Candymaking giant Mars plans to spend $1 billion over the next three years in its pet care division to hire 300 more tech workers and enhance its digital chops, including adding more artificial intelligence.
The company says that 70% of the financial commitment will go to hiring, upskilling, and bringing in third-party vendors, including consultants, to make its dog and cat food unit more digitally oriented. The spending commitment is a “significant acceleration” to what the division had previously budgeted for all things digital, according to Mars, which declined to provide any further details.
The remaining 30% of the funds are earmarked for spending on generative AI, data management, e-commerce, and other emerging technologies. Mars is also using some to expand the fleet of electric vehicles it uses from Swedish startup Einride, with plans to put 300 trucks on the road in Europe by 2025.
With around 100,000 associates already working for Mars’s pet care division globally, the hiring figure is relatively small. But Mars says that adding more data engineers, data architects, and digitally focused product developers and managers is key to support the company’s goal of doubling digital sales by 2030 from today’s level.
Ikdeep Singh, global president of Mars Pet Nutrition, says one big change the company made was to the C-suite reporting structure for IT leaders. Until recently, chief information officers in the pet nutrition arm had reported to chief financial officers. They now report to division presidents, a nod to the greater focus on adopting new technologies, rather than the more traditional focus on running IT operations in a manner that prioritized cost savings.
“The upskilling starts at the top,” Singh says.
Pet food brands owned by Mars include Pedigree and Iams. Industry data shows that Mars’s pet business and rival Nestle’s Purina PetCare rank atop the world’s largest pet food companies, each generating annual sales of around $20 billion. The next-closest rivals, including Hill’s, General Mills, and Diamond Pet Foods, all report sales under $4 billion.
While American shoppers are projected to spend $150.6 billion on pet food, pet medicine, vet care, and other pet-related services in 2024, Mars and other so-called “Big Kibble” brands are facing pressure from upstarts like The Farmer’s Dog and BarkBox. Many of the newer brands were built online first, often focusing on monthly subscription services, which have been more popular with younger pet owners. COVID-19 led consumers to do more online shopping, and those habits have stuck even after the pandemic has subsided. To better compete in e-commerce, Mars in 2022 acquired direct-to-consumer pet food brand Nom Nom.
“We have seen all these digital habits stick,” Singh says. “It’s become even more critical” to invest more in AI, e-commerce, and other digital tools to follow consumers.
An estimated 48% of pet owners are Gen Z or millennials, according to data by the trade group American Pet Products Association. Singh says Mars should focus more efforts on using AI for product development, marketing campaigns, and in the supply chain to address younger customers who are gravitating to social channels like TikTok and Instagram to learn more about pet ownership, nutrition, and vet care.
“Pet parenthood is expanding,” Singh says. “More young consumers are coming in.”
So far, Mars’s AI initiatives have focused on relatively standard applications for a large consumer products business. The company is beginning to test the integration of generative AI tools that can glean insights from nutrition research journals, social media, and Mars’s own data to recommend future innovation in pet food. Mars is also using AI image recognition tools to make more accurate veterinary care diagnosis.
During our conversation, Singh declined to name any AI vendors that Mars is working with. In the past, the company has talked about a close partnership with Microsoft, and earlier this year, Mars opened an AI lab at the candy maker’s office in New Jersey to encourage more exploration of the technology. No concepts from the AI lab have been made public.
John Kell
Send thoughts or suggestions to CIO Intelligence here.
NEWS PACKETS
Salesforce pivots on AI pricing. Salesforce this week will unveil a new AI strategy at its annual Dreamforce conference that will include a new pricing strategy: Charging $2 per conversation handled by its new generative AI “agents.” Bloomberg reports that the new pricing model is a sign that the software-as-a-service industry is under threat by AI. If businesses offload more work to AI, humans would need fewer software subscriptions—and revenue at companies like Salesforce that depend on software subscriptions would decline. Salesforce’s new pricing strategy could offset some of those predicted losses.
Microsoft gives AI agents an upgrade. Similar to Salesforce, Microsoft is pushing into the world of AI-powered agents with an update to its Microsoft 365 Copilot that will give users the ability to create AI assistants that can carry out tasks autonomously. It's the latest sign that tech giants, including Google, Amazon, and Apple, are racing to update their existing digital agents, though cost remains a barrier to many potential customers. As many CIOs have shared in this newsletter, AI copilots are frequently deployed judiciously, especially given the $30 per user per month fee that Microsoft and others typically charge. Adding more features or changes to the pricing strategy could get more users on board.
Intel inks AI chip partnership with Amazon. Chip maker Intel and Amazon Web Services announced plans to work together on a custom semiconductor for AI that will rely on Intel’s 18A process, an advanced chipmaking technology. The news comes after Intel also postponed plans to build new factories in Poland and Germany for about two years, pending increased market demand, while remaining committed to expanding in a handful of U.S. states including Arizona and New Mexico. Other big changes include speeding up a $10 billion cost-savings plan and cutting the company’s real estate by about two-thirds globally by the end of the year.
ADOPTION CURVE
Banking sector's slow digital transformation. A survey of 1,000 senior banking executives found that only 11% of banks were deemed "transformation" leaders based on how they answerd questions about their operations and customer experience. That was a pretty steep drop from the 22% total in last year's global banking study from consultant Publicis Sapient, and a strong indication that financial firms aren't as far along in their digital transformations as they should be. Executives say that regulatory challenges, a lack of operational agility, and legacy technology are among the top barriers preventing a tech overhaul.
But for those that are exploring newer technologies, in particular generative AI, six out of 10 executives cited “transactions” as a focus area, which includes credit analysis, underwriting, and contracts. Employee and internal tools like AI assistants and developer tools rank second (55%), followed by AI tools that support marketing and customer service.
JOBS RADAR
Hiring:
- Forgepoint Capital is seeking a chief technology officer. Posted salary range: $240K-$300K/year.
- Intel is seeking a director of IT infrastructure, based in San Jose, Calif. Posted salary range: $186.8K-$299.2K/year.
- Morgan Stanley is seeking a VP of data and technology, based in New York City. Posted salary range: $200K-$250K/year.
Hired:
- Carlsberg Group has hired Anurag Pandey as CTO, based in Copenhagen, to oversee the brewer’s IT strategy and promote digital innovation. Pandey previously oversaw Nike’s digital initiatives in markets like China while VP of global technology.
- Autoliv appointed Fabien Dumont as CTO and executive vice president, while also joining the company’s executive management team. Dumont was previously VP of engineering for the company’s China division, and has been employed at Autoliv since 1998.
- Mount Sinai Health System appointed Lisa S. Stump as chief digital information officer of the health system and Dean for IT of the Icahn School of Medicine at Mount Sinai. Stump was most recently SVP and chief information and digital transformation officer for Yale New Haven Health and Yale Medicine.
- John Hopkins appointed Janet L. Rathod as chief information security officer and vice president, effective Sept. 16. Rathod joins the research university from Citigroup, where she led cyberintelligence across multiple global teams. She was also previously a senior director at Capital One Financial and spent 16 years in the FBI.
- VersiTech named Anoop Kulshreshtha as chief product and technology officer, joining the software provider after leadership stints at health care products distributor Henry Schein and retailer Barneys New York.
- Sovrn has named Will Duckworth as CTO, responsible for the advertising technology firm’s data science, engineering, and overall technology. Duckworth was previously SVP and head of engineering at iSpot.tv.
- InvoiceCloud announced Jed Maczuba as a new CTO, steering the development and execution of new products and features for the digital bill payment software provider. Prior to joining InvoiceCloud, Maczuba served as SVP and CTO at Advisor360 and as CTO at Bank of New York Mellon.
