When a handful of teens took to social media to complain about the paltry size of their microwaveable mac and cheese, Big Food was paying attention.
At Kraft Heinz, the corporate behemoth that’s responsible for a lot of the items in your pantry right now, a “social listening team” picked up on that chatter in the summer of 2019. Months later — lightning speed in the food world — Kraft Macaroni and Cheese Big Bowls were on store shelves.
Tracking social media buzz is one of the newly honed tools in Kraft’s data collection toolbox, and both the company and its packaged-food peers are increasingly thinking about how they gather and use information like this to speed product development.
“For a food brand it’s really no longer about who has the biggest factory, or who has the biggest media budget,” said Taylor Smith, a partner at Boston Consulting Group (BCG). “It’s about what data you have and how you use it.”
From Kraft to General Mills to Conagra Brands, big foodmakers are finally warming to analytics as they try to become nimbler and more responsive to consumer whims. A pandemic-driven rise in online shopping and grocery delivery has widened the trove of data available to food companies that have long struggled to gain insight into shopping trends because retailers, not manufacturers, have been the gatekeepers to most shopper transactions.
And Big Food isn’t just keeping an eye on Twitter feeds or delivery orders. Some companies are grabbing cell-phone tracking info, scouring customers’ grocery receipts and keeping tabs on how long it takes to clean up dinner. Conagra is even monitoring Peloton subscriptions to gauge whether shoppers would be more inclined to buy health food versus junk food, and tweaking its marketing accordingly.
Data analytics are shaping up to be a critical factor in determining which food companies can thrive in a post-pandemic world. Americans have turned back to old pantry stalwarts over the past year, giving new life to staid brands that had been losing out to smaller competitors. But investors are realising not everyone can hold onto those gains once the economy opens back up and people eat less at home. Pandemic outperformers like Clorox are facing similar questions about how they’ll fare once things get back to normal.
An S&P index of consumer staples stocks is up about 27 per cent in the past year, the best 12-month performance in that period in over a decade. Yet that pales in comparison to the 63 per cent surge in the broader S&P 500. And foodmakers like Campbell Soup and Kellogg are among the worst performers in that consumer index, which also includes toilet-paper manufacturers, grocery stores and cigarette makers.
For other industries, the use of analytics is nothing new—everything from banking to health care to retail has been reshaped by user data. But large food manufacturers have been late to the party. With long-established brands like Betty Crocker and Oscar Mayer, market-leading firms have been largely content to drive sales through traditional advertising or simple name recognition.
One obstacle they’ve long faced is in data collection. Since the products are generally sold through grocery stores rather than directly to consumers, food makers have less insight into the details of the transaction, including what other products customers are buying. The largest consumer packaged goods firms have only one-tenth the size of customer databases compared with retail peers, according to BCG’s data.
A rise in delivery and growing direct-to-consumer efforts that accelerated in 2020 have started to shift the balance. The data available through e-commerce is similar in many ways to what supermarket loyalty programmes already offered, but it’s now available at a much larger scale and more quickly, explained Bob Nolan, who leads Conagra’s insights and analytics team. Merchants can see what shoppers purchased, what they clicked on but didn’t purchase, what else was in their baskets and what they’ve bought over time.