With the Fourth of July quickly approaching, Americans are breaking out their barbeques and heading to the store to grab holiday necessities. The National Retail Federation (NRF) estimates that Americans will spend $7.1B on food and drinks for this year’s holiday, up from $6.8B in 2016. According to its survey, the NRF found that 66 percent of Americans will be celebrating with a barbecue, cookout or picnic. That spend represents $73.42 per household on food for barbecues and picnics.
While Independence Day purchases include decorations, flags, fireworks and travel-related products and services, for many Americans, much of their holiday budget goes toward food costs. Last year, Nielsen reported that Americans would consume $389 million in chicken, $388 million in fresh ground beef and $25 million in bratwurst. Leading up to July 4, Americans buy 190 million pounds of beef, more than 150 million hot dogs and around 700 million pounds of chicken. With all of these center-of-the-plate entrées, there are related-purchases, too. Nielsen forecasts the following spend on related items:
- Corn on the cob: $36 million
- Watermelon: $83 million
- Hotdog and hamburger buns: $133 million
- Chips: $318 million
- Condiments (BBQ sauce, ketchup, mustard): >$100 million combined
- Beer: $1.72 billion
- Soft drinks: $1.114 billion
This uptick in demand gives food manufacturers the opportunity to profit substantially. While traditional Independence Day favorites remain strong, it’s important for manufacturers to understand how current diet trends can influence purchases. Consumer interest in gluten-free and low-carb diets continues, and many stores will be looking to feature lighter and healthier options. As people search for alternatives for bread, rice and potatoes, food manufacturers will have to pivot and adjust to demand given these shifting preferences.
In fact, cauliflower has seen a 452 percent jump in producer price index since February of this year, with some industry experts dubbing cauliflower as the new kale. Consumers have begun using this vegetable as an alternative for high-carb and high-gluten ingredients. There are even recipes to make cauliflower buns, a perfect accomplice to those July 4 burgers.
Interest in vegan and vegetarian options will also influence some holiday food purchases. According to MarketsandMarkets, by 2022, the meat substitutes market will be worth $5.96 billion. To further this point, companies such as Beyond Burger and Impossible Burger are producing plant-based “burger” alternatives that look like ground beef and provide similar mouth-feel and flavor. Additionally, meat processors Tyson Foods Inc., and Maple Leaf Farms Inc., have begun investing in plant-based alternatives to beef, chicken and pork. Omaha Steaks has also added a selection of veggie burgers to its catalog. While the United States is still predominantly carnivorous, the meatless trend will undoubtedly have a growing impact on food manufacturers working behind the scenes to make sure delectable options are available for all this Fourth of July.
Despite the threat that evolving food preferences and diet trends may pose on revenue, food manufacturers still have a powerful capability on their side: dynamic pricing technology. Pricing dynamically can help companies insulate themselves from these types of market factors and account for changing commodity prices, supply chain issues and forecasted demand. As the industry prepares for one of the biggest summer holidays of the year, food manufacturers can grill up revenue growth by knowing and understanding what is driving market trends. Ask the following questions:
- Which products will be in high demand?
- How will customers respond to discounted or increased pricing?
- What amount of inventory is on-hand?
- How will changes in market conditions impact pricing
Food manufacturers that leverage dynamic pricing solutions driven by data science can quickly respond to changes and easily optimize pricing. For instance, if hot dogs aren’t flying off the shelf as originally anticipated, and a company can see the demand shift toward turkey burgers, dynamic pricing science can identify these real-time changes and enable manufacturers to respond in kind. In the end, food manufacturers don’t miss a beat and consumers enjoy well-stocked shelves with the products they want. Now that’s certainly something worth celebrating this Fourth of July.
About the author
Emily Hart serves as a Senior Industry Solutions Manager for PROS, Inc. (NYSE: PRO). She leads the global go-to-market strategy for the company’s food and consumables team.