Leadership Strategies
The New CPG Playbook, AI Insights, and Consumer-Led Innovation
Large food and beverage companies have traditionally been stable and low-risk, driving consistent success. However, factors like the rise of GLP-1 medications and a shift toward values-driven purchasing have shaken this stability. Market growth slowed to 2.1% in 2024, below inflation, with big players barely growing (0.5%) compared to smaller brands, which grew at 4.9%. This shift highlights opportunities for startups to redefine the consumer packaged goods (CPG) space.
The winners in this disrupted market won’t be those sticking to old strategies. Instead, success comes to those who focus on consumer-centric growth and leverage AI and machine learning to identify the true drivers of demand. Smarter data strategies help companies anticipate trends, launch relevant products faster, and adapt to changing consumer behavior. Agility and insight are becoming key differentiators in this new environment.
How We Got Here
Recent data shows that cost is no longer the primary factor influencing food purchases. Quality and taste lead consumer priorities, with 56% valuing product quality and 52% prioritizing great taste. Even as more consumers turn to store brands amid rising prices, large CPGs have lost some market grip.
Policy changes add complexity. The appointment of Robert F. Kennedy, Jr. as Head of the U.S. Department of Health and Human Services, with his proposals targeting certain additives, threatens existing formulations—especially for large companies tied to extensive supply chains and capital-intensive ingredient sourcing.
Many big companies have pulled back on innovation. For example, General Mills recently shut down its innovation studio, and AB InBev paused its exploratory initiatives. Even when new products are developed, success rates remain low, often below 30%. This indicates a disconnect between product development and actual consumer demand.
The rise of omnichannel competition means CPG brands are now competing with everything from social commerce platforms to international brands entering consumer feeds via algorithms. Traditional product development methods are falling short.
Chaz Flexman, CEO of Starday Foods, sums it up: “Relying on the status quo of product development is not serving today’s grocery shopper.” Retailers now have access to rich shopper data, offering smarter ways to identify gaps on shelves and emerging product demands in real time.
Where Do We Go From Here?
Generic products no longer satisfy consumers. Health preferences have become deeply personal, with growing interest in Low FODMAP diets, high-protein options, and allergy-safe foods. Many consumers turn to social media platforms like TikTok, Instagram, and Reddit to discover products or recipes that fit their unique needs.
Generative AI can act like a massive insights team, analyzing user-generated content across multiple platforms to uncover emerging demands quickly. Starday Foods, an AI-driven innovation company, uses this approach to identify unmet consumer needs and accelerate product development.
For instance, Starday’s chickpea protein topper, All Day, addresses multiple consumer desires: vegan protein, clean ingredients, convenience, and variety. By responding to intersecting trends, the product launched faster and achieved strong sales and category velocity, especially at retailers like Sprouts.
The Future of AI and CPG Product Development
Traditional growth and product development methods won’t meet today’s consumer demands. AI-powered software offers a new framework for gathering and interpreting data at scale, enabling faster and more precise decision-making.
However, AI alone isn’t enough. The consumer mindset must remain central. Long R&D cycles and rapidly shifting behaviors create challenges that require tech-enabled, data-driven strategies focused on real consumer needs.
As Chaz Flexman notes: “Organic growth is more challenging than ever. At Starday, we put the consumer first. Using technology and data, we’re helping CPG companies not just adapt but thrive in this new era.”
- Focus on consumer-centric innovation backed by real-time data.
- Leverage AI to accelerate product development and uncover unmet needs.
- Move away from long, expensive R&D cycles disconnected from current trends.
- Prioritize agility to respond quickly to shifting consumer preferences.
Product development professionals should consider integrating AI-driven insights into their workflows to stay competitive and relevant. For those interested in expanding their skills in AI and data-driven product development, exploring AI courses tailored by job role can provide practical knowledge and tools.
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