By Exceedra Sales Director APAC, Simon Elsby
With 40 per cent of the country’s population ‘opening up’ over October and November, a spotlight has been thrown on supply and demand in both the onpremise and offpremise in the run-up to the festive season. Always the busiest time of year in the liquor industry, this year’s summer socialising and entertaining season looks set to be a doozy.
The previously stifled need to socialise will likely see consumers flock to onpremise venues of all kinds, socialising and celebrating outdoors, and entertaining at home. All this within whatever venue capacity and social distancing constraints apply, and possible limits on visitors to homes. And beyond Christmas, regional areas particularly in NSW and Victoria are even more likely to be hit with tourists than previous years, especially if residents in those states are not permitted into other states at that time.
In the onpremise, this is likely to put a demand premium on kegs, and on categories such as sparkling wine and cocktails as consumers delight in ‘the real thing’ after months of having to make do, or make it themselves.
Likewise the offpremise, rather than ‘losing volume’ to the onpremise, may see a bump from both the anticipated at-home entertaining and outdoor socialising. Craft beer, sparkling wine, and RTDs of all stripes including hard seltzers and cider are particularly probable beneficiaries.
So how to plan for this to ensure you’re not caught with your stock ‘pants down’?
Planning and Forecasting
An ECR Asia Pacific study of manufacturers and retailers indicated that the top reason for poor on-shelf availability (OSA) for manufacturers was considered to be poor forecasting, and for retailers supplier availability.
Integrated business plans made at the beginning or even middle of this year may now require urgent review. This involves matching all your consumer and shopper demand drivers and generation activities such as price, promotion and shopper marketing programs, to the alignment of your supply planning. Based on understanding and hypothesizing what the likely consumer behaviours are going to be, optimising assortments down to SKU and shelf space as well as adjustments to the promotional calendar. (Do you really need to discount the proverbial turkey at Christmas?)
It also means mapping the elements and variables for each step of the supply chain and scenario planning for each of them including ‘doomsday’ scenarios. In this instance, things such as potential localised snap lockdowns, international shipping delays, and cross-border transport and delivery holdups. Manually capture these variables if they haven’t actually occurred yet. Once they’ve occurred and there is a history, and you can isolate them, they can be automated.
This kind of integrated business planning enables supply chain optimisation and improves agility and efficiency. It ensures an end to end financial, demand planning and customer planning system that provides a single source of truth to manufacturing, marketing and selling brands. Key components of this for the offpremise include: Annual Operating Plans & Joint Business Planning + External Factors Planned and Unforeseen + Price Changes & Promotional Mechanics, Promotional Uplifts and Dips, Cannibalisation, Pantry Filling and Forward Buying + Omni-Channel In-store KPI Compliance + Seasonality.
Collaboration
The same ECR study mentioned earlier identified the supply chain greatest success factor as the ‘involvement of partners’. This means don’t forecast in a vacuum, get retailer and venue feedback and alignment, and ensure everyone understands their responsibilities at each stage of the supply chain.
Flexibility and Agility
The pandemic has proven the need for agility and the ability to pivot at short notice. Even taking into account the scenario planning mentioned above, the plan needs to bake in flexibility around such things as payment terms and delivery scheduling.
Measure early and often
Having stated the need for agility, continuous monitoring of the market is a given to be able to reduce the number of ‘surprises’ requiring pivots and fixes.
OSA should be measured as frequently as daily, and start early in the season to catch any issues before they compound as the festive season rolls on.
According to the majority of the ECR study respondents, the ideal method of measuring OSA is a combination of automated tools, manual checking and aligning with the retailer or venue’s method of measurement.
It needs to be granular, measured at the supplier, DC and store levels. And now that we now collectively have a list of variables across elements of the supply chain that have been impacted by COVID, these can be tracked automatically. So it is possible to ‘post-pandemic proof’ your supply and demand forecasts and get the proverbial ducks in a row for a bumper, and hopefully relatively painless, festive season.