The ever-changing economic landscape, affected by inflationary pressures, the war in Ukraine, and the COVID-19 pandemic, has compelled specialty food companies to reevaluate their business strategy including goal setting, financials, operations, and marketing. Executive VP of Saffron Road Foods, Jack Acree, and VP of Finance at King Arthur Baking Company, Brock Barton, discussed these issues during the SFA In the Know Webinar “Navigating Turbulence in Today’s Economy,” last week.
As they set out to prepare makers to effectively "weather the storm," Acree and Barton challenged attendees to think about their operations and goals for the future.
Barton shared that baking and frozen food categories saw considerable gains during the height of pandemic purchasing, but demand has since waned for a variety of reasons.
“[King Arthur] tends to like consistency. Unfortunately, that has not been possible these past few years,” he said. “With the war in Ukraine causing inflationary pressures in wheat, we’ve been forced to do a variety of things…but ultimately at the core the question is how do we maintain the energy and momentum that we picked up in 2020?”
One strategy for driving demand deals with changing how King Arthur handles promotions at retail. Barton said that modifying the length and depth of the discount can have dramatic effects on sales. He also stressed the importance of collaborating with departments like finance, sales, and operations to consider holistic, data-driven strategies to drive demand while ensuring adequate supply.
Both companies also mentioned supply management as an issue. Barton said that keeping up with the demand to get flour out to grocery stores at the height of the bakery boom was incredibly challenging for the company. Acree mentioned that Saffron Road Food’s strategy to address supply management was to switch from “just-in-time” inventory to “just-in-case.” In addition to creating a solution, however, this brought another issue.
“Just-in-time inventory was standard before the pandemic,” Acree explains. “The shift has changed to just-in-case to prepare for an uncertain future. That has a ripple effect because if retailers stock in an unexpected way, then it applies pressure to your supply chain in a way you didn’t expect.”
To stay nimble in today’s economy, Acree advised flexibility, challenging specialty food businesses to think about where they can be nimble in regard to a product’s formula, packaging, or distribution.
Acree explained how the War in Ukraine affected the world’s supply of sunflower seeds and sunflower oil. Root 11 Chips was only using sunflower oil in its product and was forced to switch but faced hurdles in transitioning because of the inclusion of the ingredient on product packaging. Acree noted that if the packaging said something like “sunflower and/or peanut” the ingredient transition would have been much easier. Instead, the company had to print stickers and add them to each bottle made with peanut oil.
To learn more about how your specialty food business can prepare for economic uncertainty, watch the webinar on demand in SFA’s Learning Center.
Related: Specialty Food Makers Persevere Despite Grain, Oat Shortages; Saffron Road's Acree, King Arthur's Barton Share Advice for Riding Out Economic Turbulence