Mike EdgettEvery season has a flavor. From pumpkin spiced coffee in September, candy cane flavored milkshakes in December and shamrock green beer in March, today’s consumers remain enthralled with seasonal offerings. Restaurants, retailers and niche food suppliers have turned these timely treats into a dynamic sales opportunity, generating added revenue and building loyal followings for seasonal or holiday-themed products.
Driving The Trends
The food and beverage industry has always embraced seasonality, initially driven by supply, but later due to demand based on traditions associated with specific seasons and festivities. Watermelons and berries were summer treats, fall was for apple harvests and holidays featured classic flavors like pumpkin, peppermint and gingerbread. Many of these ingredients were simply not consistently available all year. It was the advent of the global supply chains that allowed for a change in the fixed calendar. Now, foods requiring warm growing seasons can be cultivated in Central America and the Caribbean year-round. And modern processes like flash freezing have made it possible to process foods during peak cycles and store for future production batches.
That year-round availability may be good for the consumer living in Chicago who craves “fresh squeezed” orange juice in January, but the lack of variation also leads to flat sales.
Enter the age of seasonal offers. Once a fad, specialized offerings are now the cornerstone of new growth for many food and beverage processors. McDonalds’ Shamrock Shake is no longer alone in holiday-themed beverages. Starbucks launched its original Pumpkin Spice Latte in 2003. Now, the beverage has become the retailer’s most popular seasonal beverage, a cult-like hit with college students and Millennials that is available in several variations, from ground roast to ready-to-drink bottles.
Now, The Challenges
Although the opportunities are clear, not all seasonal offerings find the same success as the Pumpkin Spice Latte. The enterprise must also take into consideration the complexity of seasonal offerings, such as:
- Alignment: Determining if a seasonal offering will be a hit among the target audience is no easy task. The sizable research and development (R&D) investments associated with a product launch raise the stakes. You cannot afford to waste resources or risk brand equity on a flop.
- Speed: The compressed timetable is another complication. You need to move seasonal products through the supply chain quickly, so they can be on shelves or in menus in time to hit the peak target season. A week delay in a four-week window of opportunity can destroy the profit projections.
- Predicting demand: Excessive inventory, or underestimating the demand, is also a key factor that must be addressed. Inventory that is left over after a holiday is likely to be wasted, unable to be stored for an entire year and retain freshness. Rapid inventory depletion is just as frustrating, as potential sales are lost.
- Unique formulations: Creating seasonal products will likely involve raw ingredients from vendors who are not on your list of standard suppliers. This may involve more time to build relationships, negotiate pricing and terms, and establish the reliable timetable of deliveries that can support the narrow seasonal window.
- Compliance: Just because a product is going to be in market for a shortened shelf-life doesn’t mean it won’t require the same compliance and labeling mandates as standard offerings. Time must be built into the process so that labels, packaging and distribution channels comply with local and regional mandates. New products may involve researching requirements in unfamiliar territory.
How Do You Cope?
With this list of complexities, it can be argued that the risks associated with seasonal offerings are too high. However, there are ways to better control that risk and help ensure a profitable seasonal product line. Modern IT solutions can offer support that makes the benefits outweigh the challenges. When you turn to technology for decision-making tools, process improvements and market insights, these operational hurdles become quite manageable, allowing you to take advantage of opportunities for added revenue.
Two tools will be the key to success: Product Lifecycle Management (PLM) solutions can provide the foundation to develop the new products quickly and ensure you are meeting labelling and regulatory requirements, while advanced Supply Chain Planning (SCP) tools can determine how to balance demand versus supply and ensure you hit that restrictive availability window when consumers will want your product. They can also assist in making sure you do not run out of stock when demand is still hot. Here is how modern PLM and SCP solutions integrated to your ERP solution can help you plan, produce, package and deliver seasonal offerings:
- Efficient product management: Using a PLM solution, you can develop new products faster with lower cost while meeting the market demand. Collaborative tools enable your R&D team to work faster and get feedback from key decision makers (e.g., sales, marketing and operations), which helps not just speed development time but also improve confidence in a new product's success.
- Anticipating demand: Modern solutions include predictive analytics capabilities which can be used to ensure the raw resources are in the right place at the right time, so you can optimize the short seasonal window, producing and shipping the products to the right destination.
- Optimized scheduling: You can use tools to help ensure adequate inventory of dyes, oils, stabilizers, flavorings, nutritional supplements and other specialized components used in the seasonal offerings. Additionally, your production facilities must be able to sequence and schedule these limited-run products without adversely impacting the availability of your standard products. With modern solutions, you can streamline operational processes to remove wasteful procedures and unnecessary costs.
- Labeling confidence: Ensure that the label or specifications sheet for new product offerings always match the updated list of raw materials that are adjusted for the new formulation depending on the seasonal requirements.
- Maintain visibility: With seasonal offerings, anecdotal notations can be lost or forgotten in the off-season. Create a database that contains all the necessary information required to track products, materials and formulations, so you can be sure you are retaining the correct information. You also want to maintain complete visibility from the raw materials/batches phase all the way through to customer delivery.
Food processing companies need the added revenue that special seasonal offerings bring. These specialty products boost sales and create demand in new markets. But, more importantly, such offerings help align with the customer. Customers expect many options and new offerings, and are highly vocal in social channels about their love of seasonal or holiday favorites. Catering to customer demands is a way to create bonding relationships. If you are not offering seasonal variations already, consider it. With the help of technology, it can be a seamless transition from season to season.
