- PepsiCo is keeping tabs on consumer preferences by monitoring tweets, restaurant menus, and other online sources with the help of startups like Black Swan, Chief Insights and Analytics Officer Stephan Gans told Business Insider.
- The beverage and snack giant uses the information it gleans to develop new products, design marketing campaigns, and make other decisions. It introduced new flavorings for SodaStream, for instance, after seeing increased sales of the brand as consumers spend more time at home.
- The pandemic has made knowing what consumers want even more important, Gans told Business Insider.
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Consumers are more likely to think of artificial ingredients than artificial intelligence when they see a bag of chips or a bottle of soda. But for PepsiCo's forecaster, the latter is on his mind, especially during the pandemic. The company is using artificial intelligence to pull useful data from millions of sources online in a bid to find the next trendy flavor or a smart marketing opportunity.
The beverage and snack maker has been working with data-focused startups like Black Swan Data and Tastewise to identify consumer trends before the pandemic by scraping the web for tweets, restaurant menus, and recipe blogs. Now, sifting through streams of social media posts and other fast-updating content online has become even more important, with many consumers turning to social media to document how their lives have changed as a result of the pandemic, according to Stephan Gans, chief insights and analytics officer at PepsiCo.
"To me, the pandemic has made these tools more useful," Gans said in an interview with Business Insider. "The main reason is that the pandemic has rocked everybody's foundations in life."
For a company like PepsiCo, looking online is the best way to figure out "what people are really talking about with each other," whether the topic is the state of the economy or what people are snacking on, he added.
PepsiCo's platform, called 360 Always On, uses artificial intelligence to analyze the information it gathers online from social media networks like Twitter, cooking blogs, online message boards, and other sources. From there, the technology can separate topics that appear to be short-term fads from those that are likely to have more staying power, Black Swan CEO Steve King told Business Insider.
The approach has led PepsiCo to develop new products and consider areas for expansion during the pandemic. Last month, PepsiCo unveiled a series of new concentrated flavorings from its seltzer brand Bubly that can be added to homemade seltzer from its SodaStream machines. Bubly Drops, in flavors like lime and blackberry, were developed after Gans' team saw customers posting online about frequent use of seltzer makers in lieu of drinking away from home.
"SodaStream was already growing in our core markets, but that growth has absolutely accelerated" during the pandemic, he said. "If you're spending much more time at home than you would normally do, SodaStream brings a kind of in-home excitement."
360 Always On also allows PepsiCo to spot opportunities in specific regions. In 2018, for instance, the company introduced seaweed- and rice-flavored curls under its Off the Eaten Path snack brand in the UK less than a year after seeing an uptick in online recipes that used the ingredient.
PepsiCo likely wouldn't have spotted that trend if it had only used traditional consumer research, which relies on interviewing consumers directly about their preferences, Gans said. While consumers had learned about seaweed, they might not have known enough about it to talk about it in a more formal survey setting.
"People will always answer the question within the context of what they're familiar with and what they know," Gans said. "It's actually much better to focus on seeing [what people are talking about online] because you can get much better insight into what's on people's minds and what people would actually prefer."
Consumer companies have taken a range of actions in response to consumers' changing preferences during the pandemic. While makers of cleaning supplies, packaged food, and other in-demand items have bolstered production and rushed to bring new products to market, others, such as Coca-Cola and Mondelez, have taken the opportunity to cut underperforming products.
Seeing how consumers are reacting in real-time, and determining how long those changes will last, is part of making those decisions, King of Black Swan said. "If you're a brand, you may want to unload some of your portfolio quite quickly, or you might want to wait," he said.
Many of Black Swan's clients are using the company's data to plan for different scenarios based on how long the pandemic lasts and whether consumers continue to consume more at home, King added. "This pandemic was a catalyst for this kind of data," he said.
It also represents a different approach for Gans, who spent more time scanning supermarket aisles for rivals' new products when he first broke into the CPG world.
"When I started my career, we would call something a trend if it showed up on-shelf," he said. "Over the last couple of decades, our ability as a company to spot a trend well before it reaches the shelf has improved significantly."
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