A lot changed in 2020 for the CPG sector. At Salesforce Live: Switzerland, we looked at the issues on leaders’ minds today — from changing business models to a new focus on supply chain resilience.
It’s been a dramatic year in consumer packaged goods (CPG), with the pandemic revealing vulnerabilities in the way the sector operates and suggesting new ways forward for innovation-minded companies.
In our fast-paced, hour-long Salesforce Live: Switzerland show, we explored the big moments of change in the industry, with the help of our industry specialist Pamela Wolf and customer AB InBev.
You can watch the session on demand or enjoy some of the highlights and key takeaways below.
A hot topic throughout the show was the impact of COVID-19. The pandemic has been a rollercoaster ride for CPG companies, bringing severe disruption but also new opportunities.
Most notably, brick-and-mortar businesses took a big hit, due firstly to lockdowns and then to consumer reluctance to return to physical spaces. Deprived of a vital channel to market, many CPGs switched to a direct-to-consumer (D2C) model. This reconfigured their value chains and turned them into e-commerce retailers almost overnight.
One single fact from the event sums up the impact of COVID-19 on an already-changing CPG sector:
“At the start of the crisis, one Australian toilet paper subscription service reported a 1,000% increase in sales.”
That figure not only highlights how the pandemic upended the supply of key necessities but also how CPG is changing with the times more broadly. Five years ago, not many people would have considered buying their toilet paper as a service.
But now, innovative direct-to-consumer models are taking hold — and when the new model dovetails with a consumer need, they can be enormously successful. Pamela cites the success of subscription CPG companies like Dollar Shave Club, Casper Mattresses, and Warby Parker as prime examples.
The key to getting D2C right, Pamela says, is truly understanding what consumers want and need, then providing it in a better way than they’ve experienced previously. That’s something that doesn’t always come naturally to companies more used to operating on a B2B model. “It represents a big change in an industry where innovation traditionally took place in a bubble,” she says.
Peter Bruyland, European CIO at beverage giant AB InBev, believes emerging technologies can help CPGs understand their consumers’ preferences better. He cites digital twins as a technology with a lot of promise. “It’s something we’re already working on for our breweries,” he says.
“Imagine if we could create a digital replica of every bottle out there. We could know what temperature it’s drunk at, and where — it could give us so much consumer insight.”
While digital beer bottles may be a little future-gazing, AB InBev is finding ways to get closer to end-consumers today. The company has taken a leaf out of Walmart’s book, running Net Promoter Score surveys to understand how consumers perceive the brand.
“It forces you to really understand the pain points that are driving a low NPS and start to tackle them with your consumer,” Peter says.
There’s change afoot in the supply chain too, with the pandemic throwing the fragility of the just-in-time model into sharp relief. Taking its place is a new imperative: supply chain resilience.
“Companies are realising that it doesn’t matter how efficient your supply chain is if it’s not also resilient. Continuity is going to be a major driving force, with supply chains becoming smarter, faster, more agile, and more automated.”
Peter Bruyland at AB InBev agrees, saying that his company is already making use of new technologies like machine learning to create more accurate demand forecasts, which in turn lead to more efficient transportation planning.
Interestingly, the company isn’t just looking at transportation in the upstream value chain, but downstream to retailers and consumers, too.
“We’re looking at autonomous vehicles, which for us is super-important because last-mile delivery is a problem for us,” Peter says.
CPG companies are facing rapid change on many fronts: from evolving consumer preferences to advances in technology and the advent of new business models. To thrive through this time of great change, one thing will be important above all others — strategic agility.
“All other strategic imperatives roll up into agility,” says Pamela. “Whether you’re creating new service models, becoming more sustainable, or empowering your sales teams, you need that agility layer. It’s going to play such a key role moving forward.”
For more insights into the past, present, and future of the CPG industry — including our engaging ‘SEOdown’, where experts try to predict the most-searched industry terms — watch on-demand now.