Why ‘Agility’ Is One Of CPG’s Hottest Buzzwords

In the tech world, the term “agile” is typically used to describe an approach to developing software.

Now, the term “agile” has taken on a broader meaning.

Public company executives are increasingly using “agile” or “agility” to describe their ability to quickly respond to shifts in consumer preferences or competitive threats from a strategic, organizational, and cultural perspective.

Earnings calls mentions of the term “agility” have steadily increased over the last decade.

Interestingly, while many tech companies are heavy users of the words “agile” or “agility” in earnings calls, CPG giants Unilever and P&G are also frequently using these terms to signal innovation to the street.

why the need for agility?

Lower startup costs and access to capital have led to an explosion of options for consumers. Last year, US food and beverage startups raised over $1.7B across more than 300 deals, up from $940M in 2016.

Consumer preferences are also becoming more dynamic. In the past, many consumer companies were able to create profit-generating machines by building great brands and developing award-winning TV ads to make connections with captive audiences.

Now, Google, Amazon, YouTube, Pinterest, and countless other discovery mediums coupled with digitally-savvy consumers are shifting the basis of competition from great brands to great products.

how to develop fast-twitch muscle

1. Reignite legacy brands with newly acquired startups

In the last five years, P&G, Unilever, Nestlé, and L’Oréal have collectively acquired over 60 companies. While most of these acquisitions are blips on the radar for these consumer giants, which have nearly a trillion dollars in combined market cap, P&G, Unilever, Nestlé, and L’Oréal are using their newly acquired knowledge and capabilities to catalyze innovation across their portfolios.

For example, in 2017 Nestlé acquired vegan food brand Sweet Earth to cater to rising consumer demand for healthier eating options. Now, Nestlé is offering new versions of its Stouffer’s lasagna and DiGiorno pizza made with its plant-based ground beef alternative from Sweet Earth.

2. Update the approach to innovation

With the pace at which consumer preferences are evolving and new products are hitting the market, traditional methods of market research, like consumer surveys and focus groups, are slowly being rendered obsolete.

P&G, for example, has shifted to a “lean” approach for many of its new product innovations. To get products to market faster, the company sells prototypes in limited quantities online, and analyzes consumers’ responses in real-time through sales, reviews, and comments.

3. Experiment with new technology

Some consumer products companies are using AI to increase the speed at which they respond to consumer demand.

For example, image recognition tech from Heuritech is helping brands ranging from Dior to Adidas analyze social media photos to anticipate new fashion trends.

Predictive analytics is also helping companies anticipate new demand to better optimize inventory flows. Earlier this year, Nike acquired Celect, an analytics company that uses AI to predict buying patterns across purchase channels.

action > buzzwords

With more disruptions on the horizon, like the rise of functional beverages and AI-powered skin analysis, consumer products companies will need to turn buzzwords into action.