'Tis the season — for a slew of new holiday-related flavors and products. From apple cinnamon, cranberries, and pecan pie to pumpkin spice everything, manufacturers appeal to consumers’ love of traditional holiday foods and flavors while also trying to introduce the next big holiday hit, such as this year’s hot cocoa craze.
Introducing Hot Cocoa Chips Ahoy! Limited Edition cookies. Snuggle up with the flavor of hot cocoa, no mug required! pic.twitter.com/91oPz0hoR3— Chips Ahoy (@ChipsAhoy) November 2, 2015
But how do manufacturers go about finding and bringing to market the holiday flavor or product that will sell? And what are some of this year's products in the running to be the next holiday craze?
Creating the next big holiday hit
Before creating a holiday-flavored product, food and beverage manufacturers usually do two things, according to Anil Kaul, data scientist and CEO of Absolutdata. First, they identify an opportunity in the marketplace for a particular product or flavor, such as an unmet need or something in the marketplace consumers are looking for, and qualify that need or want based on the size of the consumer market or target demographics who might be interested in this type of product. Needs and market size will vary from company to company, so there is no definite formula for identifying what might be the next big hit for the holidays.
Peppermint, particularly mint chocolate and peppermint mocha, are flavor trends that companies have identified as consumer preferences at the holidays, and several major manufacturers have created products to fulfill those market needs. Three out of Hershey's five holiday products debuting this year are all mint-flavored: Kit Kat Dark Chocolate Mint Miniatures, Hershey's Peppermint Bark Bells, now with nationwide availability, and Ice Breakers Candy Cane Mints. Nestle has brought back its own take on consumers' peppermint kick with, instead of confections, a peppermint mocha Coffee-mate creamer.
Gingerbread is another holiday flavor that has popped onto manufacturers' radar. Nestle has responded with the debut of a new Coffee-mate creamer, Nestle Toll House Gingerbread, and Kellogg has released limited edition Pop-Tarts Gingerbread with a gingerbread-flavored crust and cream frosting filling.
Sometimes the holiday flavors likely to be a big hit are already past successes or traditional flavors that manufacturers can adopt for their products. Arguably the best-known example this year is the ubiquitous pumpkin spice, which has managed to flavor everything from Ben & Jerry’s ice cream and Pillsbury Grands cinnamon rolls to Chobani Greek Yogurt and Hershey’s Kisses.
Celebrate the first day of fall with HERSHEY'S KISSES Pumpkin Spice Flavored Candies. pic.twitter.com/6D5JFkkScB— HERSHEY'S KISSES (@HersheysKisses) September 22, 2014
Secondly, manufacturers will consider the feasibility of being able to develop that product or flavor within their supply chain and R&D departments. Sometimes the idea and even demand for a holiday flavor is there, but the ingredients, processes, and/or distribution needed to create that flavored product at a mass scale is unrealistic.
Once that flavor trend is identified and product is developed, manufacturers want to know whether consumers like and will buy the product, which is usually where consumer testing comes in.
"Doing some consumer testing doesn’t tell you if it’s going to be a big hit necessarily," said Kaul. "Consumer testing is much better at predicting what products will fail rather than predicting what products will be big hits."
While the holidays may be a time of opportunity for experimentation with products and flavors, this time of year also presents four unique challenges:
Oversaturation of marketing
No time of year are consumers more bombarded with marketing than during the holidays, when everything from TV airtime to social media and online ads are filled with messages about products to buy. If a company doesn’t have a large enough marketing budget, its holiday product messaging can get lost in the clutter and gain little traction.
Product launches over the holidays require even more intensive planning and preparations because the market is inundated with both products and advertising all vying for consumers attention.
"If a company is able to put in the required planning and preparation, the ROI can be large," said Kaul. "However, the risk of failure is also larger. Hence, it is very important to ensure good preparation."
Strain on the supply chain
If a company manages to strike gold with a major holiday hit, that product’s demand could greatly and quickly surpass its supply, which can strain various levels of the supply chain, including production and distribution capacities. Because the holidays come in a short window and holiday fads can boost demand practically overnight. This can be a good problem to have, but it’s a problem nevertheless.
Lack of customer education
New products, especially if they feature flavors not widely tested in the market, require more consumer education and testing than others. The holidays may be too short of a window to provide the education needed to attract consumers’ attention.
Kaul recommends that a company "soft launch the product before the holidays to test the market and then use the holidays to pick up the consumer demand steam – this strategy will result in ensuring that you are able to fully leverage the holiday season to get the maximum bang for your investments."
"Holidays are a special time of the year [where] consumers are more relaxed, and they relate holidays to many traditions. By pursuing holiday flavors, you are riding on the tradition wave," said Kaul. "Companies should absolutely pursue holiday flavors, particularly if your competitors are not, as that links the sale of your products to the holiday mood. What could be better than consumers thinking about your product (and the holiday flavor) when they think of the holidays?"