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MICROSOFT CORPORATION

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Microsoft : Your Snack's Crunch Is Cloud-Verified

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11/24/2018 | 08:14am EDT

By Mike Cherney

BRISBANE, Australia -- To make a snack with the perfect crunch, one company is turning to the cloud.

Majans Pty, which makes pea- and nut-based snacks in Australia, is teaming up with Microsoft Corp. and others to test a system that uses a beam of light to measure moisture and salt levels, then uploads that data in real time to the cloud. If successful, it could allow factory managers to instantly detect an issue in production -- possibly with just an alert on their smartphones.

Too much moisture can lead to an unsatisfying crunch, a big problem for snack companies that have just one bite to impress consumers. But current methods often require a technician to scoop snacks off a conveyor belt, bring the sample into a lab and use a special machine to get a moisture reading. At Majans, that test is only done every one to two hours, potentially overlooking flawed product.

"Moisture is the enemy of crunchy snacks," said Mathew Barbagallo, the chief commercial officer at family-owned, privately held Majans, which sells its snacks in the U.S. as well as Australia. The crunch "triggers certain sensors in the brain to add a level of enjoyment. The crunchier, the better."

Since batches of snacks are sometimes unfit for sale if they're too soggy, better data from the factory floor can help reduce waste and save money. Ensuring snacks are sufficiently crunchy can also help food makers succeed in an industry where competition is intensifying. Health-conscious consumers are embracing everything from date-based protein balls to roasted fava beans, a trend that is pushing manufacturers to look beyond potato chips and make crunchy snacks from a wider range of foods, like kale and seaweed.

A survey conducted earlier this year by market research firm IRI found that 50% of U.S. consumers eat snacks that "add excitement to their daily diet." That was a 19-point jump from a similar survey two years prior, suggesting that many consumers are looking for more variety in their snacks. IRI expected snacks based on beans and chickpeas to be fast-growing categories.

Food companies that tap into shifting consumer tastes -- and use technology to ensure a compelling crunch -- could grab a bigger slice of the growing U.S. snack market, which research firm IBISWorld estimates is worth nearly $43 billion in revenue this year. The market is projected to increase 4.2% annually over the next five years, up from 3.7% in the previous five-year period.

One day earlier this month, a conveyor belt ferried a barbecue-flavored, tapioca-based shrimp cracker around Majans's Australian factory. The conveyor passed under a device, called a spectrometer, that determines moisture content by beaming light onto the snacks and measuring what is reflected back. The information was then displayed on a computer screen in an office overlooking the factory floor.

"That's gold, that data," said Phil Dahlenburg, the manufacturing manager at Majans, as he watched results from the machine appear on the computer screen.

The spectrometer, made by a unit of German manufacturer Zeiss Group, costs roughly $40,000, and is already used by other companies to assess potato products and tobacco. But Microsoft says the Majans plant is the first time it has connected a device like this in a snack factory to the cloud -- which is being used to bring everything from refrigerators to livestock and beer kegs online.

Measuring moisture content "moves the game quite a fair bit" from traditional, lab-based methods, said Angeline Achariya, chief executive at the Monash Food Innovation Centre, a unit of a local university in Melbourne, Australia. "Every company is looking for technologies that can give them much more real-time data."

In general, some 3% to 5% of snacks produced in a factory might be unfit for sale due to production issues, Mr. Dahlenburg estimates. Depending on the severity, manufacturers might be able to blend an irregular batch of snacks with future production runs to recoup some losses, or use bad batches in livestock feed.

After collecting a sample for a moisture test using the traditional machine, a technician needs to grind it up and feed it into the device -- which can take six minutes or more to spit back a reading.

In contrast, the cloud-connected spectrometer can offer readings every two seconds and deliver that data to a computer nearly instantaneously. If found to be reliable enough, Majans could install more of the devices in a new factory being developed.

"That crunch is a promise" to customers, said Amit Raniga, a director at Majans. "You can't compromise on that."

Write to Mike Cherney at mike.cherney@wsj.com

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Financials ($)
Sales 2019 124 B
EBIT 2019 40 546 M
Net income 2019 34 246 M
Finance 2019 58 111 M
Yield 2019 1,49%
P/E ratio 2019 27,18
P/E ratio 2020 24,05
EV / Sales 2019 6,97x
EV / Sales 2020 6,25x
Capitalization 922 B
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Number of Analysts 36
Average target price 126 $
Spread / Average Target 5,1%
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NameTitle
Satya Nadella Chief Executive Officer & Director
Bradford L. Smith President & Chief Legal Officer
John Wendell Thompson Independent Chairman
Jean-Philippe Courtois President-Global Sales, Marketing & Operations
Amy E. Hood Chief Financial Officer & Executive Vice President
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