How data replaced gut instinct in the food industry and is feeding rapid change
Fancy a pint of AI beer?
While that may sound futuristic or that Silicon Valley is taking over the brewing industry, beers are already on the market that have been brewed with the assistance of artificial intelligence.
Intelligence X asks drinkers to provide feedback by responding to a series of questions through the Facebook Messenger app on its beers. The data that generates is processed by an algorithm, and the brewer decides whether to follow the advice and evolve its products.
And this is a sign of the way the food and beverage industry is rapidly changing and innovating.
Brewers are using data to better understand the preference of drinkers and alter existing products or launch new ones.
And they are not alone.
Coca-Cola, one of the world’s most recognisable brands and a company responsible for 3 per cent of all drinks consumed globally, has also taken steps into the world of artificial intelligence.
It is using data gained from its Freestyle vending machines to refresh its drink mixes and launch new products. Data harvested from the machines showed many people had a preference for cherry Sprite. So, the company decided to bottle it, launching a product to shops it has admitted it may not have introduced without the data.
Thomas Stubbs, the company’s vice president of engineering and innovation, told the South by South West conference: “We discovered that there were a lot of people that really had a preference for Cherry Sprite.
“We learned this through the data on the Freestyle machine. So, that wound up being bottled, and it probably wouldn’t have without that happening in Freestyle.”
These are just two examples showing how the food and beverage industry is changing and moving away from gut instinct as customers become more knowledgeable about what they consume, where it comes from and change their shopping habits.
And the global pandemic has propelled the pace of change to new levels.
Jenny Brown, vice president for food and beverage at Sagentia Innovation, said: “The pace of change is dramatic and covid has accelerated those changes and brought things to the fore.
“Everything is accelerating in terms of the amount of information, the number of new companies on the scene and the need to be agile and be able to quickly adapt to these changes.”
As the world closed its doors and work, education, physical activity and socialising were conducted from the comfort of our homes, the industry adapted overnight to altering consumer demands.
Covid restrictions prevented us all from going to our favourite pubs and restaurants for meals. The impact that had on those industries has been well covered in the media.
But, as we heard from Jenny during one of our recent podcasts what is rarely discussed is that with the average consumer eating out 30 per cent of the time before the pandemic, there was suddenly a surge in demand for food to cook at home.
Perhaps unsurprisingly, the way food was brought from supermarkets also changed. Consumers opted to reduce the number of trips they made to supermarkets, either by moving to online shopping or by carrying out one well-planned visit a week that removed the need for ‘top up’ shops.
According to Reuters, £1.2 billion was spent on online groceries between April and May last year. That figure set a new record at the time, but it is a number that has continued to rise, hitting £1.4 billion in January.
Data from NielsonIQ shows that one in three British households now shops online. But it should be highlighted that the success of the vaccination programme does now seem to be driving a return to supermarket visits, particularly among the over 65s.
However, it wasn’t just supermarkets that saw growth in online shopping. Meal delivery kit company Hello Fresh, which provides ingredients and cooking instructions, has seen a huge jump in customer numbers.
It had 7.3 million active users globally in the first three months of 2021 – an increase of 74.2 per cent on the same period last year.
Pasta Evangelists operates similarly and estimates its sales grew by 300 per cent in 2020.
Another industry change accelerated by the pandemic is the rise of ethical consumers. People are increasingly looking for products not only offering nutritional and health benefits but that are also sustainable.
They want to be able to track where their food has come from. And in the past year, there has been a surge in people buying locally from independent stores and producers.
In just two months last year, more than 500 British veg box providers, with waiting lists ranging from 160 to 6,700 customers, delivered 3.5 million boxes of fresh produce to homes. This was more than double their usual sales.
And this trend is expected to remain.
A report by the Retail Think Tank said that: “Instead, increased use of convenience stores, local shopping and home delivery look set to be legacies of the pandemic that will continue to shape the food sector next year.”
How the food industry will change again as restrictions ease and freedoms return is unclear.
But what we do know is the sector will not be relying on gut instinct to decide what changes to make.
Data and analytics will lie at the heart of the decision-making process. And those companies that have a data-driven strategy are the ones that will succeed.
And as the amount of data and information increases, so will the pace of change.
To borrow a famous quote from Canadian President Justin Trudeau “The pace of change has never been this fast, yet it will never be this slow again.”
Keen to find out more? The way the food and drink industry is changing and using data is explored in more detail in our latest podcast.