Transcription
When you go grocery shopping, how do you decide which products to buy, especially when there’s so much choice? Maybe it’s how the product is packaged, or the ingredients, or maybe you’ve bought it before, and it tastes great.
Finding ways to attract consumers to packaged goods is the role of the global market research industry, worth an estimated $88 billion in 2024. The industry is expected to grow by another $15 billion in the next four years, with artificial intelligence’s rise one of the major contributing factors. One company hoping to lead that disruption is AI Palette. AI Palette helps consumer packaged goods companies create products that their consumers will love. For example, if a company wants to launch a new juice in a market like Thailand, our platform will tell them what kind of juice they should launch, along with how they should position it so that it is successful in the market. And we do that using the power of artificial intelligence by analyzing the big data around food to identify what the latest trends are.
Before co-founding AI Palette, Somsubrha Gan Choudhuri worked in the fast-moving consumer goods industry (FMCG) and worked closely with some of the world’s largest consumer packaged goods companies. The challenge that they always have is that consumer preferences are changing faster than ever before, and they are not able to keep up to understand and predict what will be popular, say, one year from now. That’s when I first came across AI and machine learning. As I learned more about it, it became quite obvious to me that it’s just a matter of time before AI impacts every industry.
As AI development gathers pace, so does interest from investors. Venture capital firm 500 Global invests in entrepreneurs who they believe are building game-changing companies. We caught up with them at the Singapore innovation conference SWITCH. Younger entrepreneurs that we're investing in are rebuilding companies with AI in mind. It can, in an exponential fashion, reduce costs associated with day-to-day business activities that otherwise take up a lot of time and require a lot of people.
One of the areas that we looked at was in the space of marketing, product design and creation, and product research. Get to the market faster with more confidence that the product you launch will be successful in the market. So today, for companies to launch a product, it takes one to two years, and by the time they launch the product into the market, consumer preferences would have changed significantly because the way it is run traditionally is by talking to a small sample of people, which is not truly representative of that particular market. It only tells you the trends of today.
AI Palette was founded in Singapore in 2018, and its AI platform has been up and running for the past four years. Its clients include major food and beverage brands Diageo, Nestlé, and Pepsico, as well as Symrise, a company that works with brands to manufacture ingredients and products in taste, nutrition, health, scent, and care. AI Palette knows very well the needs of companies like Symrise, so the platform and the capabilities are set up and established in the way that we would want to use them. It's very user-friendly. So data is pulled from many different sources, including social media, online menus, product data that is online, and many other sources.
This is a key need for a company like Symrise, as we’re able to easily synthesize what is happening in the marketplace and then interpret that to have an outcome that we can present to our customers. Consumer brands like Pringles use our platform to understand the preferences for snacks across four different markets: South Korea and Australia, which are very mature and developed markets, and developing markets like Thailand and Indonesia. Our AI helped them understand flavor trends based on which they launched quite a few different products into the market.
AI Palette has a three-pronged approach to its cross-sectional forecasting, which includes 39 different factors to predict the future trajectory of a trend. For instance, a trend may start in Korea, then move to Thailand, and subsequently to Indonesia and the Philippines. Other influences include cross-category influences; for example, alcoholic beverages as a category often take a lot of inspiration from non-alcoholic beverages. The final influence is generative AI, which helps us to create product concepts incorporating the latest consumer trends in a language that resonates better with consumers.
What AI Palette provides for us we could not do before, so it is something new. We still do traditional consumer research as well. If the decision is significant—such as a large investment—we would also go back to the very same consumers and ask them questions. Here in the labs behind me, we still have to taste the product because our artificial intelligence cannot do that yet. Our job is not to replace humans but to make their lives better so that they can do their jobs faster and with a lot more confidence.
The ground in AI is shifting very quickly. The technology advances at light speed with every few months that go by. This creates a lot of opportunity for startups because this uncertain ground is fertile for innovation. However, it also presents risks. We look at companies that are building resilient solutions that tackle big problems that no one is perhaps looking at right now or have an innovative way to solve. So we think that ground is very, very ripe. It's often an overlooked area. Companies like AI Palette that take on a very specific sector are exactly the kind of companies that we like.
Along with VC investors, AI Palette has had the backing of the Singapore government, which is committing more than three-quarters of a billion dollars to AI development to strengthen its AI ecosystem. What they really loved was that we are trying to disrupt a very large and traditional industry like the CPG industry. The companies are very traditional, and there has not been much disruption. The plan is to expand into other types of CPGs, such as homecare and possibly pet care. We want to be synonymous with this category.