CPG ecosystem must evolve with changing consumer preferences

The advent of digital ubiquity has led consumers of all ages to shift their preferences to digital channels that offer the convenience of anytime and anywhere buying.

Moreover, modern consumers prefer healthy, hygienic, innovative products that are personalized and sustainable. To cater to this dynamic demand, CPG companies are shifting from the traditional profit-driven model that prioritized local optimization of partners, to a purpose-driven model that focuses on collaborating and forging partnerships to create ecosystems to build new business models, product portfolios, and capabilities. For example, Chobani partnered with PepsiCo to leverage its larger ecosystem of robust chilled distribution network to distribute yogurt drinks, thereby helping PepsiCo to offer consumers both ‘fun-for-you’ and ‘good-for-you’ products. 

Customers get fragmented experience due to siloed platforms

In this purpose-led ecosystem, however, consumers have a fragmented experience due to siloed platforms and services with no end-to-end play and visibility of product assortments across channels.

Further, this ecosystem model is unable to cater to evolving consumer preferences for hyper-personalized, innovative products, ubiquitous delivery, inclusivity of the elderly and specially abled, and personalized, automated replenishment. 

Figure 1:  Shifting consumer preference and the evolution of next-gen ecosystem

Hence, a next-gen ecosystem that is consumer-centric and purpose-driven with an interconnected set of services is the way forward. 

Companies should shift towards single, integrated platform

A few companies have taken initiatives in this direction to drive consumer-centricity.

For example, Mars’ Mars Edge platform leverages FoodSpring’s digital and analytics capabilities to create hyper-personalized nutritional recommendations for consumers. Unilever partnered with Aera to enable a self-driven supply chain that can shift from forecast-driven to demand-driven fulfilment. Coca-Cola partnered with Manna Aero to leverage its drone capabilities to deliver drinks to consumers, allowing rapid last-mile delivery in a few minutes. 

These ecosystems must further evolve to offer consumers a network of services on a single, integrated platform. To envisage this next-gen integrated ecosystem, the interplay between CPG companies across segments, technology providers, and ecosystem players from other industries such as retail, life science, healthcare, insurance, travel, and hospitality is essential. In this connected personalized ecosystem, consumer will be at the center surrounded by the three pillars of the ecosystem—the core participants, enabling participants, and the governing ecosystem. 

The vastness of this ecosystem will increase with the number of CPG segments and other industry verticals that collaborate to provide an end-to-end consumer experience.

Figure 2: One-stop platform for the food and beverages specific ecosystem in our larger next-gen ecosystem

For example, in a food and beverages next-gen ecosystem (Figure 2), the consumer is at the center surrounded by core participants, like technology partners, fulfillment partners, personalized advisory, and social media influencers. The enabling participants and the governing ecosystem are the backbone of the ecosystem, ensuring its effective functioning. 

An ecosystem to meet future consumer needs

Next-gen consumers will look for healthy, innovative, and hyper-personalized products catering to their dynamic preferences, through any channel, anywhere, and anytime of their choice.

They will have complete access to product assortments across channels and will use democratized services to explore new experiences driven by next-gen business models. 

Consumers will conveniently get their products replenished through a subscription-based model, powered by emerging technologies that will automate day-to-day chores, enabling a perfect pull-based demand fulfilment. All these will be enabled by a one-stop platform that will host the interconnected network of services in the ecosystem.

Figure 3: Meeting future consumer needs with a next-gen food and beverages ecosystem

In the year 2030, when Sandra visits her grandparents in a town in Switzerland, the smart container will automatically detect her food and beverages preferences from her profile and place an order to a consortium of CPG companies. The next morning, Sandra sets out on a trek to a nearby hill and conquers it. To celebrate, she orders a pizza from an online food aggregator (OFA). The OFA detects her remote location and delivers the pizza with a network of drones. 

In the evening, Sandra’s personalized nutrition consultant is notified of the change in Sandra’s health parameters, and she is recommended a hyper-personalized protein bar, which is fulfilled by a nearby retail store with a 3D printer. The next day, Sandra travels to Paris to meet a client in a popular restaurant. She relishes her dinner curated with a recipe purchased from her favorite restaurant in Rome.

Next-gen CPG ecosystem will open up infinite possibilities

With the confluence of next-gen technologies and new-age channels, there are infinite possibilities to curate a non-fragmented, end-to-end service for the consumer.

This will lead to the creation of hyper-personalized, innovative products and services, and provide unexplored consumer conveniences such as integrated search to access infinite product assortments. Data will be the binding factor and the consumer data platform will form the underlying fabric of this next-gen ecosystem, offering deep consumer insights with a 360° consumer profile. 

To harness the power of this platform, it is imperative to establish a federated data architecture with robust data governance, quality, security, and privacy. Participants must conduct their digital maturity assessment, set up a center of excellence, and embark on a digital transformation journey to ensure seamless functioning of the ecosystem. 

In conclusion, digital transformation with mutual interests and benefits of all participants and a culture of data-sharing for the benefit of the consumer will lay the foundation to drive the shift from a purpose-led ecosystem to a next-gen ecosystem.

The consumer data platform will form the underlying fabric of the next-gen ecosystem, offering deep consumer insights with a 360° consumer profile. To harness the power of this platform, it is imperative to establish a federated data architecture with robust data governance, quality, security, and privacy.