In the modern era of rapid technological development and countless innovative startups it is becoming inefficient for food and beverages companies to continue developing new product the old way – having a team of marketers and scientists come up with a new product or flavor and then deliver it to the market using standard logistics and communication channels. It is way too easy now to miss a great idea or a demand for a new product and, as a result, have the competitors benefit from this. Therefore, using the open approach to developing new products allows the companies to both capture consumer preferences and identify new opportunities that the in-house R&D team would have otherwise missed. Moreover, launching new products on the market is way more than just about incremental revenue for food and beverages companies, it is about securing the future existence of the company itself. The trends in food consumption are shifting permanently and dozens of start-ups arise each year aiming to take the crown from the current CPG industry leaders.
The vision of the food and beverages industry future has been one of the key priorities for PepsiCo over the last years. This has resulted in numerous programs which can be grouped in two large groups: one is enhancing current product lines by adding new flavors or changing the way top brands are produced and the other is investing in new trends that may be fundamental for the company’s performance for the years to come.
Crowdsourcing ideas for the enhancement of existing products and remodeling the way they are produced looks both in and outside the company. One of the most well-known examples could be a “Do us a flavor” program in UK  which has both increased the interest in the company and its products among millennials and drove sales up by 8% simply by asking customers to submit their potato chips flavor ideas and launching the winning one on the market. Ever since then this approach has become a habit for the company and resulted in multiple successful launches such as Pepsi Wild Cherry with zero sugar and Lipton Sea Buckthorn in Russia which were not only popular among consumers who were showing the request for these flavors, but incremental to the beverages category in general, securing PepsiCo’s market share in the category for a year or two. PepsiCo also understands well that not only the consumers, but the company employees should be incentivized to innovate and share ideas that could move the business forwards, so the company focuses on both acquiring outside talent through such open completions as “Go Trendsetter”  and internal “Next Big Idea” challenges. The ideas presented at these forums vary from launching mixable chips flavor sachets to introducing compostable plastic to the bottles, from turning bag of chips into a T-shirt to offering a cryptocurrency as an addition to the product for the consumers.
While the abovementioned innovations are aimed at keeping consumers engaged today and maintaining the current market share, the search for the products of tomorrow is focused on success for years to come. Such programs as “Nutrition Greenhouse”   are targeted at innovative small companies that are trying to reinvent the food and beverages industry using the global shift towards healthier nutrition. And it is efficient – investing as little as $ 20,000 in ten companies is not significant for such a giant PepsiCo is, but if the project succeeds it will be easier to acquire the company given the established relationships and deep knowledge of the business that PepsiCo has developed throughout the program. Next step to test future success strategies is to grow the acquired small brands and Pepsi is also doing this by launching “The Hive”  an initiative with a purpose of turning smaller brands – Maker Oats, Stubborn Soda, Loosa – into American-wide ones.
Pondering the next steps in a search for new products and greater trends in the food and beverages industry PepsiCo could possibly turn to machine learning and trying to predict consumer preferences. Currently the company is in a beneficial position for that as they have a huge amount of granular representative data from all around the world and enough available funds to invest in such research.
As of today, PepsiCo has made a significant progress in the way they innovate and leverage the wisdom of crowds, but in a rapidly changing and developing food and beverages industry of today how can they make sure that they are not missing the next big thing that may bring them down?
- Graham Buchanan “5 Examples of Companies Innovating with Crowdsourcing.” Innocentive, Jan 11 2018 https://blog.innocentive.com/2013/10/18/5-examples-of-companies-innovating-with-crowdsourcing
- James Thickett “PepsiCo Go Trendsetter Challenge” HrReview, June 12 2017 http://www.hrreview.co.uk/hr-news/strategy-news/james-thickett-pepsico-go-trendsetter-challenge/104804
- “10 Food and Beverage Startups That PepsiCo Sees as the Next Big Thing” Entrepreneur, Nov 12 2018 https://www.entrepreneur.com/article/323019
- Janet Forgrieve “Plants Power New Products In PepsiCo’s Accelerator Program.” Forbes, Sep 11 2018 https://www.forbes.com/sites/janetforgrieve/2018/09/11/plants-power-new-products-in-pepsicos-accelerator-program/#29f015431233
- Brett Dworski “New PepsiCo Platform to Develop Emerging Brands.” CSP Daily News, Aug 22 2018 https://www.cspdailynews.com/snacks-candy/new-pepsico-platform-develop-emerging-brands