Food Business News - June 17, 2014 - (Page 36)

C-suite focus shifting toward greater efficiencies Commodities remain a concern, but opportunities are seen on plant floors ingredients custom blends innovation national distribution B.C. Williams Bakery Service BCW Food Products 1-800-527-4104 36 FOODBUSINESS NEWS ® CHICAGO - Top senior food and beverage executives running middlemarket companies, those with sales between $10 million and $1 billion, are still concerned about commodity cost volatility, but their attention has shifted in the past few years to mining greater efficiencies from their operations. "The concern about commodities is always going to be there, but it seems to be fading," said Chris Nay, senior managing director of food and beverage for GE Capital. "In 2013 and 2014, companies are very focused on operational efficiencies as opposed to worrying about commodities. "As we looked at it, around 2008 and 2009 rising commodity costs hit companies hard as retailers tried to hold their price points. As a result, companies have made changes to how they work with customers; they have moved to tolling arrangements. They may not be making as much margin, but they are better able to tolerate commodity swings. Since 2009 and 2010 there has been a big move to derisk with hedges and supply agreements." GE Capital conducted a survey of Csuite executives with 50 middle-market food and beverage companies earlier this year. The results of the survey indicate using efficiencies to lower cost is a primary goal. Seventy-three per cent of the survey's respondents said they plan to increase operational efficiencies while 50% plan to invest in automation and 45% plan to upgrade or replace equipment. "I think there is a lot of room to run on the efficiency side," Mr. Nay said. "If you go back and look at how old some of these plants are and realize what they can do with the right technologies. High pressure pasteurization (H.P.P.) equipment is changing the way suppliers are thinking about what the consumer wants; it is changing how people think about the freshness of products. That is driving a lot of technology and operational efficiency. There have also been big changes in automation, and that is what makes me believe there is a lot of running room from an efficiency standpoint. "The other thing you have to consider is what the customers want as well. Companies like Wal-Mart, Costco, McDonald's and Yum! all have sustainability scores. So companies are prompted to try new things to get more efficient, because when you combine the alternative energy sources and efficiency, for example, then you have both social and business benefits." Mr. Nay added that GE Capital is seeing a lot of investment in the good-foryou space, but the field is crowded and challenging. "Creating a brand is very hard right now with the proliferation of stock-keeping units (s.k.u.s) among lower middle market companies," he said. "You need a strong concept, like creating a brand around an avocado 100-calorie pack that people are buying. Another example is the move into the coffee industry, where we are seeing a big change from bagged coffee to single serve. That is a big transition for companies selling to retailers and distributors, because consumer preferences are changing. "Another example is natural juices, where you are better served making a fresh product. This is creating a market for things like H.P.P. equipment. As consumer preferences move to fresh and healthy, it is changing the need for equipment. I am hearing from our customers that they are trying to figure out fresh, and that is changing some factory floors." FBN June 17, 2014

Table of Contents for the Digital Edition of Food Business News - June 17, 2014

Food Business News - June 17, 2014
Tyson building a prepared foods powerhouse
Sodium reduction: Aiming at the target
Mid-year markets spotlight
Web Contents
Editorial - Preventing food fraud must be a priority
Peanut butter innovaton propels Smucker
Pinnacle opens pilot plant at Rutgers
Consumer interest in protein remains high
Trashing trillions of calories
Health science at the center of Nestle’s strategy
Nestle sees emerging markets as an e-commerce opportunity
McDonald’s U.S. sales still slipping
Innovation popping at Diamond Foods
Emerging natural and organic food and beverage trends
B&G Foods goes clubbing
C-suite focus shifting toward greater effi ciencies
Krispy Kreme looks to create buzz with licensed coff ee
Private label, sustainability shaping Hain Celestial’s strategy
Quality Egg executives plead guilty to selling adulterated products
Redefining food allergens
Have your cake and quinoa, too
Three snack makers to watch
Flavor mining
Ancient grains for modern trends
Ancient grains in America
All systems go on sustainability strategies
Targeting sodium reduction
General Mills launches Cheerios Protein
Wonka introduces Peel-a-Pops
Ready Pac expands on-the-go meals
Pacifi c Foods adds to hummus offerings
Big chicken fi llet sandwiches debut
Breyers off ers gluten-free ice cream
oCrunch and Kellogg’s partner to create cereal bowl
Stoneridge Orchards launches new dried whole fruit products
GoOrganic debuts fruit chews
popchips rolls out veggie chip line
On the Border debuts smart menu selections
Annie’s announces snack and mini meal kits
Gold’n Plump upgrades frozen chicken patties
Ingredient Market Trends - U.S.D.A. raises U.S. and world wheat ending stocks forecasts
Ingredient Markets
Supplier Innovations and News
Ad Index
Food Business in the News

Food Business News - June 17, 2014