Small, rotating flavor portfolios engage but don't overwhelm consumers, expert says

“Research shows that if you give too many choices to consumers they tend to postpone purchases, which means you are losing sales,”​ said Anil Kaul, CEO of Absolutdata.

He acknowledged that rolling out flavor extensions may seem like an easy win to engage consumers who are constantly looking for the next taste experience, whether it be spicy​, bitter​ or a nostalgic flavor​ from childhood. But, he said, too many choices at once can be overwhelming to consumers, causing them to shut down and walk away empty handed.

Likewise, a large selection of flavor extensions can complicate production with manufacturers struggling to maintain a large inventory, he said. In addition, it can cost them more in stocking and shelving fees at the retail level because they have more SKUs, he added.

For these reasons, he said many companies are rationalizing and reducing their flavor portfolios – opting instead to rotate through a smaller, limited-time flavor selection that keeps consumers engaged without overwhelming them or the business.

The constant flux of limited portfolios can be a challenge for large, established CPG firms, many of which have long production cycles that were created to meet the shopping style of older generations, Kaul said. He explained that baby boomers’ approach to food and beverage traditionally has been to find a flavor they like and stick with it. But the upcoming millennial generation is more adventurous and is constantly seeking new flavors.

CPG firms need to adapt to these new demands, or else risk falling out of touch with consumers and sales flattening, Kaul said.

“The food industry needs to be much more agile and fast in terms of bringing in new flavors and packaging so the customer is engaged and can find something exciting,”​ he said.

How to predict the next big flavor​

Luckily for manufacturers, the techniques for predicting the next big flavor have evolved along with the fast-changing tastes of consumers, Kaul said.

“In the past, the gut played a big role in people making predictions about the flavor of the season, and you were taking a big bet,”​ he said. “What we are seeing now is a lot of companies using big data to identify an emerging trend before they do an introduction.”​

For example, manufacturers are working with firms like Absolutdata to quickly survey consumers on their preferences or reactions to potential flavors.

They also are systematically scanning social media to find unusual flavor trends that are upcoming.

“Social media is an early indicator – almost two to three months of lead time – of where you will find the flavor that everyone will be talking about or buying,”​ Kaul said.

Take time to get it right​

While time is of the essence to seize consumers’ quickly changing preferences, firms should take the extra two to three weeks needed to test whether the flavor will succeed and who specifically will buy it, Kaul said.

The latter is particularly important because launching a new flavor makes little sense if it will eat into sales of an existing flavor and not add incremental business, Kaul said.

For example, if a company discovers a flavor is stealing share from another in its current portfolio, it should consider swapping one out rather than have them compete, Kaul said.

Know when to drop a flavor​

Launching a flavor is only half of the battle, Kaul said. He explained companies need to closely monitor sales of new and existing flavors so that they know when to pull or replace them with the next flavor to keep consumers engaged.

“The best way we noticed for when to see if a flavor is at its saturation point is by tracking your sales. You should have an S-curve sales structure. When you have a new flavor it tends to be flat, then picks up sales and then flattens out again at the top,”​ Kaul said. “When the later starts coming in, companies should start thinking of new flavors to replace it.”​

So, for example, he said the sales of pumpkin-flavored products in the US is still climbing, but likely will flatten out in the next two years – signaling that America’s long love-affair with pumpkin spice and pie flavors could be cooling off.

If and when that happens, though, Kaul said manufacturers will have more than enough lead time to develop pumpkin’s replacement because it is a seasonal item, at the end of which firms still will have a year to replace it.