer sensitivities. Low/no sugar, more natural ingredients.