Believe it or not, artificial intelligence (AI) may create your favorite new beer. For years, AI has played a critical but mostly invisible role in the lives of consumers: recommending what movie to watch or product to buy next, translating our speech to text and determining which email is spam. AI has successfully made music and art and deepfakes. AI is already playing a big role in the consumer packaged goods (CPG) and food and beverage industries. Now it’s on the way to designing products that people find irresistible.
This decade, we predict that AI will make a hit beer. Brewers are using “flavor fingerprinting” to estimate the appeal of a brew and get suggestions on how to modify recipes through AI. Yet bringing a successful consumer product to market is far more complex than simply recipe-testing. The label, distribution, price, freshness and marketing messages associated with the product all help determine its success. In 18 years of working in consumer products, we have seen many amazing, delicious products fail to succeed in the market—or never even make it to production.
But now, AI is about to help companies determine what will (or won’t be) a product success before it hits the market. Here are four reasons why we believe AI is on the brink of creating a breakthrough in beer and other CPG categories:
1. AI can test and predict consumer preferences
Most innovations in consumer goods, particularly food and beverage, fail to establish meaningful returns. The sooner doomed concepts can be screened out, the more that the company can allocate its resources to likely winners. When bad ideas are eliminated early in the innovation process, it frees up resources for the good ones and speeds their way to market.
Food and beverage manufacturers are already using AI to bring their most-likely-to-succeed ideas to the marketplace. Manufacturers are using product attributes, historical performance data and consumer feedback to train algorithms to predict what consumers want. In our experience running similar projects for food and beverage clients, we have discovered that our version of this AI-driven approach is more than 90% accurate in distinguishing food and beverage ideas that can or cannot reach $20M in product sales in year one.
2. AI can optimize execution
AI can help companies develop ideas by forecasting their potential and optimizing execution. To give a disguised case from our own work, a client recently wanted to look at a new type of frozen pizza with a unique crust made from vegetables. The food concept had high potential, but what toppings should go on the pizzas? And how many SKUs should the client launch? In this case, our AI solution helped our client determine which toppings are most likely to appeal to consumers who might buy a vegetable-based pizza. The solution helped determine that four SKUs would be optimal for most of these retail customers, and the initial launch has been a strong success.
The evolution of backward-looking product analytics to forward-looking AI-driven analytics
|Types of questions answered about item development
|What ingredients are in the highest-velocity SKUs in the category?
|How will a product with these ingredients perform?
|What ingredients should I use?
|Types of questions answered about market execution
|Which stores do my brand’s shoppers usually shop in?
|Which store’s shoppers will love this new product?
|What new item should we introduce in a particular big-box store?
3. AI can point to the ideas customers (and investors) can’t resist
AI has much larger computing power than the human brain. In a world where AI is able to forecast performance based on attributes such as flavor and ingredients, it makes sense that AI could identify the optimal items to test. The big advantage that algorithms have in this application is the ability to evaluate huge numbers of product combinations and surface the best overall ideas. AI can sort through thousands of possible combinations of ingredients, packages, artwork, flavors, forms and cuisines to develop combinations that are likely to be irresistible to consumers.
Similarly, AI can guide investors to the most promising consumer products and ideas, driving innovation success. There are thousands of food and beverage startups in the U.S., and connecting the best ideas with investors is a huge challenge. With AI, investors can load tens of thousands of product labels into a solution that will help them identify some of the best proposed options. Imagine taking all of the labels from presenters at a trade show and valuing each item’s potential through AI. This isn’t a business development dream—it’s how leading investors are valuing and assessing potential investment decisions.
4. AI can predict where customers will shop and which products will succeed for particular retail banners
Go-to-market is another place AI can help boost innovation success. Tastes vary by region, by retail banner and by neighborhood. When AI solutions are trained on retail sales data and detailed product information, AI can not only predict what products shoppers will try and enjoy, but which shoppers are likely to do so and where they shop. Integrating demographic panel data into AI engines moves food and beverage companies to a place where they can make decisions based on highly personalized information about customer behavior. AI is not only able to understand the types of trips that shoppers are taking to the store, but it also can recommend the ideal ingredients, product claims, pack size and price point. Manufacturers who can accurately make these recommendations for retailers will rapidly develop an advantage in category share.
Make room for new AI-inspired products that consumers will love
AI already plays an enormous role in our digital lives. And it is primed to extend its reach even further as it allows manufacturers, investors and retailers to successfully innovate, bring desired products to market and expand their category share. In short, it’s time to make room in your fridge for that new beer—or seltzer or kombucha or tea—the one with the uniquely appealing graphics and flavor profile that AI knows you will love.
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