21 May 2021
Posted in Consumer
FMCG drags its feet over AI initiatives but platform revenue will reach $3.5bn by 2024, says GlobalData
With the consumer goods sector being so saturated, no company in this space can afford to forget about artificial intelligence (AI), says GlobalData, a leading data and analytics company. These companies have been slow to integrate AI into their business processes so far; pilot projects have been popular, but few companies have created comprehensive AI strategies.
Sarah Coop, Thematic Analyst at GlobalData, comments: “While AI can be used across the consumer goods value chain, it is not currently commonplace outside of retail. AI can also help other companies in the chain such as FMCG weather the COVID-19 storm by streamlining operations and saving costs. Further, AI-driven production efficiencies will help with price stability and limit the costs being passed onto the consumer.”
GlobalData’s latest report, ‘Thematic Research: AI in Consumer Goods’, reveals that AI platforms will incrementally gain popularity in the consumer goods industry, with revenues forecast to reach $3.5bn by 2024, up from $1.2bn in 2019.
Machine learning and data science are both strong tech investments across the supply chain, while context-aware computing has great possibilities in manufacturing, and conversational platforms are an exciting investment for consumer engagement. As digitalization becomes more commonplace, more consumer goods companies will see the value in AI investment.
Coop continued: “FMCG companies must target the right consumers to be successful, and AI is the best way to do this. Consumers are becoming more demanding, requiring instant gratification. Machine learning models help businesses respond to these high expectations by targeting the consumers most likely to be interested with personalized marketing and product recommendations.
“However, with new innovations come new risks. In the case of AI advancements, these risks will translate to the need for increased customer data protection and investments in cybersecurity. Consumers are now more aware they are being profiled, and any cyberattacks would damage brand image.”
According to GlobalData, the global slowdown in consumer goods saw an estimated $357bn net loss of market value in 2020, compared to original baseline forecasts. Food and household products are the only sectors to have seen greater growth in 2020 than anticipated pre-COVID-19.
Coop concludes: “GlobalData notes that one of the best ways to tech enable a business, or excel in a theme such as AI, is to acquire a company or start up that is already a forerunner in that field. This strategy is beginning to happen in the consumer goods sector with McCain Foods acquiring a minority stake in Fiddlehead Technology in February 2021and we expect an increase in similar M&As in the future.”