How Brokers Can Lead the Way in AI Adoption

Positioned between brands and retailers, brokers can leverage AI and precise data to find a common truth — and pave the way for CPGs to adopt AI

Brokers play a crucial role in the CPG and retailer community. They possess extensive knowledge of the market and categories across every store, including consumer preferences, trends, and pricing dynamics. Brokers effectively represent brands and lead as strategic partners in navigating the retail industry. Leveraging their expertise, brokers help retailers streamline their supply chains, expand their product offerings, and ultimately enhance customer satisfaction. Their ability to effectively bridge the gap between suppliers and retailers as a total solution makes brokers essential in optimizing retail operations and driving business growth.

By sitting between the CPG and the retailer, brokers hold a unique position, with an opportunity, or even a responsibility, to become leaders in how CPGs of all sizes adopt AI. The technology is currently in its infancy for effective adoption, with limited clarity on exactly how CPGs will allow AI to change ways of working. However, brokers can shape the ways this technology creates efficiencies, reduces the digital overload, and pioneers its broad application to the industry overall. In doing so, they differentiate themselves and fulfill their promises to their CPG partners in helping them gain a competitive edge in this dynamic retail landscape.

Through business intelligence and predictive analytics, brokers can ascend to new heights among CPG partners. They can also strengthen their standing among retailer partners. Moreover, brokers can be a bridge between both, using high-powered AI to uncover common data truths and drive growth across the store.

Here are top ways brokers can lead the way in AI:

1. Present Accurate Demand Planning and Predictive Market Analytics

In 2023, retail sales are expected to grow more than 4%, generating nearly $5.23 trillion, according to the National Retail Federation. NRF also said more than 70% of those sales will be inside physical stores.

How close to reality will that forecast of 4% growth turn out to be? Brokers can provide a precise view of what’s happening in the market and what is likely to happen through AI-powered demand planning and market-level trend forecasts. These data and insights help inform forecasting from the highest level. Brokers can help predict future buying behavior across channels and subcategories. They can inform retailers of trends and shifts in the marketplace, and they can provide the most granular store-level view into inventory and click-and-collect service. All of these efforts, powered by AI, continuously learn, adapt, and create an enterprise environment enabling strategic decision-making, rather than an increased digital workload. Brokers can become a single source of truth in developing a precise view of enterprise market and demand planning.

2. Assist With Store Execution and Assortment

At a store-by-store level, across retail channels, brokers can leverage AI to customize insights for CPGs in any category. AI can be custom-tailored to each of the brands with which brokers work, to build the most impactful product mix and decision-enabled portfolio.

Further, they have the unique perspective of working with brands at all points in their journey of scaling and growth. For larger brands, some brokers have a responsibility to effectively build a mature portfolio with multiple opportunities in the retail environment. In that role, they fill gaps where large CPGs lack visibility and provide solutions where larger CPGs cannot internally manage the need for additional capabilities. For emerging, growth, and niche brands, brokers have a different, more targeted set of responsibilities to deliver that those brands might not be able to generate themselves.

All brands are looking to achieve category thought leadership and mutual growth with retailers they serve. AI application to assortment optimization, demand transference, and predictive analytics can help them achieve a greater share of the category and effective increases in visual inventory. Smaller brands aiming to get a stronger foothold in a category can tap into brokers and their ability to lead with AI-driven insights to bring retailers data-informed strategies on how they’ll grow a category overall.

3. Optimize Promotions and Trade

Even without a robust services suite, as sales partners to CPG brands, brokers, enabled by AI, can boost acumen in understanding elasticities of price, space, and market. AI modeling shows how the interconnected dynamics in availability, leakage, allocated category space, pricing and promotions impact sales and profitability.

Brokers that embrace this technology will lead by using learning models to predict the most effective promotional outcomes, optimized for their partners’ established goals and the current macroeconomic environment.

The technology allows for actionable insights on how to execute the best overall plan, and the best use of promotions, in the most impactful locations, and in the most deserving regions. The technology backs brokers with the unique and differentiating capability to plan efficiently as partners and lead with the optimization of portfolios, brands, and categories, in ways CPGs are currently not leveraging themselves. Brokers can align a pricing strategy that maximizes sales, revenue, and profits for their partners.

4. Become a Bridge to a Common Truth

Possibly the greatest strength a broker can leverage through AI is an ability to lead the data capabilities that solve problems and enable more efficiencies for CPG clients, in addition to relieving their own ‘digital debt’ that continues to grow for the industry overall.

Digital debt is costing us innovation. According to a recent Microsoft study, 64% of people struggle with finding time and energy to get their work done, and those workers are 3.5x more likely to say they struggle with innovation.

Common truth, or insights driven by the integration of multiple sources of data, narrow the focus to that with the greatest impact on the outcome. And those that excel at — or adopt these integrated models to find the common truth — will be the bridge-builders and the leaders in the industry. This becomes a powerful position for brokers, solidifying them as intelligence-driven category advisors.

Brokers have a tremendous opportunity to enhance their offerings to CPGs through the adoption of AI. AI and machine learning solutions can enable brokers to analyze vast amounts of data, including market trends, consumer behavior, and competitor insights down to the store level. By harnessing these insights, brokers can further establish themselves as thought leaders and strategic advisors, providing CPGs with valuable market intelligence, helping them to be more agile, make more data-driven decisions, and outpace the competition.

For more on how Insite AI can help brokers become innovation leaders in the industry, contact us here.

Another Summer of Hard Seltzer?

How you can leverage AI to identify your top performers and revamp your product portfolio

In today’s highly competitive market, it is more important than ever for businesses to continuously analyze and optimize their product portfolios to stay ahead of the game. With the help of AI and predictive analytics, companies can gain valuable insights into their product performance and make data-driven decisions about which products to keep, which to improve, and which to remove from their portfolio.

In this blog, we will explore how AI can help you identify your top-performing products and eliminate the underperformers, using the example of the hard seltzer craze to illustrate the importance of portfolio rationalization in the ever-evolving landscape of the alcoholic beverage industry.

Hard Seltzers Won’t Fizzle Out

A category that got its mainstream footing just a few years ago, with early days powered by brand darlings like Truly (Boston Beer Company) and White Claw (Mark Anthony Brands), hard seltzers are credited with driving overall category growth. With last year’s off-premises sales increasing a whopping $900 million — quadrupling year-over-year — it’s hard to believe that at the start of 2018, just 10 hard seltzer brands were on the market.

Since then, more than 65 brands have entered the space, which continues to grow at a rapid pace, most recently enjoying a 33% increase in sales earlier this year (January – April 2021) versus the same period in 2020. This explosive growth has accelerated the sub-category from new entrant to what’s now becoming a mature mainstay.

While the growth of hard seltzers is starting to stabilize, we can expect to see on-premises sales continue to be a boon to the sub-category’s ongoing evolution as bars and restaurants welcome back patrons. For brand leaders, this means shifting strategies to plan for and accommodate changing consumption behaviors.

Another factor to account for in assortment planning is consumer preferences and flavor profile trends, which will drive category dominance and innovation as hard seltzers themselves become less of a novelty. Today, citrus- and raspberry-flavored hard seltzers prove most fruitful in sales, whereas blueberry does not fare as well.

Ready-to-drink (RTD) and Canned Cocktails

Ready-to-drink cocktails: Ready-to-drink (RTD) cocktails have been growing in popularity in recent years, particularly in the canned format. RTD cocktails are pre-mixed and often packaged in convenient, portable cans or bottles, making them a popular choice for outdoor events and activities.

The canned cocktail trend has been gaining popularity in the US in recent years, as consumers look for convenient and portable options for their summer drinks. Canned cocktails are pre-mixed, ready-to-drink cocktails that are packaged in cans and sold in packs. They offer a convenient alternative to traditional cocktails, which can be time-consuming and require multiple ingredients and equipment.

One of the main advantages of canned cocktails is their convenience. They can be easily transported to outdoor activities such as picnics, concerts, and beach trips, making them a popular choice for summer events. They are also easy to store and serve, requiring no additional mixing or preparation.

Canned cocktails are available in a wide variety of flavors and styles, from classic options like margaritas and mojitos to more innovative and creative combinations. Many brands are also emphasizing the quality of their ingredients and the use of premium spirits to appeal to discerning consumers.

Overall, the canned cocktail trend is expected to continue to grow in popularity, as consumers seek out convenient and high-quality options for their summer drinks.

Beer Will Begin to Bounce Back

While the early part of 2021 (January – April) saw certain segments of beer sales decline, including craft beers, which saw a 1% year-over-year drop, we will see some segment growth return. For premium beers, markets like Denver, Little Rock and Houston have all delivered segment growth, which underscores the importance of localizing assortment plans to maximize potential pockets of development.

Other category sub-segments, including hard tea and ciders, do not show as much promise for the short-term, coming off annual sales declines of 3% and 4% respectively.

‘Healthy Choices’ Rule

In this age of information, today’s knowledgeable consumer is increasingly mindful of what they are putting into their bodies (and mouths). Newer generational values of millennials and Gen-Zers who are coming of drinking age are focused on wellness — one reason hard seltzers, with lower calories often touted as a brand benefit, have performed so well.

One newer sub-segment marketed as a “healthy” option that is showing tremendous potential for continued growth is hard kombucha. According to Kombucha Brewers International, hard kombucha sales grew from $1.7 million in 2017 to more than $12 million in 2019, and Insite AI data indicates an 85% year-over-year increase in growth for these beverages during January through April of this year.

The fermented tea has been compared to light beer in terms of taste, but like hard seltzers that showcase fewer calories — or in the case of Vizzy hard seltzer (Molson Coors), antioxidants — hard kombucha touts its digestive benefits, an attribute that is increasingly resonating with health-conscious consumers today. Expect to see more innovation in this sub-segment, especially with major players like Anheuser-Busch InBev getting in on the action by backing the fast-growing Kombrewcha brand.

Data-Based Decisions Will Drive a Profitable Future

As America continues down its path of pandemic recovery, the alcohol category — including hard seltzer, canned cocktails, beers, flavored malt beverages and more — will continue to grow in both in-home and on-premises consumption as consumers figure out and embrace what the “new normal” is in their lives. However, after the next six to 12 months, the category will begin to see a reckoning and rebalance as long-term patterns begin to emerge.

For consumer goods brands, that means now is the time to prepare for potential shifts and to be ready to make the right decisions in category planning for future success. Brands that embrace innovative technology solutions like artificial intelligence and machine learning will be well-positioned to bullet-proof those plans, especially when they can make decisions based on predictive recommendations with granularity down to an individual SKU on a shelf in a single store location. Such decision-making power will be critical in navigating the ever-changing landscape, uncertainties like supply chain disruptions and inflation and evolving consumer behaviors.