Escalating costs and limited ingredient availability mean bakery and snack brands are rethinking their novel product launches and marketing strategies. Digital transformation is becoming an integral part of brands’ plans to generate data-driven insights and recommendations that spur improved consumer loyalty and increased sales.
“For retailers, better data analytics capabilities will help them target and reach consumers,” Kristina Rogers, global consumer leader of EY, the global umbrella for several member firms of Ernst & Young Global Limited, told Bakery&Snacks.
Bakery and snack brands can use retail media and loyalty programs to incentivize private label purchases and create alternative revenue streams by promoting industry collabs. Like the recent partnership between Lotus Bakeries and Mondelez International to appeal to a wider audience.
Brands are using artificial intelligence (AI) to support their research and development (R&D) efforts throughout the supply chain and at various operational stages, from sourcing to consumption.
“AI is transforming the bakery and snacks industry by enabling more precise product development, personalized nutrition insights and optimized production processes,” Alex Lloyd, head of organic acquisition for January AI, told us.
Working in collaboration with snack producer Mars through its research arm – the Mars Advanced Research Institute (MARI) – January AI is leveraging its AI platform (based on digital twin technology) to generate new insights that could influence future R&D efforts and manufacturing processes.
Global bakery ingredients business Zeelandia, for example, has implemented advanced AI capabilities to significantly enhance product selection efficiency and precision. It’s also using the tech to help create pricing strategies for its bread mixes and improvers, pastry ingredients, lubricants and release agents.
Multiple tech provides advanced analytics
Bakery and snack marketers can use AI tech and data analytics to create highly targeted campaigns based on consumer behavior and preferences.
Combining AI with machine learning enables brands to analyze consumer behavior and preferences and optimize production processes, developing new products that reflect demand.
Digital twin tech like AI and machine learning can predict consumer reactions to foods without actual consumption, enabling producers to generate valuable insights that can shape future product development and innovation. SnackSmart is just such an AI-driven platform that personalises snack recommendations based on individual dietary needs and preferences.
“By creating a digital representation of physical products and production lines, we can help bakeries and snack manufacturers improve efficiency, reduce waste and ensure consistent quality,” said Lloyd.
Global brands are embracing this tech approach to forecast consumer responses to different food products, going beyond simple predictions and providing extensive data sets. Companies like January AI aim to help the food industry leverage generative AI for increased intelligence, generating new insights that can inform product development and enhance understanding of consumer preferences.
“This approach allows for a more nuanced and personalized understanding of how different foods impact individuals,” added Lloyd.
Through this AI-enabled approach to research innovation, Mars and January AI are sharing understanding, exploring broader cultural shifts and new and evolving consumption behaviors around food and health. Nestle has also adopted this advanced digital twin technology to help leverage AI for product development.
“This trend is likely to grow as consumer demands evolve for product knowledge and transparency throughout the food industry,” said Lloyd.
Data and analytics complement service and support
Despite these AI and online shopping achievements, consumers still value instore experiences, according to EY’s 14th Future Consumer Index. The large-scale report surveys over 23,000 consumers across 30 countries and highlights the importance of manufacturers and retailers balancing tech with people.
“Reports of the death of the store have been greatly exaggerated,” said Jon Copestake, global retail lead analyst at EY.
“While a shift to digital channels will continue to grow, the role of physical retail remains an essential part of shopper experiences.”
According to the EY Index, 61% of consumers still value human interaction when selecting or researching the products they buy, while 57% visit stores because they want to see, touch or try items before buying them.
As the globe transitions out of COVID-19, manufacturers need to use tech to streamline processes while maintaining the human element to deliver personal service and support that reflects consumers' values.
“AI-led product recommendations can deliver incremental sales, but they won’t resolve more complex, service-oriented customer needs,” said Rogers.
“Investing in people, both in terms of experience and knowledge, is equally as important as investing in technology and they must go hand in hand.”
Personalization, predictions and a powerful pairing
EY's report reveals most consumers appreciate receiving personalized offers and promotions generated by AI, with 68% expressing trust in them.
However, almost half (49%) feel frustrated when smart chatbots fail to resolve their queries effectively. Additionally, 33% are worried that AI-generated recommendations may be biased towards products or brands that are not in their best interest.
Addressing these frustrations effectively requires an integrated approach that combines advanced technology with a strong human element.
“Technology is not the enemy of human interaction; rather, it can be a powerful ally and consumer companies that use it to support a human-centred experience are more likely to succeed,” said Rogers.
Brands need to leverage data and analytics to gain consumer insights and anticipate future needs while uncovering areas of friction and customer dissatisfaction.
“While technology is enabling new ways to understand and engage with consumers, their needs remain essentially human and social,” added Copestake.
Consumers are not wedded to one channel or another but prefer to flit between them based on whatever needs they have at the moment. Finding consumers’ needs is vital, with tech playing a prominent role in brands’ bakery and snack development.