AI to identify CPG growth pockets

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AI to identify CPG growth pockets

By Louisa Hallett - 10/17/2018
Here’s why AI may be the solution to every retailers concerns.

Since 2013, more than $17 billion in CPG industry sales have shifted from large players to small ones. Size used to be one of the most important factors of success, but e-commerce has leveled the playing field, subsequently allowing smaller brands to reach consumers in unprecedented ways.

The latest IRI Point of View, “The Next Frontier: Leveraging Artificial Intelligence and Unstructured Metrics to Identify CPG Growth Pockets and Outperforming Brands,” identifies how to gain an edge by identifying where to play; whom to buy or draw inspiration from; and how to use a set of nontraditional, unstructured metrics and artificial intelligence to predict areas that will become future growth pockets before they manifest themselves among the traditional measured channels.

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“Given the current climate where CPG manufacturers are struggling to expand, identifying attractive, sustainable pockets of growth and outperforming brands can be a game changer,” said Jamil Satchu, partner and practice leader, IRI Growth Consulting. “Accurately identifying and then prioritizing pockets enables growth teams with a powerful road map for future investment and acquisition activity.”

In the report, IRI identifies three actions that, if acted upon, can create a powerful road map for future acquisition, innovation and renovation activity:

1. Where to Play Now: Identify current opportunities by leveraging IRI’s new proprietary solution, TrendSpotting, which uses artificial intelligence and machine learning to identify a list of winning companies, brands and products that are operating in sectors that are also showing unabated growth.

2. Where to Play in the Future: Predict future opportunities using IRI’s NextGEN methodology that incorporates a view on unstructured metrics that can help predict the next set of outperformers to expand a company’s acquisition lineup to include potential candidates that have yet to explode into measured channels.

3. How to Prioritize: The Junction of Present and Future: By understanding current and future growth pockets, CPG manufacturers can focus their attention on creating a targeted acquisition roster based on three levels of priority:

  • First Priority: Top Performers – This list includes outperforming brands across unstructured metrics and measured traditional channels.

  • Second Priority: Winners in Traditional Channels – These brands are outperforming brands across a more focused retail sector: grocery, drug store, convenience and gas, mass merchandise and Walmart.

  • Third Priority: Rising Stars – Brands that are performing well across unstructured metrics, but have yet to make an impact on measured traditional channels.

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“The market has been struggling in recent years, but pockets of growth are there, and ripe for the taking. Tapping into them appropriately and effectively is key to future success,” said Connie Chang, principal of IRI Growth Consulting. “With experience and precision, CPG companies can identify those growth opportunities and develop innovative strategies that will bring truly differentiated competitive advantages.”

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