FMCG Forecasting: Ice cream, chocolate & pregnancy…..

Please bear with me for a while on this one; I will get to the Supply Chain stuff eventually.

Do you know that on average 85% of a sample of expectant mothers suffer food cravings during pregnancy? Apparently, the top 5 must-haves are:

Pickles  5% - double yuk. (That choice surprised me too.)

Cheese 11% - get those calories inside.

Crisps/chips 15% - much needed salt?

Chocolate 17% - simply a feel-good food.

Ice Cream 23% - junk craving or just indulgence as you put on weight anyway?

Satisfying these cravings at various times over 38 weeks must lead to a significant extra expense (which might gently prepare prospective parents for the post-natal costs that will not go away for a very long time – a very long time).  This leads me to consider that there are specific windows in the calendar when opportunities for cost effective pregnancy cravings exist.

If you crave chocolate, then the best time for a pregnancy should include Christmas when you can take advantage of everyone buying you chocolates as gifts plus post-holiday BOGOF (buy 1, get 1 free) discount offers. However good is FMCG forecasting, it seems that seasonal chocolate stocks always need promotions to move the excess from retail. If you need a chocolate fix it does not matter if it is in the form of a multi-pack of standard bars or if it is a box of chocolate Donald Trump figures. As long as you satisfy the pregnant one, then all is very well with the world.

If you are really clever with your timing you might be able to take advantage of discounted chocolate products in January then enjoy a Valentine's Day top up that lasts you until Easter. Then, everyone aware of your craving can buy you chocolate for Easter before you are able to gorge on endless stocks of 2 for 1 choccy bunnies.

Like the majority of women in this survey my senior manager (wife) craved ice cream. This would have been easily manageable in UK or many other locations but we were located in Jeddah, Saudi Arabia. Even in the cooler months getting ice cream from a shop to the home freezer required an ice box and a rapid drive. Without some sort of chilling system anything you bought would quickly revert to sugar, fat, water and a lot of air! To avoid emergencies, we had to overstock at home but ease of availability meant this rapidly diminished and led to numerous middle of the night dashes to find more ice cream, usually at petrol stations.

So, if your must-have food is ice cream when is the best time to be pregnant and not break the home budget? If you are in the northern hemisphere then September/October is the ideal time to have an uncontrollable ice cream craving. Take an autumnal look at your local supermarket and you will see that one of the most promoted/discounted products is ice cream. BOGOF is common and as the time passes you will eventually see buy 1 get 4 free or more, until the stock is finally exhausted, the product expires or the store wants the retail space returned for different seasonal stock.

I know it is difficult to forecast demand for ice cream and all seasonal goods for that matter. Global weather is becoming increasingly unpredictable and even a few short weeks of a gloomy summer can ruin production planning and sales campaigns. COVID-19 brings another unknown element into life as footfall is restricted let alone the vagaries of FMCG forecasting models. Producers use very sophisticated tools that monitor the weather, providing indexes and algorithms to understand likely demand but nothing can be 100% perfect (nor will it ever be).

Weather-sensitive businesses will be expending considerable resources trying to get more reliable and repeatable demand signals as the annual write-off costs continue to hit results. These financial losses will probably rise as our climate becomes even less predictable and global pandemics with the discontinuity characteristics of COVID-19 become routine.

Good news for expectant mothers but bad news for shareholders, CEOs and CFOs everywhere. To offset the risk you can do worse than have a very rigorous Sales & Operational Planning process which operates on a weekly basis before, during and after the peak sales seasons.

At other times of the year you can revert to a monthly process concentrating on meeting the residual demand and preparing for the next peak using learnings from the previous period. This may sound like an impossible challenge but S&OP will at least make your forecasting a little less imperfect.