Digitization in Transforming the FMCG Industry: Focus on Biscuit and Confectionery Manufacturing

Introduction

Digitization is revolutionizing the Fast-Moving Consumer Goods (FMCG) sector, driving efficiency, enhancing consumer engagement, and unlocking new revenue streams. Globally, FMCG giants like Nestlé, Unilever, and Mondelez International are integrating technologies like big data analytics, AI, and IoT to redefine their operations. According to a Deloitte report, 75% of FMCG companies globally are expected to significantly increase investments in digital transformation by 2025 (Deloitte, 2023). The digital revolution is especially critical in competitive and consumer-driven categories like biscuits and confectionery, where evolving consumer preferences demand agility.

In Sri Lanka, while the biscuit and confectionery market has strong local brands like Maliban and Munchee, there is considerable room for leveraging digitization to address inefficiencies, improve brand loyalty, and increase exports.

Sri Lankan Biscuit and Confectionery Market Overview

The Sri Lankan biscuit market is valued at approximately USD 500 million, with confectionery adding another USD 300 million (Statista, 2023). Local brands hold a 70% share of the market, competing against global imports, but are constrained by high production costs and limited technological adoption (Export Development Board, 2023). Although digital marketing and e-commerce adoption are rising, operational and consumer insight digitization lags significantly behind global benchmarks.

Gaps in Digitization for Revenue and Consumer Preference Alignment

1. Data Fragmentation: Manufacturers lack systems to consolidate consumer data across retail, online, and distribution touchpoints, leading to inefficient decision-making.
2. Supply Chain Challenges: Delayed replenishment cycles and high wastage rates hinder competitiveness.
3. Underutilized Digital Marketing: Most campaigns are limited to generic social media posts rather than personalized, data-driven strategies that enhance consumer loyalty.

Building Data Pipelines in Biscuit and Confectionery Manufacturing

Efficient data pipelines can bridge these gaps by enabling real-time insights and informed decision-making.

Retail Data Capturing Devices

Technologies like QR codes, NFC tags, and POS systems allow manufacturers to track consumer interactions and gather insights directly from retail shelves. For example, QR codes on biscuit packaging could offer recipes, while NFC-enabled packaging can link consumers to promotional offers. A global study by PwC (2022) found that 64% of FMCG companies using QR and NFC technologies saw a 20% increase in consumer engagement.

Centralized Data Portals

A unified data portal aggregates data from retail, manufacturing, and logistics. This consolidation enhances visibility and supports predictive analytics. For instance, Walmart’s Retail Link system enables suppliers to access real-time inventory and sales data, which has been key to its supply chain efficiency (Forbes, 2023).

Big Data Applications

1. Live Demand Tracking: Predictive analytics can ensure production aligns with seasonal demand fluctuations, reducing overstock and stockouts.
2. Localization: Customizing products for regional preferences boosts market penetration. A study by NielsenIQ (2023) found that localized products saw a 30% higher off-take than generic ones.
3. Super Segmentation: Big data enables segmentation by behavior, loyalty, and preferences, increasing the precision of marketing campaigns (McKinsey & Company, 2023).

Smart Distribution with IoT

IoT devices embedded in the supply chain enable live tracking of inventory, transportation, and shelf-life. This reduces waste, minimizes delays, and ensures retailers are stocked with high-demand products. For example, Coca-Cola’s IoT-powered vending machines monitor stock levels in real-time, optimizing restocking schedules (Coca-Cola, 2022).

In Sri Lanka, integrating IoT in distribution could address inefficiencies like overstocking and misaligned distribution—a common problem in rural areas.

AI-Powered Packaging

AI tools such as computer vision and heatmaps can analyze consumer interactions at retail points. For example, Mondelez International uses AI to assess consumer reactions to packaging and product placement, achieving a 15% sales increase in key markets (Mondelez International, 2023). In Sri Lanka, implementing such tools could guide brands like Ritzbury in optimizing packaging for regional markets.

Smart Planogramming

IoT-enabled smart shelves provide live data on stock levels, sales velocity, and consumer interaction. This enables:

1. Faster Replenishment: Minimizing stockouts with real-time alerts.
2. Competitor Surveillance: Tracking competitor off-take patterns for strategic adjustments.

Global leaders like Tesco have adopted smart shelf technologies to optimize inventory turnover and improve consumer experience (Retail Gazette, 2023).

Interactive Smart Packaging

Smart packaging enhances consumer engagement through AR/VR links. A QR code on a biscuit pack could connect consumers to interactive games or product origin stories. Kellogg’s implemented a similar AR feature, increasing consumer engagement by 18% in North America (Kellogg’s, 2022).

AI-Powered Data Analytics

AI integrates diverse data sources—POS systems, e-commerce platforms, and shelf data—into actionable insights. This allows manufacturers to:

• Optimize pricing.
• Personalize promotions.
• Identify underperforming SKUs for improvement.

Nestlé has reported a 12% increase in efficiency through AI-driven analytics for its confectionery division (Nestlé, 2023).

Digitization across the FMCG industry a high-level view

The chart highlights the diversity and depth of technological integration across the industry. Here is a stacked bar chart showing how top global biscuit and confectionery companies (Mondelez, Ferrero, Mars, Hershey, and Nestlé) adopt various digital technologies such as AI & Analytics, IoT, E-commerce, Blockchain, and Smart Packaging. The data reflects the extent to which these technologies are utilized to enhance efficiency, consumer engagement, and supply chain optimization.

Challenges in Implementing Digitization

1. Skill Gaps: A lack of marketing technologists and data analysts impedes adoption. Only 18% of FMCG firms in Sri Lanka employ digital specialists (SLIM, 2023).
2. Leadership Hesitation: Many top executives are reluctant to invest in digital transformation, fearing high costs and uncertain ROI.
3. Absence of Digital Strategies: Without a structured roadmap, manufacturers risk fragmented and ineffective digitization efforts.
4. Cost of Implementation: Digital infrastructure, including IoT devices and AI tools, requires significant investment, which is challenging for small and medium enterprises (World Bank, 2023).

Summary and Way Forward

Digitization offers a transformative opportunity for Sri Lanka’s biscuit and confectionery industry. Addressing gaps in data integration, supply chain optimization, and consumer engagement will unlock new growth avenues.

Recommendations

• Develop a Digital Strategy: Define a clear roadmap aligned with business objectives.
• Upskill Workforce: Invest in training marketing and data professionals.
• Collaborate with Tech Partners: Leverage partnerships for affordable and scalable solutions.
• Government Incentives: Seek support through grants or subsidies for digital adoption in the FMCG sector.

As global case studies demonstrate, digitization is not just an efficiency driver—it is a competitive necessity. Sri Lankan manufacturers must act swiftly to remain relevant in an increasingly tech-driven market.

References

1. Coca-Cola. (2022). IoT innovations in vending machines. Available at: https://www.coca-cola.com (Accessed: 1 December 2024).
2. Deloitte. (2023). Digital transformation in FMCG. Available at: https://www.deloitte.com (Accessed: 1 December 2024).
3. Export Development Board. (2023). Market insights: Sri Lankan biscuit and confectionery industry. Available at: https://www.srilankabusiness.com (Accessed: 1 December 2024).
4. Forbes. (2023). Walmart’s Retail Link system and supply chain efficiency. Available at: https://www.forbes.com (Accessed: 1 December 2024).
5. Kellogg’s. (2022). AR innovations in packaging. Available at: https://www.kelloggs.com (Accessed: 1 December 2024).
6. McKinsey & Company. (2023). Big data applications in FMCG. Available at: https://www.mckinsey.com (Accessed: 1 December 2024).
7. Nestlé. (2023). AI-driven analytics in confectionery. Available at: https://www.nestle.com (Accessed: 1 December 2024).
8. NielsenIQ. (2023). Localized products and market penetration. Available at: https://www.nielseniq.com (Accessed: 1 December 2024).
9. PwC. (2022). Leveraging QR codes and NFC in retail. Available at: https://www.pwc.com (Accessed: 1 December 2024).
10. Retail Gazette. (2023). Smart shelf technologies in global retail. Available at: https://www.retailgazette.co.uk (Accessed: 1 December 2024).
11. SLIM. (2023). Digital skills gap in Sri Lanka’s FMCG industry. Available at: https://www.slim.lk (Accessed: 1 December 2024).
12. Statista. (2023). Market size of Sri Lankan biscuit and confectionery industry. Available at: https://www.statista.com (Accessed: 1 December 2024).
13. World Bank. (2023). Costs and challenges of digitization in emerging markets. Available at: https://www.worldbank.org (Accessed: 1 December 2024).
14. Mondelez International. (2023). AI for flavor optimization and IoT in logistics tracking. Available at: https://www.mondelezinternational.com (Accessed: 1 December 2024).
15. Ferrero. (2023). E-commerce expansion and blockchain for supply chain transparency. Available at: https://www.ferrero.com (Accessed: 1 December 2024).
16. Mars Wrigley. (2023). Advanced analytics in production and smart packaging for consumer engagement. Mars Wrigley Sustainability Report. Available at: https://www.mars.com (Accessed: 1 December 2024).
17. Hershey. (2023). IoT for inventory management and AI in market forecasting. Hershey Innovation Insights. Available at: https://www.thehersheycompany.com (Accessed: 1 December 2024).
18. Nestlé. (2023). Widespread adoption of smart packaging and blockchain for provenance tracking. Nestlé Digital Transformation Report. Available at: https://www.nestle.com (Accessed: 1 December 2024).

Christopher Wijeyakulasuriya is a seasoned professional with over 20 years of experience in marketing, spanning tech-based products and services, FMCG, media, advertising, and education. Renowned for his expertise in brand strategy and consumer-centric innovation, he has successfully driven growth across diverse industries. As a writer, lecturer, and marketer, Christopher combines his deep industry knowledge with a passion for storytelling and teaching, inspiring the next generation of professionals while delivering impactful insights into marketing and technology's evolving landscape.