All change! Are you ready to get up close and personal with the new consumer?
What do oat milk and electric cars have in common? That’s one of the questions we answer in this wide-ranging chat with MDs from technology leader, Accenture.
Discussing how established food brands can achieve growth in an ever-changing consumer landscape, we look at how data can only go so far in helping big brands talk to consumers as authentically and playfully as a start-up.
It’s all change for consumer packaged goods companies (CPGs). From health-conscious confectionery to alcohol-free drinks and home delivery services, the big players are facing all sorts of industry challenges from innovative disruptors and rapidly shifting consumer trends.
In the next five years, the top 20 global consumer packaged goods companies are expected to experience slower growth than their smaller category competitors for the first time.
With the ever-changing marketplace, altering consumer tastes and seismic shifts caused by the Covid-19 pandemic, food and beverage brands are being forced to search for growth in new ways and different places.
And it all starts with getting to know your customers better than ever before. And letting them get to know you.
As with many sectors, food and beverage is now driven by immediacy. The days of the quarterly or yearly consumer insights report are numbered, with data and client feedback fuelling innovation and R&D more than ever.
Understanding the customer as a three-dimensional muse, rather than a person who simply wants to purchase a specific item for a specific occasion or motivation, is an emerging factor that large businesses need to embrace. And fast.
“I strongly believe we need to understand the full human in order to be able to design things that can make the world better, whether that’s through sustainability or through providing better options, better value, better things that better address their needs,” explains Giles Hanson, Director for ?WhatIf! Innovation, part of Accenture.
Giles explains that, when working with clients, he employs emotional analytics tools and resources to uncover what customers are saying at scale, to understand everything from semiotics to unmet needs. “It’s remarkable how much you can learn about people in the moment using data,” reveals Giles. “We’re even seeing CEOs being able to use different software platforms to go and have real time conversations with the people who they want to be buying their products.”
We’re really only scratching the surface right now of how we can build better businesses that better serve the needs of people through using data.Giles Hanson, Director for ? WhatIf! Innovation, part of Accenture
Moving towards conversation-driven research and data collection is going to help supercharge a brand’s or company’s ability to deliver what people truly want. In this way, consumers are almost becoming co-creators, with their input helping to drive innovation at CPGs. Oliver Grange, Managing Director for Consumer Goods Strategy at Accenture, believes all large companies are going to be fully data-driven within the next five to 10 years. “It’s one of the advantages that big players may have,” he says. “If they can access consumer data globally, and really understand what’s driving consumer preference, then be able to quickly change that into a product that consumers want to buy in the place they want to buy it, that’s obviously going to be tremendously valuable.” But, says Giles: “We’re really only scratching the surface right now of how we can build better businesses that better serve the needs of people through using data” – so it’s certainly an area worth focusing on.
The Covid-19 lockdowns saw small, local businesses able to rapidly niche down into what their customers really wanted in a flexible, agile way that larger brands were slower to catch up with. Giles says: “I live in an urban area, and saw bars and restaurant businesses which were massively disrupted by lockdown able to quickly pivot to provide a hyper-local service. So now, for example, I have much more choice for cocktails, draft beer, or good food delivered to my door than I could have imagined previously.” In that respect, Covid has accelerated the development of a lot of trends, and it will be interesting to see the impact of that on larger CPG businesses.
This agility is helping to drive acqui-hiring, where we see big companies like PepsiCo buying smaller, innovative disruptor brands like functional soft drink business Driftwell. These big businesses aren’t only buying into the smaller brand’s product portfolio – they’re also taking advantage of the personnel in order to give themselves an edge. “They might not buy them just because they’ve got an interesting product, or an interesting approach, but because of the talent they think can also bleed across into their broader business,” explains Oliver. “You’ve got folks in the smaller startups who are able to communicate personality or values very clearly, and the bigger players want to be able to do that in an authentic way with their own brands.”
Accenture forecasts that smaller, more nimble startups and competitors are likely to grow five times faster than the established brands. This is leading to a new business model – we see established companies still on track with steady growth, keeping shareholders happy and creating trend-based new products, but also looking ahead towards a new way of working which is driven by data, and which enables the incubation of an entrepreneurial spirit or startup mentality.
This is also reflected in large corporations establishing new goals to reflect what the smaller disruptors are up to. Rather than focusing on financial goals, there’s now a shift towards considering more conceptual goals, as Oliver reveals: “Over the last two or three years we’ve started to see some of the big companies looking at broader societal goals. Clearly there’s an environmental footprint, particularly if you’re a food company and you have ingredients that stretch all the way back to the farm, in lots of different parts of the world. Those sorts of non-financial ways of looking at growth have started to become more important.” Oliver believes that financial measures previously made up around 90% of a business’s annual report, whereas this aspect now only makes up 50 or 60% of an annual report. People are expecting more from their brands – consumers are starting to ask more questions about a product’s sustainability, environmental impact, social impact in terms of its producers further down the line, and the quality and origins of the ingredients.
That’s something Giles identifies in relation to the turnaround in perception for brands like Oatly. “A couple of years ago, oat milk may have been seen as being in the slightly hippyish health food shop category,” he explains. “The semiotics followed – these products are seen as worthy, as being good, as being pure – which limits your audience and, in a world where we like to take sides, it creates a situation where someone like me might say, ‘I’m not going to drink that’. Yet I now constantly have at least one Oatly product in my fridge.” Giles thinks there are two reasons behind this change: “The conversation around better alternatives has been democratised and is less about virtue and more about what’s actually common sense. Secondly, it’s been turned into a fun, playful lifestyle category that people want to sign up to. This is such a subtle but critically important change – it’s not a million miles from what we’ve seen Tesla do with the electric car. It’s fun. It’s something you would enjoy.” And the aforementioned ability to flex and consciously expand means that Oatly has now moved to more indulgent products like ice cream – making their previously clean, virtuous products feel even more acceptable in the mainstream.
The work of disruptors is helping drive the establishment towards change, while the conversation with customers and the adoption of more flexible, collaborative R&D approaches is enabling the faster development of trend-based products and delivery methods. It’s all about staying in tune with the consumer, and keeping the conversation going to help fuel data collection and address new needs, new occasions and new ways of buying, in order to drive innovation.
If you’re keen on learning more about the comings and goings of the food industry, the Table Talk podcast, brought to you by Food Matters Live, explores every aspect of the food and beverage sector – from food security to industry disruptors, net zero targets and food health claims. Subscribe via Apple, Spotify, Google or your preferred podcasting platform.