Artificial intelligence, or “AI,” is transforming the consumer products landscape. As of the beginning of 2024, 42% of retail and CPG companies use AI technology, and another 34% are assessing or piloting AI initiatives. The market value for AI in CPG is currently valued at $2.46 billion dollars, and as the technology continues to make advancements, an increasing number of consumer products companies are implementing AI solutions throughout their operations.  

AI impacts nearly all areas of a business, but the most common uses are to improve the customer journey, fuel product innovation, and optimize product management and organizational practices. We break down these 2024 AI trends in consumer products below. 

2024 AI Trends in Consumer Products

1) Improving the Customer Journey 

In the age of AI, understanding and engaging with customers has become imperative for consumer product companies aiming to stay competitive. Large language models (LLMs), a significant advancement in AI technology, have revolutionized customer service. These models have led to a remarkable increase in communication efficiency, with a reported 40%-50% rise in customer service interactions resolved without going to a customer service representative. 

Johnson & Johnson 

For example, Johnson & Johnson implemented AI-powered chatbots on their customer support platforms. These chatbots utilize natural language processing (NLP) algorithms to address customer inquiries and provide personalized assistance, resulting in a significant improvement in customer satisfaction. Originally implemented in 2018 to guide customers through the process of choosing Acuvue contact lenses and answering customers’ questions, J&J has since expanded to building chatbots internally using the Microsoft Bot Services platform to help answer common questions from all departments of the company. 

Procter & Gamble (P&G) 

Moreover, AI-powered marketing tactics have enabled a shift towards personalized experiences. Procter & Gamble (P&G) utilizes AI algorithms to analyze consumer data, segment past and current customers into different shopping demographics, and deliver personalized marketing messages in real-time. Using neural networks and proprietary algorithms, P&G has grown its U.S. sales by 10%, while increasing return on investment by 17% and total media savings by 15%. AI has allowed them to tailor their marketing campaigns to individual preferences and behaviors, which in turn has created a more impactful and successful customer journey experience. 

Colgate-Palmolive 

Colgate-Palmolive has embraced AI technology to enhance the customer journey and drive innovation in product development. Partnering with Perfect Corp., Colgate-Palmolive leveraged AI-powered solutions by utilizing augmented reality (AR) and AI technologies to provide online shoppers with a QR code that allows customers to use a filter on their smartphone to see what their smiles would like after two weeks of using a Colgate whitening product. This innovative approach not only provided a personalized and engaging experience for customers, but also empowered them to make informed purchasing decisions.  

2) Fueling Product Innovation 

Product innovation lies at the core of consumer product companies’ success. Currently, 85% of product launches fail within two years, making it extremely important to launch a successful product. The use of AI empowers companies to glean actionable insights from vast troves of data, enabling them to design products tailored to meet evolving market demands and, ultimately, have a higher product launch success rate. 

Unilever 

For instance, Unilever utilized AI-powered predictive analytics to anticipate changing consumer preferences and develop innovative products. By leveraging AI technologies, Unilever achieved a 30% increase in the success rate of new product launches. Unilever utilized Unspoken by SKIM, a psycho-analysis tool that defines customer sentiment around products and brand interactions by measuring their interactions on an app against new products. This allowed Unilever to better understand their customers’ motivations, which allowed them to then design products that better serve their customers’ needs.  

Coca-Cola 

Coca-Cola has also embraced AI to revolutionize its product development processes. Through initiatives like “Coca-Cola Creations,” the company leverages AI-powered algorithms to predict and create futuristic flavor combinations, like the new “Y3000” flavor. By analyzing vast amounts of data on consumer preferences and market trends, Coca-Cola utilizes AI to generate innovative flavor profiles that resonate with evolving consumer tastes. For instance, AI-powered vending machines developed by Coca-Cola utilize geospatial data and machine learning algorithms to optimize product offerings and personalize recommendations based on location-specific preferences and demographic data. This strategic use of AI not only enables Coca-Cola to introduce novel beverage offerings, but also enhances consumer engagement and satisfaction. but also enhances consumer engagement and satisfaction. but also enhances consumer engagement and satisfaction. 

3) Optimizing Product Management and Organizational Practices 

AI’s impact extends beyond the customer journey and product innovation, permeating into product management and organizational development. Generative AI technologies, when integrated with traditional processes, streamline tedious tasks, reduce manpower, and enhance efficiency. Reports indicate that consumer product companies leveraging AI for product management witness a 20% decrease in time-to-market and a 15% increase in labor productivity. 

Nestlé 

A prime example of this is seen with Nestlé, which implemented a full suite of AI-powered data-management tools to embed analytics across their business. Nestlé chose to work with the Microsoft Azure platform to layer in key organizational data capabilities over their SAP HANA system. Utilizing Azure Machine Learning and adding Microsoft PowerBI capabilities on top has allowed Nestlé to develop key monitoring dashboards for their DE&I goals. These dashboards have made Nestlé much more proactive in addressing bias in hiring practices and gender pay inequity as their employees succeed to higher levels. 

Additionally, Nestlé leveraged their new analytics capabilities to develop a “digital warehouse of the future” that features advanced sorting systems and robotics. This co-creation with Swisslog Logistics Automation is a state-of-the-art facility that uses predictive analytics and intelligent machines to accelerate the distribution and delivery of their products. 

Kraft Heinz 

Kraft Heinz is also bringing AI to their business. Several years ago, they partnered with Snowflake to develop a universal data hub within their business. Now, they are partnering with several other analytics platforms to bring that data to life by creating an on-demand, ChatGPT-like platform to help inform employees while making strategic decisions. Their goal is to gather real-time insights and information across their supply chain that can be accessed at any time. Although Microsoft Azure and Snowflake products are involved, Kraft Heinz is also partnering with other software providers like Alteryx to automate workflows and FourKites to add real-time visibility to their supply chain. 

Looking Ahead 

AI’s integration into consumer product companies is not just a trend, but a transformative force driving innovation and efficiency across various facets of business operations. By leveraging AI to enhance the customer journey, fuel product innovation, and optimize organizational practices, consumer product companies can stay ahead of the curve, delivering unparalleled value to customers and stakeholders alike. 

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