Why keeping track of consumer likes and dislikes is a ‘must’

Consumer preferences have always been an important driver in the fast-evolving food and drink sector, and manufacturers know that understanding and reacting to customer insights is key to winning and maintaining market share. However, keeping track of consumer preferences is becoming more challenging. Growing awareness of healthy eating trends and the rapid rise of social media influence, for example, are recent factors that have significantly changed the way consumers shop.

It is crucial for manufacturers to respond to consumer trends quickly to avoid being blindsided by sudden shifts in demand, but what can they do to stay ahead of the curve?

Keeping up with consumers

There are many reasons why consumer preferences are becoming more changeable. For example, there is growing consumer awareness and interest in how food and drink products are made and what they contain. Regulatory changes, including the introduction of consumer-friendly labelling and measures to limit the sugar content in certain products after the implementation of the Sugar Tax, are empowering consumers to make more informed choices. However, many consumers still want to know more. For example, recent research shows that 41% of UK consumers would like supermarkets to provide health information about ultra-processed foods (UPF). Additionally, around 49% of respondents stated that they would like to see supermarkets improve labelling on UPF. This trend has been spotted by the likes of Marks and Spencer, who in response to consumers wanting cleaner labelling and ingredient transparency have launched a new range of “Only Ingredients” clean-label food, containing just six ingredients or less.

Clean eating is the latest trend to influence the buying behaviour of health-conscious consumers. Spurred on by social media influencers and growing consumer interest in food culture, this trend involves eating mainly whole foods that are minimally processed and unsweetened, optimising their nutritional value.

Influencers in the health and nutrition space, such as Tim Spector and Dr Megan Rossi, have grown large followings on social media by encouraging consumers to cook food from scratch, rather than UPF products. There has been a surge in demand for full-fat dairy products, such as whole milk, full-fat yogurt and traditional butter in preference to products that have undergone more processing, such as low-fat spreads. At a time when products showcased by food influencers on their social media channels can sell out at supermarkets, food and drink manufacturers can’t afford to get left behind.

Failing to notice emerging trends could be risky to food and drink businesses of all sizes, potentially causing them to fall out of favour and lose market share. Additionally, those that fail to adapt could face issues such as overproduction, resulting in excess inventory, increased environmental impact, and reduced profitability. To get ahead of shifting consumer trends and anticipate demand before it happens, manufacturers need to place greater focus on consumer data and predictive analytics.

Using customer data effectively

For food and drink manufacturers, tracking customer data is essential to staying ahead of the curve. Gleaning information about returning customers, what’s in baskets, and the products that they are buying and not buying, is key to ensuring that the right products are available at the right time. Monitoring social media trends and product mentions in the mainstream media can also help to flag potential peaks in demand, ensuring that consumers aren’t disappointed by a lack of availability.

Data can also play role in guiding product development strategies and boosting operational efficiency. For example, data-based insights can inform production efficiencies, improve demand forecasting, and lead to improvements in inventory management. In a highly competitive, low-margin industry, the ability to react to data-driven insights quickly and confidently has become critical to survival.

Customer loyalty schemes can be particularly valuable as a means of harnessing customer data. In the past, there was little connection between what customers purchased and their shopping habits, but now supermarket loyalty programmes can provide insights on purchasing patterns, allowing manufacturers to identify seasonal and other factors that drive demand to inform their production strategies.

AI and machine learning have become powerful tools for identifying consumer patterns and cultural or market trends. PepsiCo, for example, uses AI technology to analyse customer preferences online and then use that data to develop innovative products that align with trending tastes. This reduces the risk of a product launch failure. Coca-Cola is another company that is utilising AI to align with customer preferences. AI-powered platforms analyse consumer interactions across digital touchpoints, including purchase history, social media engagement, and location data, to make sure new products released are meeting customer expectations. Learning from global market trends can help to inform product development strategies and assist manufacturers in getting products to market whilst the demand curve is still rising.

Data can also improve sustainability. With many consumers opting to support sustainable companies, manufacturers can use data to forecast demand with greater accuracy, minimising waste and avoiding unnecessary emissions. Supermarkets can play a role here too by promoting seasonal items as and when they are in demand.

Businesses don’t necessarily need to reinvent the wheel to stay ahead of the curve. Focusing on differentiation and transparency can help them to take the right decisions at the right time. For example, Oatly’s decision to display the carbon footprint of its products on its packaging ahead of any legal requirement to do so sends a strong brand message to consumers interested in making sustainable choices. Highlighting factors like food miles and local sourcing initiatives can also help to build consumer trust and drive sales.

Improving operations

From farm to fork, data can help food and drink manufacturers to optimise processes, improve inventory management, and minimise waste. Businesses that invest in these areas are better equipped to streamline their supply chains, optimise production, and minimise disruptions.

Many manufacturers are already using data effectively to refine processes, limit production downtime, and improve planning. However, there is still an opportunity for forward-looking businesses to use data analysis to anticipate consumer trends and adjust their product development and production strategies to gain a competitive edge. While larger manufacturers may find it easier to source the customer data they need as they have more likely to have robust data collection processes in place, smaller businesses may need support in this area. Effective use of AI can help both SMEs and larger firms alike to analyse consumer trends, predict demand, and improve their decision-making without extensive capital and other resources. However, SMEs can be more agile and reactive to data-led trends, giving them a competitive advantage in the market.

Rather than reacting to market shifts too late and being left with excess inventory or missing out on demand-side opportunities, data-based insights can help manufacturers to stay ahead of the curve when it comes to consumer trends. Ultimately, businesses that invest in data, and use it effectively, will be positioned for long-term success. Investing to harness the power of data is now a ‘must’ for food and drinks manufacturers to thrive.