Around 30,000 new CPG products are launched every year and 90% of them fail, resulting in an estimated loss of $40B to the industry. While there are a myriad reasons behind this failure rate, one of the key factors is that the products don't resonate with the consumer needs.
To understand why that is the case, let’s look at the process/methods followed today by the new product development (NPD) teams. They typically hire market research firms to do field based research & focus group interviews where a set of people are surveyed to extrapolate to what the end user market wants. Or use data sources like Mintel that show what products are selling now. It is obvious that these methods are costly, take time and cover a limited sample size (100-200). Existing data sources provide historical sales information which might not be a true reflection of what will sell in the future. New Product development cycles today can take upto 12 months, with 3-6 months spent on market research itself. So by the time the product is launched the customer preferences would most likely have changed.
The problem is exacerbated by the fact that consumer preferences are now changing rapidly and the CPG space is becoming highly competitive with new age brands finding success. This has led to the industry transforming into a buyer's market. Brands need to keep up with the changing customer behaviour and hence are looking for agile innovation so that they can quickly spot trends, launch successful products faster while reducing their market research spends.
Let’s reimagine this process. Today, there are millions of data points available online through social media, blogs, publications and journals. Can this digital data be leveraged and transformed into accurate consumer insights in real time through a SaaS platform? A platform that delivers macro level insights such as ‘Korean food in India is a growing trend (at +50% yoy)’ and ‘Indonesian dishes an emerging trend (at +77% yoy)’. Or a granular level insight like ‘black garlic in the snack category is an emerging trend in the Asian market’. The new product development/consumer insights team can then simply log in, consume these insights and decide what product to launch next. This is how Ai Palette is reimagining product innovation and it is doing this through its proprietary technology that is able to take millions of unstructured data points and translate them into actionable insights.
Ai Palette’s foresight engine ingests digital data at scale and uses sophisticated NLP models and image recognition trained on F&B datasets to cut through the noise, analyze the information and maps the evolution of a trend across six stages of lifecycle - dormant, emerging, growing, mature, declining and fading. What makes the platform so valuable is that it can identify current trends as well as predict the trends’ future trajectory. Unlike a black box based output, the engine highlights the “why” behind the output. In addition, the NLP models are multilingual and can work on a combination of languages in one sentence, a common occurrence in social media conversations. This platform can be used not only to conceptualize new products but also for repositioning existing ones as well as validating a new product hypothesis.
Over the last few months, the company has shown strong customer adoption, added top global brands like Danone, Kellogg’s, Cargill and Dole to its customer base and expanded its user base to 13 countries. The platform supports 15 languages and has demonstrated considerable product innovation time and cost savings for their customers, one example being a cost saving of 80% and time reduction by 6 months for a leading F&B company. Having started in the F&B segment, the company is now fast expanding its platform capabilities into other languages and segments under FMCG.
The genesis of Ai Palette stemmed from Som’s first hand experience in the F&B industry, where he saw the product innovation challenges. To capitalize on this opportunity, he founded Ai Palette along with Himanshu in 2018. Som and Himanshu with their F&B and tech backgrounds respectively, bring complementary skills to the table. Extremely driven individuals, they have built within the company a culture of customer centricity and employee diversity. We are impressed with their vision of transforming the FMCG industry using AI and also their foresight to visualise this three years ago. We have been closely following Ai Palette since last year and have been very encouraged by their progress.
AI is disrupting various industries as we know them. FMCG, however, is one of the traditional industries that is still in the nascent stages of tech disruption. Ai Palette is accelerating this pace through its AI led approach, with new product development being the initial target segment. At pi Ventures, we back category leaders that leverage disruptive technology to change the status quo and differentiate themselves and Ai Palette fits this thesis very well.
We are very excited to partner with Exfinity on this journey!