Connecting the Dots with Technology
Technology-the ROI driver for Food and Beverages Industry
Supporting Your Configuration Management Effectively
A Report from the Front: Transforming IT to Enable Business Strategy
Eileen Baines, SVP, CIO, CoBank
Thank you for Subscribing to CIO Applications Weekly Brief
Disruption in the Food & Beverage Industry
By Andria Long, VP Innovation & Consumer Insights, Johnsonville Sausage
At Johnsonville, we classify disruptors into three (3) groups:
• Internal-situations that occur within an organization over which leadership has the power to impact or control
• External & Known-situations that occur outside an organization and its control, but which can be defined and war-gamed
• External & Emerging-situations that are currently emerging and taking shape, only giving hints as to how they may ultimately disrupt industries and businesses
While all three types of disruptors can seriously impact an organization’s operations and financial health, it is the ‘External & Emerging’ disruptors that I believe can have the most profound effects on an organization’s long-term viability when not proactively addressed. The action or, in most cases, inaction that an organization takes to fully grasp the implications of such disruptors on its current operations, customer base and talent pool is what separates a cutting-edge forward-thinking organization from the rest of the pack.
The F&B industry is off to another exciting year that will inevitably be filled with some unforeseen twists and turns. However, after evaluating the various forces at play, I’ve identified three main ‘External & Emerging’ disruptors that I believe will affect the way we think about and approach innovation in F&B in 2018 and beyond. The thematic glue that holds these disruptors together is the “Democracy of Access”; by this, I mean that today, nearly all consumers have unprecedented access to hyper-customized products, shopping technology and information to make their lives better.
Disruptor #1: Unprecedented Access to Hyper-Customized Products
• Meal Kits: Meal Kits address many unmet consumer needs, but online providers are having difficulty retaining subscribers. This has opened up the door for retailers and brands to more efficiently and effectively deliver on consumers’ desire for convenience and freshness. Example: Albertson’s acquisition of Plated gives consumers the ability to choose which purchase method best meets their needs–traditional brick & mortar, eCommerce or subscription model.
• Products with an ‘It Factor’: In a quest for such products, Big Food companies have invested in and launched their own incubators and accelerators supporting emerging food startups.
Organizations that do not embrace AI & Machine Learning will quickly become less efficient and less innovative than their competitors
Moreover, they’re placing even bigger bets via large investments and acquisitions in proven startups. Example: Cargill's investment in lab-grown clean meat manufacturer, Memphis Meats, is the first by a traditional meat company.
• “Microbenefit” Foods: Companies are jumping on the personalization bandwagon by adding highly specialized functional ingredients to both new and established products to give consumers the hyper-specialized benefits they’re looking for all in one place. Example: Alove yogurt–a Japanese-style yogurt containing aloevera–is an edible skin enhancer with additional health benefits.
• Non-Animal Protein: Concern for the world’s ability to feed the growing population in a sustainable way has propelled non-animal protein into Retail &Food service markets. Example: Beyond Meat’s plant-based Beyond Burger has mass distribution in national grocery chains and is even on the menu at T.G.I. Friday’s.
Disruptor #2: Unprecedented Access to Shopping Technology
• Frictionless Shopping: Amazon’s full suite of online grocery shopping platforms, delivery options and brick & mortar stores gives consumers what they want, when they want it, where they want it. Example: As a Prime member, a consumer can “shop” at their local Whole Foods and have their order delivered within 1-2 hours via Prime Now.
• Traditional Retailers’ Response: To avoid extinction, traditional retailers have been forced to reinvent the way they engage with shoppers by making significant investments in logistics and digital capabilities. Example: With its acquisition of Shipt, Target will offer same-day delivery services, including grocery.
• Digital Assistants: Voice interfaces’ inherent brand biases resulting from brand partnerships will force brands to change the way they reach consumers. Example: Marketers everywhere will become well-versed in “Algorithm Optimization” as they try to keep their products ‘visible’ to consumers via Siri or Alexa the same way they use SEO with online search engines today.
Disruptor #3: Unprecedented Access to Information
• Transparency & Traceability: Widespread distrust has increased the need for F&B manufacturers to be forthcoming about their ingredients, production processes, and supply chains at a level previously not seen. Only those brands that are fully transparent will gain consumers’ trust and be rewarded with brand loyalty. Example: Using Blockchain technology, companies can have a record of every transaction of a product from farm to shelf via a de-centralized ledger.
• Artificial Intelligence (“AI”) & Machine Learning: These sophisticated technologies will make all processes from demand forecasting and delivery scheduling to pricing and promotion more efficient. Organizations that do not embrace AI & Machine Learning will quickly become less efficient and less innovative than their competitors. Example: Uber uses Machine Learning to determine everything–the pricing of rides, minimizing wait times, predicting surge pricing, and optimally matching passengers with other riders to minimize detours when pooling.
• Game-Changing ‘Economies’: eSports, Outer space & Passenger Economies will drastically alter how consumers spend their time, energy and money, while simultaneously improving productivity across industries and cities. Example: Driverless cars will significantly increase productivity of the U.S. transportation network at a fraction of the cost, while simultaneously saving lives via safer driving.
When evaluating which of these disruptors to prioritize, organizations should take into consideration the following three factors:
• Time horizon–When do we expect the tipping point to occur to take the disruptor mainstream?
• Organizational complexity–Do we have the internal capabilities to attack it today? If not, what will it take to get the capabilities?
• Importance to consumers–How much do consumers care about the disruptor?
Although no organization can accurately predict future disruption, each should be constantly assessing its own standing and asking "what if?"