Achieving a competitive advantage in FMCG with data analytics
The retail industry for Fast Moving Consumer Goods (FMCG) is quickly changing, and as a result, food and beverage companies are facing increasing complexities. As millennial and Generation Z consumers continue to dominate the market, mass consumer behaviour has moved further toward the adoption of e-commerce, popular trends, and socially conscious buyer behaviour; leaving many food and beverage companies struggling to keep up with this new era of consumers.
While consumers are now demanding greater quality ingredients, sustainability focussed supply chains and ethically focussed production, they still demand affordability. With the growing need to supply more for less, FMCG businesses are facing a dilemma; how can they increase value and sustain profit margins without changing retail pricing?
We believe the answer is data analytics. In this blog, we outline the key problematic areas for food and beverage manufacturers and retailers today and evaluate how data analytics can be used to help FMCG businesses better accommodate current inefficiencies and address future consumer trends
1. Understanding and handling changing customer tastes
In this digital era, information is abundant and as a result, consumers have more resources available to research ingredients, supply chains and the effects these have on their personal well-being as well as the people and communities that create them.
As consumer preferences are getting more fragmented toward particular niches, larger sized FMCG brands are struggling to keep up and as a result, consumers are choosing to support smaller, local brands who can accommodate their new tastes. This, consequently, is causing problems for larger FMCG brands who have for a long time been using traditional growth models to reach a large and variable audience.
Mass consumer taste was once largely controlled by traditional advertising efforts however new-age consumers, in particular millennials, are less likely to purchase based off advertising messages preferring peer recommendations instead. As consumer taste continues to outgrow traditional means of market engagement, FMCG brands need to revaluate how they take their food and beverage offerings to the world. Even for smaller brands, who have less complex supply chains, this can still be problematic.
2. Meeting consumers’ changing dietary needs
Food and beverage manufacturers also need to think about changing dietary needs; gluten-free, dairy-free, vegan, keto and paleo are all popular diets today and have subsequently limited many consumers from purchasing certain products. As these diets and others like them require obscure ingredients, food and beverage manufacturers need to be able to adapt product lines and increase SKU variation to provide the variety consumers crave and FMCG retailers need.
At the risk of losing sales, FMCG businesses need data, and a sufficient way of managing it to truly understand consumers’ dietary needs. By not using advanced data mining to understand customers’ dietary preferences, FMCG businesses will not only miss potential sales but will also not be able to provide the personalised and targeted communication consumers now expect.
3. Ensuring quality and compliance
FMCG food and beverage businesses are not only tasked with offering consumers more variety and transparency but they also need to keep up with and monitor regulations (current and future) to ensure their products remain compliant and avoid being recalled.
It is advised that food and beverage manufacturers monitor the technology they use to ensure that it is up to the task of traceability and quality, regulation changes and ever-evolving consumer tastes.
By updating legacy systems to include more advanced functionality such as data analytics and business intelligence reporting, food and beverage businesses stand a better chance at managing compliance and quality control regulations. The below graph shows the improvements that can be made by adapting current systems to include more agile and equipped functionality
4. Managing price and consumer expectations
Although consumers yearn for more sustainable, ethically sourced, and organic ingredients they still want affordability. As a result, food and beverage manufacturers are working with increasingly tighter margins. Which has led to many having to restructure their supply chains and revaluate their product sizing.
Shrinkification is one trend abundant within the bar and chocolate manufacturing industry. A trend used to compensate changes to the cost of ingredients, international health regulations, exchange rates, and even distribution factors such as packaging and transport.
In particular, Shrinkification highlights the importance of transparency with consumers. Today, thanks to social media, consumers are okay with the transparent communication and personification of brands. If a brand can communicate decisions to its customers, that are justifiable in the eyes of the consumer, that brand stands a better chance at keeping its market share – even if they’ve had to drastically change their offering.
5. How food and beverage analytics can help
In terms of utilising food and beverage data for a competitive advantage, retailers still have a long way to go. However, food and beverage manufacturers have already started to understand and measure how these pockets of product and operational data can be turned into valuable insight. In particular, how it can be used to resolve operational inefficiencies and drive product improvements.
ERP systems are now a common tool used by many organisations (across a variety of industries) to manage and measure operational data against strategic business goals. As such, smart and successful food and beverage manufacturers have begun integrating further analytic software to address, measure and digitise other vital business data to develop products and streamline operations in a more efficient way.
Here’s an example of the tools successful food and beverage manufacturers are utilising today:
By implementing additional applications to summarise and corollate varying business unit data, food and beverage businesses can better plan their purchasing, production, and maintenance as well as more accurately determine future business plans.
Summary
For FMCG food and beverage businesses to get ahead in today’s current consumer-driven climate, brands need to reduce their reliance on mass brands and leapfrog into developing markets and premium niches. To do this, brands need to embrace technology and innovation, adopt new functionalities, and utilise consumer-driven data to remain competitive and stay ahead of the curve.
By implementing data analytics and business intelligence applications into current management systems, both food and beverage manufacturers, and retailers can make the most of their current offering and accurately plan for the future.
How Smetric Insights can help?
Food and beverage manufacturing are becoming increasingly complex – and one way for businesses to not only survive but thrive is to leverage data analytics.
Smetric Insights can provide an easy path to business insights to drive better business performance by turning business data into accurate, reliable and visible insights to improve decision making. By integrating Smetric Insights business intelligence and advanced analytics to your current management system you won’t have to grapple with spreadsheets or outsource data analysts to extract the valuable insight you need to forecast sales and meet consumer demand.
If you’d like more information on how Smetric Insights can help your FMCG business utilise data analytics to stay informed and competitive, please get in touch with the Smetric team