PepsiCo Looks to Analytics to Improve $2 Billion E-Commerce Business

Need to Know

• PepsiCo is investing in data analytics capabilities to gain more of a foothold in the evolving consumer marketplace, according to CFO Hugh Johnston’s comments at a recent conference.
• One main focus is on digitizing marketing and consumer insights efforts.
• The food and beverage conglomerate is continually training its automation algorithms to increase ROI by integrating data from sources such as “CRMs, brand sites, cookies and ID data, as well as second-party and third-party assets.”
• E-commerce made up $2 billion in sales for PepsiCo in 2019.

Analysis

At the Consumer Analyst Group of New York conference last week, PepsiCo CFO Hugh Johnston outlined how the food and beverage company is increasing its investments in data analytics in order to stay ahead of the competition and offer new products to customers.

“By enhancing our ecosystem of data and consumer insights, we can increase the efficiency of our promotions and become more dynamic with our advertising and marketing spending, in effect, getting more growth for the same spend,” said Johnston. “This includes leveraging our in-house automation capabilities to deploy targeted higher ROI marketing programs in a manner that’s both efficient and scalable.”

For a company like PepsiCo, it needs to innovate beyond simple flavor and line expansions. That’s where predictive analytics can step in to help understand what customers want.

A lot of this could come from PepsiCo’s in-house tech platform Ada, a feature that combines human insight with AI algorithms to create actionable activities. Ada can even track social media and understand market shifts.

One recent win by PepsiCo is the recent introduction of the bubly sparkling water line, which PepsiCo CEO Ramon Laguarta said “could be one the company’s next billion-dollar brands.” PepsiCo is using analytics and data from CRMs, cookies, IDs, and more to understand how its marketing is playing with consumers, then tailoring those messages accordingly.

“By capturing and analyzing more granular consumer-level data, we can understand the consumer in a more individualized way to both customize communication and execute in every store with precisely the right products in the right location at the right price,” said Johnston.

PepsiCo is currently using platforms including Black Swan’s Trendscope to identify which ingredients are trending, and then predict which ones will be popular in 6 to 12 months. PepsiCo used those analytics to predict new chip flavors, which tested so high with focus groups that the company did not have to go back and tweak anything, saving valuable time and resources.

E-commerce is a major success factor for PepsiCo as well. In 2019 alone, the food and beverage company hit $2 billion in e-commerce sales. As those figures grow, Johnston says PepsiCo is able to speak directly with consumers create demand with them directly.

“By virtue of sort of having a relationship with you, either directly or a relationship with you through our e-commerce partners and our customers, we can actually much more effectively understand what your needs are,” says Johnston.

Looking further than analytics, PepsiCo is continually using technology to innovate its production. Subsidiary company Frito-Lay uses lasers to bounce off chips, then listen to those sounds to determine texture. Algorithms then process the sounds to create a virtual quality check.