Grupo Herdez will invest US$15 million to accelerate its digital transformation process through an alliance with Google. Over the next five years, the Mexican company will transform its commercial management through machine learning and artificial intelligence, it said in a statement on Monday. “Digital transformation is not about adopting technology. It is about understanding those business processes that can be enhanced with technology and Google is a great partner for this,” said Miguel Ángel López, Head of Digital Transformation at Grupo Herdez.
The company, which owns brands including McCormick, Nutrisa and Barilla, will use Google Cloud solutions such as BigQuery ML and Looker to modernize its infrastructure, predict needs in the production chain and educate its entire workforce on how to foster a digital culture. “At Google Cloud, we want to be allies in the transformation of companies that are looking to be at the forefront, that are innovating and leading a new era of doing business in the country through the use of our tools,” added Director of Google Cloud Mexico Julio Velázquez.
In 2020, digital sales in Mexico exceeded MX$316 billion (US$156 billion), an increase of 81 percent compared to 2019, according to the Mexican Association of Online Sales (AMVO). “It (the pandemic) was definitely a shock that we dealt with in a very reactive way and it made us quite strong for future events. Many of the changes are here to stay and we are very open to adapt to new conditions. We have to be attentive and work so digitalization is not an obstacle but a benefit,” Héctor Hernández-Pons, CEO of Grupo Herdez, told Forbes Mexico back in June 2020.
According to Nielsen, innovation accounts for almost 40 percent of brand growth in the food and beverages industry. Yet, only 14 percent of launches achieve successful penetration. Net sales at Grupo Herdez, which has close to 1,500 products and operates in more than 20 countries, in 3Q20 amounted to MX$5.8 billion (US$289 million), up 4.5 percent against 2019, mainly driven by canned foods. Meanwhile, frozen foods recorded net sales of MX$665 million (US$33 million) in 3Q20, down 23.1 percent from a year earlier. The new food labeling law, which forced brands to redesign their marketing strategy, represented an estimated operating cost of MX$60 million (US$3 million) for Grupo Herdez.