How will the IoT affect CPG brands?

Bud Light’s smart fridge recently became available for consumers. This is a notable innovation, not only because it’s a refrigerator that texts you when you’re running out of beer, but because Bud Light is hardly an e-commerce brand. Is this a sign of what’s to come for consumer packaged goods (CPG)?

The fridge has a complementary app, which requires a date of birth to use. Some of its capabilities include a countdown letting you know when your beer is at optimum coldness, control over what the exterior displays, NFL team updates, and an integration with a beer-delivery service that operates in select California cities. However, its main function is getting Bud Light’s offline product involved with the Internet of Things (IoT).

“The rise of mobile and connected homes are two trends we’re watching closely. It’s an opportunity for us is to figure out how to offer connected, branded experiences in-home and at the bars, restaurants, and venues were Bud Light is consumed,” says Azania Andrews, senior director of North America’s digital connections for Anheuser-Busch.

This union between beer brands and connected devices isn’t a new concept – Heineken had connected beer bottles at Coachella two years ago – but it is still something of a novel one. Coined by a British entrepreneur in 1999, IoT is a techie term that is typically used to refer to things like smartphones and smartwatches. However, it’s since expanded well beyond Google and Apple, with consumer brands increasingly utilizing connectivity in creative ways.

Rebecca Minkoff’s New York City flagship store has smart dressing rooms that scan radio frequency identification (RFID)-enabled clothing tags and suggest complementary items. Retailers like Macy’s, Bloomingdale’s, and Kohl’s have connected fitting rooms as well. Levi’s too, partnered with Google in June to make smart jeans made from jacquard yarn that combines thin, metallic alloys with traditional textile materials like cotton and polyester. 

According to Retail Systems Research’s recent report, The Internet of Things in Retail: Great Expectations, 80 percent of retailers agree that the IoT will drastically impact consumer products and the way companies do business in the next three years.

minkoff-smart-screen

It makes sense for retailers, given how the Internet has changed shopping. But can the same be said for CPG brands’ products?

“It’s a harder nut to crack on the CPG side,” says Sean Miller, senior vice president of strategy at Rokkan. “Strategists around CPG brands are trying to figure out how to make a low-involvement purchase top-of-mind. They’re not used to being needs-driven, in terms of an experience and solving problems, so that’s a new way of thinking.”

Some offline brands have already started thinking that way, even if their campaigns were more fun novelties than anything. In March, KFC debuted Bluetooth-enabled smart trays that transform into keyboards, allowing German consumers to text without getting their greasy chicken fingers all over their phone screens. And while Doritos didn’t pioneer smart corn chips, the brand did figure out a way for consumers to access online content by scanning chips.

kfc-smart-tray

Miller points out that connected devices generally strive to make people’s lives easier in some way. So while he thinks the IoT will affect the CPG space, it won’t necessarily be on a product level. 

“That doesn’t mean that every bottle of aspirin or every candy bar should come alive somehow, but these different brands are showing that they’re aware of the context around the experiences people are having with them. So, they’re finding a way to make that overall experience more interesting,” he says.

Packaging can be more connected device-friendly – for example, a granola bar wrapper with a scannable barcode could connect with a nutrition app like MyFitnessPal. Companies can come up with new products that support their overall brand experiences. Items you buy regularly can arrive at your home periodically, automating the shopping process.

“Technology can tell you about what you bought and when it’s going bad,” says Gary Koepke, chief creative officer for North America at SapientNitro. He offers another example, “It could say, ‘Hey, you bought tomatoes over a week ago and they’re on their last leg – you’d better have spaghetti tonight.'”

Koepke doesn’t think the IoT will have the same seismic effect on the CPG as it will retail. However, he does think connectivity will increasingly become a factor in the brands’ strategies.

Like Miller, Koepke thinks it will happen at a brand experience level. Rather than come out with soap in a smart bottle, a brand like Dial can send reminders.

“They can say, ‘It it flu season – are you remembering to wash your hands?'” says Koepke. “Brands could offer us ideas on how to integrate their products into our daily lives a little more, rather than just selling them to us and leaving us be.”

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