Behind the Term Sheet: Meet Kuona, an AI-Driven SaaS Company Solving CPG’s Pricing & Promotion Headaches
Consumer packaged goods (CPG) has historically been a challenging industry. Margins are tight, the industry is vulnerable to supply chain disruptions and worldwide economic fluctuations can greatly impact consumer purchasing decisions.
Amid ever changing market dynamics, consumer companies need new growth strategies and tools to stay competitive and rapidly adapt to the latest trends. This is why today, we’re pleased to announce our investment in Kuona, an intelligent SaaS platform that uses machine learning to automatically optimize product prices, promotions, and inventories for CPGs and retailers.
The $6M seed round, including COMETA, FEMSA Ventures and us at Seaya Cathay Latam, will help expand Kuona’s presence and team in key geographies such as Latin America, Europe and the United States. This also marks the 3rd investment from the Seaya Cathay Latam fund following Chilean fintech Xepelin and Argentinian edtech Henry announced earlier this year.
The need for global (CPG) innovation & the rise of Latam SaaS
While certain pandemic-related developments proved beneficial to CPGs — specifically, stimulus checks boosting purchasing power, higher employee wages due to a labor shortage, and decreased demand for luxury items in favor of CPG household necessities — inflationary pressures have again raised the stakes.
CPGs are under pressure to boost top-line revenues. To accomplish this, revenue managers are increasingly trying to leverage data to inform their financial decision-making. However, that data is often fragmented and hard to make sense of. Many companies are also still relying on Excel to manage and organize their data. While useful for certain low-stakes tasks, Excel isn’t built to deal with real-world pricing and promotion complexities. Unfortunately, market realities reflect this information deficit. Most CPG companies run thousands of promotions per month, spending millions of dollars, with 80% of these activities not turning a profit.
With current technologies such as AI, a new set of tools can be created to predict demand and track customer behavior in a more effective and cost-efficient way. And Latin America is quickly becoming a stronghold for these kinds of emerging SaaS companies thanks to an expanding market and its vibrant startup and tech talent ecosystem.
According to Marketwatch, “Brazil and Mexico are becoming the leaders of the SaaS market in Latin America due to maturing mindset about data-driven organizations, increased productivity and Internet of Things (IoT). The IT professionals of Latin America state that the ability to access cloud services from anywhere and at any time is one of the key benefits of the SaaS model followed by easy implementation and reduced cost.”
Kuona: Equipping companies with data-driven tools to adapt to changing consumer behaviors
Launched in 2017 out of Mexico and quickly scaling across the world, Kuona helps CPG and retailers dramatically increase ROI of promotions while maintaining or increasing sales. Its effective and cost-efficient solution integrates with clients to capture real-time data and leverages neural networks for simulations with a high precision level (up to 97%).
Founded by Chema Sanroman and Agustín Magaña, who combine decades of experience in data science, AI, and CPG revenue and pricing management, Kuona’s skilled team has an international footprint from Mexico and Brazil to the US with active expansion plans. Currently operating in 5 countries, the company is already profitable and serves major customers around the globe such as Coca-Cola and OXXO convenience stores.
Kuona’s products have versatile omnichannel capabilities, serving modern trade (supermarkets, convenience stores), traditional trade (mom and pop stores) and major e-commerce organizations. Its unique proposition of automatic data capture with high levels of granularity and accuracy — a differentiator that sets it apart from its competitors — has proved a boon to customers who relied on Excel and paper-and-pencil era techniques to try and predict demand.
The company currently offers two products, which include:
- Price & Promotion Optimization: Enables companies to automatically calculate the real performance of historical and current activities and optimize future ones
- Perfect Order: Creates the optimal sales order that increases sales, diminishes merchandise returns and out of stock per points of sale
Customer feedback has been immensely positive, with high-profile enterprise customers citing a number of Kuona’s capabilities, including:
- The accuracy of its neural networks, which translates into better results
- An automated approach that puts it ahead of other solutions
- The cloud-based and flexible nature of its solutions, which allow businesses to adapt them to specific needs
- Clarity into variables such as margin and sold quantity expected, which have in turn impacted the timing and execution of campaigns
Parting Thoughts on Kuona: Flexible, long-term thinkers, global potential
Since its inception, Kuona’s product portfolio has evolved to meet its clients’ needs and market trends. Along with Kuona’s strengths when pitted against incumbents and newcomers, the company’s ability to pivot when necessary is especially attractive. Its team is composed of long-term thinkers who recognize the power of the big data analytics market projected to grow to $656B in 2029 (Fortune Business Insights) and the increasing need for smart and accurate business intelligence.
At Seaya Cathay Latam, we remain committed to investing in transformative technology companies in Latin America that are building digital-first industries from the ground up. With a global platform — spanning Latam, Europe, the US, Asia and Africa — and an extensive corporate ecosystem including dozens of the Fortune500, leading retailers and CPGs (e.g., Pernod Ricard, Unilever, Sanofi), we’re looking forward to getting to work with the Kuona team on this next stage of its journey. A journey that will no doubt bring much needed innovation to global CPGs — helping this behemoth of an industry move from Excel into the truly digital (and data-driven) era.