How supply chain issues are affecting bagged salad producer
Between COVID-19-related labor challenges, inflation and rising costs, and the recent trucker protests, which blocked major trade routes between Canada and the U.S., food processors have had a tough go as of late.
In a recent interview, Leonard Batti, vice president at Taylor Farms California, talked about how the major salad and healthy fresh food supplier has been impacted by these disruptions and what it’s doing to future proof the company.
Headquartered in America’s Salad Bowl in Salinas Valley, California, Taylor Farms is a major supplier of salads and healthy, fresh foods. The business provides work for some 20,000 employees who help grow, package and transport food to families all across America.
Initially, Taylor Farms’ primary focus was the foodservice sector, supplying large-scale operators such as McDonald’s and Yum! Brands, including KFC and Taco Bell. The company also supplied wholesale restaurant food distributor Sysco Foods, as well as local produce distributors and casual dining.
“Then we got into the retail business, primarily packing in private label, and then in our own brand,” said Batti.
“That has been probably the most rapid-growth business that we’ve had over the last decade,” he continued, adding that Taylor Foods has seen tremendous success in its chopped salad line.
Taylor Farms has a third revenue stream as well. Their deli business provides grab-and-go salads, both green and wet, including potato salad, cut fruit and coleslaw. These fresh prepared products are sold in delis at the retail level.
When COVID-19 first hit the U.S., the shift was swift and dramatic, said Batti. And while having several streams of revenue would seem the best approach to protecting the business from market disruptions, it wasn’t that clear cut.
While the grab-and-go channel and operator businesses such as Subway, McDonald’s and Yum! Brands, all rebounded pretty quickly, the company still saw major shifts in demand.
“If you saw dropoff in foodservice and an increase at retail, you might see that impact on revenue where it balances the two,” he added. “But in terms of pounds consumed — so what we have grown out in the field — there’s a huge difference. You don’t move as many pounds of product in retail as you would in foodservice.”
The result was that Taylor Farms was left unable to harvest some of the product grown in fields. The company works with growers on a contract basis, providing them with a regional forecast of what to grow. While needs are forecasted for all three lines of business, planting is done in aggregate, which ensures adequate supply over all three lines without negatively impacting growers.
When disruptions hit, Batti said Taylor Farms worked closely with farmers to resolve contractual issues.
“We’ve been in business since 1995 and many of our growers have been with us since day one, so it’s a long-time partnership,” he said. “It wasn’t their fault that this happened.”
In a recent interview, Rachel Molatore, sales representative, Taylor Fresh Foods, expanded on supply chain constraints that impacted other areas of their business, including packaging and ingredients. While there was some easing from December to January, she said, the supply chain is not completely alleviated yet.
“Components that we never used to consider at risk of shortage have been difficult to keep in supply,” she said. “It is surprising how one component, like cornstarch, can shut down carton production, or a lack of canola oil can completely stop salad dressing manufacturing.”
In some cases, Molatore said supplier partners bent over backwards to keep up with demand. “At one point, we had a supplier fly glue from Ecuador to make sure we did not run out of cartons,” she said. “We value our suppliers, treat them with respect and appreciate all the hard work they do, especially during these trying times.”
Despite recent challenges, Taylor Farms has been able to manage fairly well. Molatore attributes some of that success to their supplier partners who were able to keep up with demand even under strenuous conditions. However, the company is now planning for longer lead times when ordering and forecasting for packaging, salad dressing, protein components and equipment. Most manufacturers are still trying to catch up on orders. Longer lead times help ensure demand is met.
“There has been a myriad of shortages in the supply chain and our team has been successful at staying in supply,” Molatore concluded. “Our supplier partners have been extremely fundamental in the success of our business and have viewed us as a strategic, long-term partner.