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Welcome back to The Newsletter and happy holidays from Efficiency.coffee! I am so grateful to everyone who is reading my newsletter and supporting my mission to make the industry more efficient and sustainable. Thank you all! This month we’re going to explore how to factor seasonality into green coffee forecasting. Accounting for seasonality is important to make sure that our company doesn’t run out key coffees at the busiest times of the year. What is Seasonality? Most coffee roasting businesses experience seasonality, meaning that there are some times of the year when sales are stronger than others, or when our product mix changes. We want to make sure that we think about seasonality when we’re managing our green coffee inventory to make sure that we don’t underestimate how much coffee we need as we transition into higher volume times of the year. Common Seasonality Examples for Coffee Roasters: Here are some common areas where coffee roasters experience seasonality:
How to Watch for Seasonality in Our Business? The best way to monitor seasonality in our business is to track how much of each coffee we are roasting each week. Once we have many months or years of data, we can look back at how much of each green coffee product we are roasting throughout the year. If we don’t yet have historical data, we can estimate where we might see seasonality by talking to our production team or our cafe staff about what the busiest times of year are. How to Add Seasonality to Our Forecasts? Adding seasonality to our forecasts is simple. Let’s say that it is the beginning of December and we’re anticipating higher sales and therefore a higher volume of roasting through the end of the year. We create a projection for each product of how much more coffee we think we will sell during this time period based on past data or our best guess. Then, we add that amount of coffee to our baseline projection. So, if in October and November we roasted 1,000 lbs of Brazil per week for our espresso blend and we think that demand for that product will increase by 20%, we will forecast 1,200 pounds of Brazil per week for the month of December. Then, in January we can look back at our numbers to see how good our forecast was, and we’ll be better able to forecast accurately next year. Seasonality Summary Many coffee roasters experience a lot of seasonality in their businesses and it’s important to consider seasonality in your green coffee forecasts. Predicting seasonality can be challenging, but the more we think about and track seasonality as green coffee buyers, the more accurate our forecasts will be and the more likely we are to get the projection right! Happy Holidays and thanks for reading! The Newsletter will be back in January with a discussion of Safety Stock. Stay tuned to learn about how to set safety stock levels and make sure you never run out of important green coffee components!
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