Holiday and Limited Time-Only Products: Balancing Demand and Production

The value of LTOs

Holiday-themed products tap into consumers’ love of the season, but LTOs in general are an effective way for food processors to attract attention, Capps says.

A study by the company revealed that 85% of consumers seek out food items with new flavors, and 64% of them are willing to pay at least slightly more for unique flavors.

“Flavor innovation has become incredibly instrumental to seasonal assortments,” Capps says. “Over one-third of total shoppers say they like to try new flavors often, saying ‘the wilder, the better,’ with bold flavor innovation especially important to the younger Gen Z and Millennial shopper groups.”

What separates holiday LTOs from those that appear at other times of the year is that the competition for attention on a holiday LTO is greater, since so many companies create products for the season. And the immovable end point to the season – few consumers are buying candy canes after Jan. 1 – differs from that of LTOs that are not tied to specific holidays or seasons.

For example, Kellogg’s has a broad range of LTOs on the market currently, including Little Debbie Oatmeal Crème Pies Cereal and Frosted Chocolatey Pop-Tarts Bites, that retailers could easily keep on the shelves until they sell out, regardless of the official end date of the LTO.

Retailers plan them too

Retailers with strong store brands also capitalize on the holiday LTO market. Publix, for example, launched nine ice cream flavors in September geared towards the holidays, including Marshmallow, Candy Cane & Cookie Blast; Eggnog; and Pumpkin Pie. And shoppers at Kroger can now find Kroger Pumpkin Spice Coffee Creamer and Kroger Holiday Edition Sugar Cookies on the shelves.

“While all brands can capture seasonal spending, retailers with strong private brands and a focus on driving competitive newness for consumers can capitalize on exclusive engagement, and in turn increase store loyalty using seasonal programs,” Capps says.

“A recent Daymon proprietary study found that more than three out of four shoppers have a positive perception of private brands that launch new flavors and limited-time offerings, with these respondents saying new flavors are exciting, contribute to their enjoyment of the in-store experience, and even keep them coming back.”

Some retailers maximize the holiday sales experience – for both store brands and CPG brands – by creating special holiday-themed sections of the store. This may help the stores avoid cannibalization of non-holiday products, Capps notes.

“Many retailers thoughtfully carve out a specific seasonal footprint within their stores to market holiday products, whether that be an endcap or an entire section merging a variety of holiday categories, as a defined home for seasonal products to live season after season,” she says.

Planning way ahead

 Whether it’s a store brand or a CPG company brand, success with holiday products depends on long-range planning. Because of ingredient requirements, special packaging needs and logistics concerns, planning for holiday LTOs often begins a year or more before a given holiday season.

For example, the planners at La Brea Bakery need to have commitments for orders in hand in time to acquire the necessary ingredients – such as cranberries, walnuts, sage and thyme – at reasonable prices to produce and deliver the baked goods efficiently.

“We work with our teams to pre-sell our items and get customer commitments way before the season starts so we can plan from ingredient procurement and production perspectives,” Buenning says. “The ingredients in our Cranberry Walnut Loaf and Savory Holiday Rolls are not extremely unique, but because of seasonality, they tend to be more expensive and more in demand, so they could be out of stock.

“Planning way ahead reduces our risk and our costs. With everyday items, there’s constant production as needed. But with an LTO we have to plan six to eight months before.”

It’s a similar situation at Malk Organics (malkorganics.com), which introduced a Holiday Nog version of its organic plant-based milk this year. In addition to organic almonds and water, the Holiday Nog includes organic maple syrup and organic nutmeg extract, ingredients that must be sourced well in advance of production time.

“The selling timeframe for seasonals tends to be months, if not approaching a year, in advance to ensure there is a clear projection on how much distributors and retailers will commit to it,” says Malk CEO Jason Bronstad. “Retailers have specific windows in which they bring in seasonals, and aligning to the availability they expect is critical in the demand planning process to meet or exceed our retailer partners’ expectations.”

Getting orders way in advance is obviously the ideal way to determine ingredient needs and plan production, but that’s not always feasible. Furthermore, having some product on hand beyond pre-orders could lead to more sales during the season. No one wants to get an order that can’t be filled.

Thus, many food processors do more than take early orders – they analyze previous years’ sales, study trend reports and do a competitive audit to help determine how much of a holiday LTO they should plan on producing, Capps says. Doing all that helps them define their strategy across the “four Ps”: product, price, promotion and placement, she explains.

“Best-in-class retailers and manufacturers plan their seasonal assortments nine to 18 months ahead of the targeted season,” she notes.

Nobody wants leftovers

 When Jan. 2 rolls around, holiday products suddenly lose their appeal for most consumers. That’s when food manufacturers learn how successful their planning was.

“It’s really hard when you have a product that you need to predict volume on six to eight months out,” Buenning says. “Some customers want to plan a year out, but others want to wait to make a commitment until just a couple of months out. But from our vantage point, the pre-planning and pre-committals protect us and reduce cost. We don’t produce more than we have allocated.”

Ultimately, every manufacturer making holiday LTOs seeks the perfect balance between demand and production quantity.

“Limited time offerings tend to generate excitement, and balancing the enthusiasm that our consumers and retailers have for a product is critical in the production forecasting,” Bronstad says. “Our goal is to meet the needs of our retailers, satisfy the demands of our consumers, and aim to have all of the bottles in people’s homes for their enjoyment prior to the turn of the calendar year.”