2017-12 The Happiest Time of the Year? Holiday Pressures for Food Manufacturers

Holiday seasons are often just as exciting for food manufacturers as they are for consumers. Holiday seasons are big business for food manufacturers.

2017-12 The Happiest Time of the Year? Holiday Pressures for Food Manufacturers

A chance to boost revenue, build positive associations between your brand and festive times and get people talking about your business’ products. Food manufacturers routinely respond to consumers’ desire for both traditional holiday foods, as well as new twists on traditional fare.

Seasonally manufactured food products are big business, but they also create a number of unique challenges for manufacturers. Food manufacturers must produce large volumes of new products and get them to market within a short space of time. Let’s take a look at some common holiday season challenges for food manufacturers.

Manufacturing novelty

Although traditional seasonal products are an important aspect of holiday food manufacturing, it is crucial for manufacturers to produce novel products that attract attention and drive an uplift in market share. Successful holiday products will often create a consumer craze, characterised by a perceived scarcity and the fear of missing out.

For many businesses, the race to produce unique and innovative flavours every year is tiring. Food manufacturing software can take some of the burden, but the effort involved will always be significant. Some businesses even consider that the effort that goes into creating holiday season ‘craze’ products, such as tying up food technologists, marketers and senior leadership, detracts from continuous improvement and product innovation in non-seasonal lines.

Competing for scarce air

If a business is to reap the benefits of seasonal products, gaining consumer awareness and market share is critical. Without advertising heavily, food manufacturers typically struggle to rouse any real consumer interest. Unfortunately, advertising is at its most expensive during major holiday seasons – making it difficult for a typical business to get its message out.

Tight margins

Holiday pricing often departs from the pricing strategies that businesses commonly use throughout the year. Despite being a time when consumers are locked in to shop (and are less likely to put shopping off until a later date), holiday season pricing is often strongly competitive. This is particularly the case in the food and beverage sector, resulting in tighter than usual margins for businesses with higher than usual outgoings. Keeping a close eye on expenses is crucial during holiday season; inventory and food manufacturing software can help you monitor inventory and production costs during this time.

Supply chain struggles

Holiday seasons are often a brutally busy time for manufacturers, wholesalers and distributors. If one of your suppliers also services 50 of your competitors, that supplier is likely to face increased pressure from close to 50 other businesses during peak season. Unfortunately, service standards often drop in peak season and lead times typically balloon. This can make it difficult for your business to get the inventory you require to manufacture and ship product, making it difficult for you to meet customer expectations.

Production at capacity

Chances are that your business is capacity constrained from time to time. Although this means that there is no extra room on the production line on occasion, the cost to invest in excess capacity may mean doing so is not the most economic use of a limited pool of capital. Even if your business comes up with a great holiday product, successfully builds customer hype and can get enough inventory to keep production going, your foray into the seasonal market may be limited by your business’ internal capacity constraints. It pays to build this into your planning, so that you know in advance whether you may need to run a second or third production shift. Food manufacturing software should allow you to use past years’ trading performance to predict upcoming pressures. Having enough product is critically important to keep momentum going during the holiday season, so you do not want to be caught short.