The consumer packaged goods (CPG) market has never been more competitive. Part of that is because smaller, more agile brands are rewriting the playbook. In the US, up-and-coming players captured about 40% of the overall growth in consumer products in the first half of 2024. They’re winning by adapting quickly to consumer shifts, testing new products rapidly, and making data-driven decisions at every turn.
For large CPG players, the stakes are clear: to stay competitive, you must move faster and operate smarter across every business unit. Yet many haven’t fully tapped into one of the most powerful tools available: AI.
When used effectively, AI in CPG can help surface hidden insights, streamline operations, and outmaneuver competitors.
In this article, you’ll learn:
- The current state of AI adoption in CPG
- The top use cases driving efficiency and growth
- Common adoption challenges and how to avoid them
The state of artificial intelligence in CPG
AI adoption is picking up serious speed in the CPG world. Big brands are moving beyond scattered pilots and starting to bake AI into the way they develop products, run operations, market to consumers, and deliver personalized experiences.
And the pressure is only growing. Today’s consumers expect more—faster innovation, personalized experiences, and smarter, more sustainable products. Increasingly, they assume brands are using AI to make that happen.
So, where do things stand? Let’s take a quick look at the key trends shaping AI in CPG right now.
CPG leaders are scaling AI rapidly across business functions
AI adoption in CPG has surged over the past year. According to McKinsey, 71% of CPG leaders reported adopting AI in at least one business function in 2024, up from 42% the year before. More than half, 56%, now use generative AI regularly.
The 2024 State of AI in Retail and CPG survey found similar momentum. 42% of companies are already using AI, with an additional 34% piloting or assessing it. Among large retailers and CPG brands with over $500 million in revenue, 64% are already using AI. Industry leaders are clearly driving this trend forward.
AI is already delivering measurable business impact
AI in CPG isn’t just a shiny new toy anymore. It’s driving real results on the bottom line. The same 2024 State of AI in Retail and CPG study shows just how far things have come:
- 69% of companies using AI reported revenue growth tied directly to AI
- 72% saw a decrease in operating costs
- Among C-suite leaders, 57% reported both revenue gains and cost savings of over 15%
Companies leaning into AI are already seeing a clear competitive edge. The question for every CPG leader now is not if AI can deliver impact—it’s how fast you can scale it across your business.
Consumers expect and reward AI-enhanced products
Consumers are responding positively to AI-powered product improvements and experiences. In the 2024 AI in Consumer Packaged Goods survey by Appinio and Spryker, 96% of consumers in the UK and Germany who purchased AI-enhanced products, such as those with improved formulations, smarter packaging, or personalized recommendations, were satisfied with their experience, and 40% reported very high satisfaction.
And expectations are only growing. Today’s consumers increasingly want brands to harness AI to create better, smarter, and more sustainable products:
- 75% expect AI will improve product quality
- 80% are more likely to buy from brands that use AI to improve sustainability (such as reducing packaging waste or optimizing delivery logistics)
For CPG leaders, this is both a huge opportunity and a clear challenge: AI must be embedded thoughtfully across product innovation and customer experience strategies because consumers are already watching (and choosing) accordingly.
How different types of CPG sectors are benefiting from AI
AI adoption looks different across the CPG world—and that’s exactly the point. Each sector is applying AI in ways that match its unique business needs, supply chains, and consumer expectations.
- Food and beverage: According to McKinsey, a $10 billion food and beverage company could unlock between $810 million and $1.6 billion in value from a full CPG digital transformation powered by AI. The largest share (up to $470 million) comes from optimizing customer and channel management, including more targeted promotions across online and offline channels.
- Beauty and cosmetics: Beauty brands are also leaning heavily into AI for personalization, faster product development, and more effective digital marketing. AI-powered virtual try-on tools and personalized recommendations are transforming the online shopping experience. The market opportunity is growing fast: the UK cosmetics market reached $13.8 billion in 2024 and is projected to hit $20.1 billion by 2033, driven in part by rising demand for natural and personalized products, and by AI’s growing role in e-commerce and social media engagement.
Sephora, a leading beauty retailer, has embedded AI into their retail customer experiences by incorporating AI-powered foundation matching in-store.
How CPG companies are using AI
Let’s walk through key AI use cases in CPG to show you what’s possible when it comes to driving measurable gains in efficiency, agility, and customer value.
Accurate demand forecasting
Predicting demand is one of CPG’s toughest challenges. Consumer preferences shift constantly, and external factors (from weather to new social media trends) can cause unexpected spikes or dips in sales.
AI-powered forecasting helps brands stay ahead of the curve. By analyzing vast amounts of data (POS transactions, local weather, search trends, and more), these systems generate more accurate predictions.
The result?
Smarter production planning, better inventory alignment, and fewer costly stockouts or overstocks.
Supply chain optimization
Supply chains are another major opportunity for AI. Across planning, sourcing, manufacturing, and delivery, AI helps brands respond faster to disruptions, manage risk, and optimize costs.
Generative AI enables dynamic demand planning, scenario modeling, and smarter sourcing decisions. For example, AI-driven warehouse optimization can boost productivity by 30% and lower operational costs, as per EY research. Manufacturers are also using AI-powered predictive maintenance to reduce downtime and improve equipment performance.
Predictive analytics
Understanding what consumers will want tomorrow is just as important as knowing what they bought yesterday. AI-powered CPG analytics enables CPG companies to:
- Forecast category trends
- Model promotional outcomes
- Optimize pricing strategies
These tools continuously refine their predictions by learning from new data and outcomes. As a result, brands can better anticipate demand, fine-tune promotions, and allocate resources with confidence, leading to higher sales and improved ROI on marketing spend.
Consumer insights
AI is also helping brands surface and act on CPG consumer insights faster than ever—without drowning in data. Insights teams today manage billions of data points scattered across internal sharepoints, third-party platforms (like eMarketer and Euromonitor), subscription services, and internal drives. Traditionally, it could take weeks to pull together trends by region, generation, or product interest.
With solutions like Capacity’s Answer Engine®—already in use at brands like PepsiCo (via their Ask Ada tool)—AI can now instantly index these disparate sources and surface real-time insights. That means brands can continuously monitor evolving consumer preferences through social media, online reviews, search trends, loyalty programs, and the latest industry reports.
Armed with these insights, teams can move faster, shaping new products, fine-tuning marketing, guiding sales strategies, and helping leadership stay ahead of what customers want next.
Improved customer support
Customer support is yet another area where AI is driving major improvements in customer experience and operational efficiency. If a customer has an issue with an order and has to jump through hoops, talk to multiple agents, or wait forever for a response, that’s just not going to work. Today, customers expect fast, consistent service across every channel.
AI-driven virtual agents and chatbots now handle the bulk of common interactions across voice, web, SMS, email, and social platforms. They do this instantly, 24/7. Advanced tools can even analyze service interactions to uncover friction points and recommend improvements to both automated and human-assisted processes.
Platforms like Capacity make this possible by unifying all relevant knowledge into one smart system. This allows intelligent virtual agents and live support teams to deliver fast, accurate answers and personalized service. With Capacity, you can automate up to 90% of customer inquiries, significantly lower support costs, and boost customer satisfaction.
Want to see how it works? Book a free demo today!
Product development
Innovating and bringing successful products to market remains one of the most critical drivers of CPG growth. Yet identifying the right opportunities, meeting evolving consumer needs, and accelerating time to market are ongoing challenges.
AI for product development is helping CPG brands innovate and bring successful products to market faster than ever. By analyzing consumer feedback, market data, and scientific literature, AI informs new product ideas. Some AI tools can even suggest ingredient combinations, optimize formulations, and predict consumer response before launch.
The key benefit? Faster time to market and a higher likelihood of product success.
Personalization
Today’s consumers expect brands to recognize and cater to their individual preferences. Mass marketing no longer resonates.
AI enables CPG companies to deliver hyper-personalized experiences by analyzing consumer data across channels. From personalized emails and tailored promotions to dynamic product recommendations, AI helps brands engage each consumer in more meaningful ways.
For example, a food brand might use AI to deliver personalized recipes, offers, and promotions based on each shopper’s dietary preferences and buying history.
This level of personalization drives higher engagement, conversion, and loyalty—key levers for standing out in crowded markets.
Challenges of AI adoption across CPG businesses
Many CPG leaders quickly find that scaling AI across the organization is no walk in the park. Data quality issues, organizational and informational silos, and internal resistance can all get in the way of turning early success into sustainable competitive advantage. You need a clear strategy to tackle these barriers.
Fragmented knowledge systems
One of the biggest obstacles is that CPG brands operate across numerous departments, markets, and regions. Research reports, consumer insights, and strategy documents often sit in isolated local drives or are locked behind subscription platforms like Mintel or eMarketer.
AI needs centralized, structured access to data in order to deliver value. When knowledge is fragmented, AI tools can’t effectively learn from the company’s collective intelligence or surface timely, relevant insights for decision makers.
Resistance to change
More often than not, there’s also internal resistance to AI technologies. Teams accustomed to traditional workflows may distrust or underuse AI tools. Institutional knowledge holders (often subject matter experts) can be especially resistant to sharing or “outsourcing” their expertise to AI systems.
Without cultural and leadership buy-in, even the best AI initiatives can stall. If teams do not trust AI outputs or are reluctant to embed AI into their daily work, adoption remains low, limiting impact.
Successful CPG companies treat AI adoption as a change management initiative as much as a technology rollout. This means:
→ Securing visible leadership buy-in
→ Involving SMEs early in system training
→ Providing clear examples of how AI can enhance rather than replace their expertise.
Data privacy barriers
CPG companies often handle highly sensitive data related to product innovation, consumer research, and competitive strategy. Legal and compliance teams are understandably cautious about granting broad access to this data, especially when AI tools are trained across multiple teams or regions.
These privacy concerns can delay AI deployments or lead to limited, fragmented access to key data, undermining the ability of AI systems to deliver their full value. As a result, it’s important to build robust governance and data management frameworks from the start. This includes:
- Clear data permissions
- Encryption
- Role-based access
- Compliance with relevant privacy regulations
Modern AI platforms like Capacity offer enterprise-grade security features to help brands meet these standards without compromising AI performance.
Elusive ROI metrics
Lastly, while some AI applications (such as customer support automation) have clear performance indicators, like deflection rates or reduced handle times, other areas of AI use, such as research and insights, lack obvious ROI metrics.
Without clear KPIs, it can be harder to secure sustained investment in AI tools for insights teams. Stakeholders may struggle to quantify how AI-driven knowledge sharing improves decision-making or accelerates innovation.
Leading CPG companies align AI initiatives with business outcomes from the start. For insights use cases, this may include tracking reductions in time spent searching for information, improvements in product launch speed, or faster competitive response times. Over time, even these “softer” metrics can be tied to commercial impact.
The time to act is now
The companies that win in this next era will be the ones that use AI not just as a bolt-on tool, but as a true competitive advantage, helping them move with greater agility, efficiency, and customer focus. But to do this well, your teams need seamless access to insights across the organization.
That’s where Capacity’s AI for CPG can give you an edge. Capacity Answer Engine® transforms terabytes of CPG data into instantly findable answers without the need for manual uploads or tagging.
It helps teams across the business move faster and make smarter decisions:
- Consumer insights teams can analyze regional trends, category performance, and consumer behavior
- R&D and innovation teams can access past product learnings and competitive intelligence
- Marketing and sales teams can retrieve campaign performance data and consumer insights in seconds
- Operations and strategy teams can ground every decision in up-to-date, cross-functional data
Request a demo today and see how Capacity can transform your CPG business.
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FAQs
AI helps marketers better understand and engage consumers. It powers personalized campaigns, predicts which offers will resonate, optimizes media spend, and even informs creative development. This leads to higher engagement, stronger conversion rates, and a more personalized brand experience across channels.
AI can help drive more sustainable business practices—something consumers increasingly value. For example, AI can optimize packaging design, reduce waste, and help fine-tune logistics to lower carbon emissions. Many consumers say they’re more likely to buy from brands that visibly use AI to improve sustainability.
AI will transform jobs in CPG—not eliminate them. Many roles will evolve as AI takes on the heavy lifting of data processing and routine operations. This gives employees more time to focus on uniquely human strengths: empathy, creativity, leadership, and nuanced decision-making. The companies that embrace this shift thoughtfully will be the ones that thrive.