Whether Luna ultimately succeeds financially is beside the point. Most Simpactful client AI discussions today focus on efficiency gains – helping marketers write copy faster, helping R&D analyze patents, or helping sales teams prepare for customer meetings. However, the Andon Labs experiment shows us that Agentic AI has the potential to go well beyond this to eventually become the operator of businesses – even CPG brands!

We Are Entering the Era of Agentic Competition
Historically, building a CPG brand required large teams, deep expertise, and years of accumulated organizational knowledge. We have seen private label and challenger brands make significant inroads in categories like food and beverage, OTC health care, durables, and capital-intensive categories like diapers. The Andon Labs experiment provides insight into how barriers to entry may continue to fall unless CPG players adopt innovation models that are much harder to copy.

AI Oriented Innovation Moats Become the New Strategic Imperative
The companies that win over the next decade will ask different questions and intentionally build innovation moats that become stronger as AI capabilities improve. Rather than asking, “How do we use AI?” – leadership teams should begin asking, “How can we use AI – and what advantages remain difficult for AI, or competitors using AI, to replicate?” Those answers become tomorrow’s competitive moat. Here are four moats every CPG business must build and hone:

1. Proprietary Consumer Understanding and Insight Generation – AI can analyze public information and past occurrences. It cannot easily recreate decades of proprietary, first-party data, conduct ethnographic and observational research, assess shopper behavior, deep dive distribution drivers, glean loyalty insights, or predict the future. Following COVID-19, Simpactful’s innovation team has observed that most companies have an opportunity to up-level their landscaping, consumer/shopper understanding, and quality insight generation. Simpactful Senior Consultant, Jennifer James, adds, “AI agents will look for assets to scrape. To combat this, CPG brands must build proprietary knowledge and the ability to translate this knowledge into true insights that inspire better briefs and superior solutions. It will be hard for AI to replicate the human observation of human behavior and emotion that isn’t articulated digitally.” 

2. Distinctive Intellectual Property and Moats – Brands should consider traditional moats as well as new tools. Simpactful Senior Consultant, Doug Stukenborg, was a buyer as the VP of Healthcare at Target. Later, he took on the role of seller when he co-founded Welly Health PBC. “Innovative brands need to create a multi-faceted moat. Patents and trade secrets matter. Exclusive formulations, forms, packaging, experiences, ingredients, and capacity can limit the speed of new entrants. Cost advantages, forecasting expertise, and manufacturing or logistical capability can translate into meaningful commercial advantages.” Today, technology is also opening new sources of intellectual property through protected datasets, proprietary AI models, and unique experimentation or simulation methods.

3. Ecosystem Relationships – Networks and relationships are a critical source of competitive advantage because they cannot be replicated overnight, especially by an AI agent. Simpactful Co-founder and Chair, John Torru, reflects, “Over the past 11 years, the Simpactful Partners have continued to expand the firm in ways that enable clients to build relationships on multiple fronts simultaneously. Our experienced practitioners can help build relationships with retailers, healthcare practitioners, manufacturing partners, universities and research labs, influencers, other brands, and start-ups.” Simpactful practitioners bring deep experience in establishing and operating world-class Open Innovation, M&A, and commercial partnerships and systems. These create unique joint value, and can generate privileged access to insights, capabilities, technologies, and distribution opportunities that autonomous competitors struggle to assemble quickly.

4. Organizational Innovation System and Capability Velocity – Simpactful Senior Consultant, Brett Evans has spent nearly 40 years working in the innovation space with dozens of CPG companies. “Every company will have AI – but few organizations will know how to develop insight, prototype, continuously learn, and execute faster than competitors. Winning organizations will have clear strategies and business models – and will institutionalize always-on innovation, rapid experimentation, KPI-enabled decision-making, and commercialization. The ability to improve every week becomes a new form of a moat.”

The Simpactful Perspective
The Andon Labs experiment is not important because an AI is successfully running a retail store. It is important because it demonstrates that embracing artificial intelligence is not enough. Brands must simultaneously guard against it. 

Need help defending against agentic innovators? Simpactful can help!  Our team of innovation experts have worked for – and with – the best CPG innovators. We can help you strengthen proprietary consumer understanding and insight generation, define differentiated intellectual property, build critical ecosystem relationships, and develop organizational innovation systems that compound over time. Contact us today at contact@simpactful.com or 925-234-6394. Visit www.simpactful.com.