This article was published following Steve and Maneesh’s presentation at Cannes Lions Festival of Creativity in June and can be read in full on the CNBC website.
Knowing what consumers will want in future is a dream for businesses, especially in an environment where smaller brands are attacking larger companies “like a shoal of piranhas,” according to a senior PepsiCo executive.
Like other food and beverage companies, PepsiCo has been trying to stay relevant to consumers who want to reduce their sugar intake. It is set to buy baked fruit snack company Bare Snacks and has introduced a Hello Goodness vending machine, selling healthier snacks such as Sabra hummus and Sun Chips.
To stay ahead, PepsiCo, which owns Frito-Lay, Tropicana and Mountain Dew among others, has launched a trend predictor to work out what consumers want, before they even know themselves, using machine-learning to understand conversations that are happening online and then applying predictive technology.
Speaking at the Cannes Lions International Festival of Creativity in France on Thursday, PepsiCo’s Global Insights Director Maneesh Kaushik explained that the company has created a “360 Always On Trend Engine,” developed with consultancy Black Swan Data.
Steve King, chief executive and co-founder of Black Swan Data, said that the company uses machine-learning to “read” what people are saying online, separating it from advertising, bots and other irrelevant information, and making educated assumptions about people such as their age, sex and location.
Black Swan’s machines then scan the data to understand what people are talking about and use predictive models to suggest what will become popular.
“Our mission is very simple. To identify and detect these trends and then inform the business so we can make faster, smarter and hopefully better decisions,” Kaushik said.
It is often the smaller businesses that can better keep up with trends, Kaushik added. “These small, niche brands are fantastic because they are able to really respond to the consumer trends and have the products and the right solutions much quicker than we can and I wish we could do better at that,” he said at the Cannes Lions event.
“These small, niche brands are like a shoal of piranhas… every single bite doesn’t really hurt you, but together, they can really cause a lot of pain.”
In its beverage business, PepsiCo tracks online conversations about more than 1,000 ingredients, including turmeric and charcoal, as well as 2,200 other brands and products. It also looks at lifestyle and health trends.
“That means we can go back and tell (the wider) PepsiCo (business) that over the next few months, you will see these (product) benefits becoming more and more important,” Kaushik said. “Or we will start seeing these ingredients gathering scale.”
PepsiCo’s predictor means that the company knows which trends will stick around and which are fads. “Are they going to grow (or) are they going to die down? That really allows us to start the journey of innovation a lot better and a lot smarter,” Kaushik said.
“Activated” charcoal is one such popular ingredient, which Kaushik said is appearing in chewing gum, snacks and facemasks, and it’s a trend that Pepsico saw a few months ago. It’s thought of as a “functional food,” or one that has particular health benefits. Activated charcoal is porous and can soak up chemicals.
Kaushik has also worked with the company’s Walkers Sensations potato chips team to help them work out which flavors will be popular, and the business is set to launch a new range as a result. PepsiCo will also use the trend predictor to work out which brands to acquire in future.
“I can tee up… the opportunity spaces that are really going to matter to consumers,” Kaushik said. “That’s really powerful information for PepsiCo to use. We can embed this in the business to help drive growth.”
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