Digital Transformation in the Food and Beverage Industry: Five Bite-Sized Insights for C-Suite Executives

Generative AI is poised to revolutionize the food and beverage industry, but economic fluctuations, antiquated ways of working and legacy technology pose a challenge. Digital business transformation can help companies bridge the gap.

How generative AI will impact the food and beverage industry

From direct-to-consumer conversational commerce, to IoT-powered smart appliances, to personalized retail media marketing, consumers and brands alike are already finding ways to implement generative AI to increase efficiency and improve customer experience.

According to a Publicis Sapient survey, nearly one in four U.K. consumers who have used generative AI are likely to use this technology to improve their experience shopping for food and beverage products. At the same time, generative AI is also poised to massively disrupt the online search experience, allowing shoppers to engage in conversational commerce to build their digital grocery carts.

The impact of economic inflation on food and beverage shopping habits

Meanwhile, widespread inflation is impacting shopper behavior as consumers are switching from branded to unlabeled products and, although they're shopping more frequently, they're actually purchasing fewer items.

More than half of U.K. consumers (57 percent) agree that they’ll switch from their preferred brand to a different brand if there is a cheaper option, because of the inflated economy. Food and beverage brands can no longer rely on historic patterns of consumer behavior.

How can digital transformation help food and beverage companies adapt to economic and consumer change?

For this reason, it’s more important than ever for food and beverage brands to connect with consumers on and off the shelf, in-person or online, through social media, traditional advertising, and generative AI-powered search.

To create the right product and channel mix amidst changing consumer behavior, food and beverage brands need to optimize their people, processes and technology to keep up with the rapid pace of technological change through digital transformation.
 

It’s not just about new technology—digital transformation in the food and beverage industry requires an end-to-end approach—starting with the organizational model, and ending with the consumer.

Here are the top five priorities for food and beverage executives to transform their organizations for growth in the coming year:

Top five priorities for digital transformation in the food and beverage industry
 

Centralize digital capabilities: enable faster go-to-market through a modernized organizational model

With the rapid acceleration of new digital channels, technologies and tools, it’s crucial for food and beverage companies to upgrade their organizational model. Many large food and beverage companies often face challenges in integrating technology capabilities due to siloed regions and brands, which can lead to duplication and slowing of efforts, as there is often little or no centralized guidance or structure.

Creating a digital center of excellence for digital tools and capabilities establishes strategic direction and buying power while empowering brands and regions to execute local strategies cost-effectively and at pace.

Personalize B2B customer engagement: adopt AI and automation to make sure the best engagement channels fit your customers and automate the “next-best” action

In the world of digital customer engagement, B2B customers now expect seamless and personalized buying experiences across channels, the same experiences they’re used to as consumers. Manual sales strategies can’t keep up with the pace of automated customer engagement, if they’re done right.

According to Publicis Sapient’s B2B Sales Gap Report, 93 percent of corporate buyers want digital customer service channels, but fewer than half (47 percent) are currently getting them.

Artificial intelligence (AI) and automation can help B2B food and beverage companies dynamically adapt their sales processes to the complex buying needs of their business customers, while still supporting personalized and high-touch sales processes and experiences. For example, AI sales tools can use customer data to automatically recommend which channel is best for specific touchpoints.

Connect content to commerce to disrupt retail: integrate engagement channels starting with social for the customer and consumer and take it through to transaction

While most food and beverage shoppers still head in-store for their regular grocery trips, their shopping journey most often begins on social media or through an online search. The priority online channel for Gen Z is the social media platform TikTok, which just recently opened a digital commerce shop in-app.

In order to translate digital engagement to in-store shopping, food and beverage brands need to connect content to commerce through an always-on strategy. The only way to optimize this content is through a unified customer data platform, providing a 360 view of first-party consumer data and second-party retailer data.

Understand the value impact of your direct-to-consumer (D2C) channels: channels that provide unique offerings are more likely to be successful

While many food and beverage brands created D2C websites to compete with digitally native competitors, not all of these D2C websites are providing the anticipated return on investment. In most cases, this is because D2C channels are providing the same products that consumers can purchase on Amazon or at their local grocery store, with no added benefits.

It’s time for food and beverage brands to reevaluate their D2C offerings to make sure they’re providing products and services that consumers can’t get anywhere else, while also increasing profitability. There are a variety of strategies to create this unique value online and collect valuable first-party data—through offering premium, limited products, interactive or educational brand experiences, personalized products, or even curated product bundles.
 

Harness retail media’s potential: normalize retail media results through data interoperability to compare investments across networks

As the retail media network (RMN) space becomes more and more complex, many food and beverage brands are left utilizing several different retail media networks with no way to harness insights from any one network , let alone let the insights work together.

Leading brands are turning to data clean rooms to strengthen relationships with retailers, harness insights and normalize metrics across multiple RMNs. The resulting data interoperability can provide better insight into ROI from different RMNs, as well as more powerful consumer analytics built from a variety of different sources.
 

Honorable mention: create connected experiences through accessible packaging

Connecting the shopping experience across the physical and the digital, food and beverage brands are exploiting packaging to engage consumers through their products, appliances and devices. From shoppable recipes to connected packaging that can interact with smart oven appliances and mobile apps, advanced technology allows for a plethora of omnichannel consumer experiences.

Accessible QR codes (AQR) printed on food and beverage packaging are the mechanism for connecting the packaging but accessible QR codes can do so much more for no additional investment, enabling enrichment of experience and consumer journeys and can even be life-changing, for example, for the visually impaired.