Ocean Spray Facing Cranberry Can Shortage

joining us on the phone in Boston. Tom. So great to have you back with us. Happy almost Thanksgiving. How are you. I'm doing great, Thanks Carol, and happy Thanksgiving to you and the listeners. This is a special time of year and we're so excited to be a big part of it. Well, you certainly are a big part of every Thanksgiving celebrations. Certainly we're in my house and

continue to be so. So tell me how this year compares with last year, and how easy or difficult will it be to get cranberries on our tables this year. You know that the there's a couple of big factors of course Number one is demand. So consumer we're coming together more than they have in the last couple of years. We're seeing a lot of demand not just on Cranberry products, but all of our products, and it's something that is,

you know, not unexpected. They want to get together, they haven't had a chance to be as family and friends, and they're just really trying to take advantage of something really positive. The other side of that is that the costs are are a lot higher, So whether it's supply chain impacts or you know, other things that are you know, just making our lives a little bit more difficult in terms of getting products to consumers. It does put us in a position where we have high demand but also

high cost. So I think that's gonna put extra pressure on not just on companies like Ocean Spray, but a lot of consumer products companies to deliver everything to the Thanksgiving table. But you know, so far, so good for us. We're really happy about the position we're in and hopefully everybody be able to find what they want and enjoy

the holiday. Tom I don't want to bring the mood down ahead of Thanksgiving this week, but there any sort of particular ingredients, particular products that all severely in short supply, things that that if you haven't done your shopping yet for Thursday, you should be worried about. You know, there's I think that that depends on the retailer, depends on the part of the country, and you know how the

supply is held up because of the increased demand. So I think the you know, the the advice that we've been giving consumers and you know people that are asking us a question, is that you know, you need to

be a little bit flexible. Some of the consumers are really excited about the iconic cranberry jelly sauce with the ridges from the can they left to open that up and slice of further family members, and but you know, there could be maybe in a situation where they got to pick up a whole berry or they have to make cranberry sauce from fresh cranberries. So I think those are the those are the things that surely make your

own cranberry source. Who does that? Yeah, well, you know, there's certainly a lot of people that I think still do. But we uh, like I'm a sample sizing one here, but our family certainly loves the can cranberry sauce, well disclosure, so do we we we make cause I made as well. Um, you know your food supply chain. I mean this is something you know, just like with the pandemic Tom, we've

learned about what it takes to create a vaccine. And I think with all of the supply shortages were understanding that a supply chain isn't just we go to a store and it's not on the shelf. It's a lot more complicated than that. What has the recent shortages, how has it impacted you in terms of how you think about your supply chain. It's really caused us to think very differently, Carol, And is the thing that is the most interesting to me is the way that the creativity

has just been on display. So are we have The company is owned by seven hundred family farms, and those family farms, you know, do things in their daily operations that they've had the change as relates to getting whether it's transportation or materials to their farms in order to then produce the Grand braise and send them to the cooperative.

I would say that you know the the supply chain parts that we've been head for example on steel cans that we put Grandberry sauce into we've had to get really creative because there's been a shorter supply of those based on demand. We've had to go to another can and a can size, and we've had to modify our lines and our plants to accommodate that. The other thing

is on transportation. You may have heard about this, uh, you know too much already, but transportation is really difficult, particularly with you know, lanes from the plants to our customers, to retailers and food service customers. It's really like the cost has gone up, but it's not just the cost

but the availability. Sometimes you can't get those products to the customers at the time in which they need them, and so it's caused us to really really think differently about you know, lead times and making sure that we're properly allocating products of customers. So the creativity is is front and center, and I'd say that overall that's a good thing because you have companies that are just thinking differently. We certainly have and has created new capabilities where we

didn't have them. Frankly, hey, you've got facilities um around the country, and you've got obviously bottle facilities in various state labors. Are you able to get the labors you want and or are you having to pay up a bunch to get them? The cost have certainly gone up. We have been fortunate that we've been able to get the team members that we would like to We've we did experience and what has been difficult thing for us to overcome has been you know, team members have left

and retired. We have people come to and spray they stay with our company because of the values that we have and the purpose that we are driven by. But you know, there have been people that have decided to retire during the pandemic. So we're training a lot of new team members. Of course, some of those team members turn over, but we have you know, thank goodness that we've been in a pretty good spot in terms of

retaining the folks that we need to get the job done. Uh, you know, the transportation side it is a little bit more difficult, but you know, so far, I would say that the team has done a wonderful job, you know, keeping team members engaged at the plant level. Tom just got about a couple of minutes and then we'll take a break, do some more news and come back and contin in. You with you. But I think about your

background former presidency. You have Tyson Foods, chief supply chain officer of at Hillshire Brands and Saraly You've been at Canagara Craft. What are the most interesting food trends that you think you're that that are happening right now? Um, I think right now it's uh food trend is getting the food to the table. The outside of that, you know,

the vality check, right. The biggest thing that is has been before the pandemic, and certainly you know, I think coming through the pandemics has been accentuated is that consumers just want to feel emotionally connected to what they're you know, buying, and they have been really looking for products with fewer ingredients and they're really taking an active role in, you know, not only what they consume, but also how they feel. And it's really the health aspects of you know, food

in the front and center. The other thing I would say is, and this is I've seen this in the pandemic, is that people are coming back to brands that they know and love. So there's a lot of a lot of focus on you know, what makes me comfortable, Like I said, an emotional attachment. But what do I know? What do I trust? What's a brand that I can feel comfortable with and I've been, you know, using for forever, or maybe I've not used it in a while, and I can come back to it. And we certainly have

seen that at Ocean Spray. Our consumers are excited about our brand. They have come back to us to a large degree. We're excited about the households that we're keeping and you know, hopefully we earned that trust every day by quality products we produced, right, and you continue to really build out the brand in a thoughtful way. And maybe we'll get into that a little bit more when we come back on the other side. Tom Hayes, President CEO of Ocean Spray, you know the name Ocean Spray.

I remember Ocean Spray as being about cranberries. But Tom, I'm delighted to speak with you. I won't be in the United States this year for Thanksgiving, and it's actually sag because it's the first time I won't be for a couple of years. But we were discussing how more

more people than ever will get together. Essentially, there's so much to consider around supply chain inflation, higher input costs, but at the end of the day, you're still the sea have an important company this time of year, how much attention do you pay to things like the president's nomination of J. Powe's FED chair and Dr Lele Brain

and his vice chair going forward? We certainly, you know, do we have a government relations team that is trying to make sure that our interests are best served, and so we constantly tell our likely officials what we think that would be helpful for our seven hundred farm our owners as well as consumers. So that's something that's certainly front and center. I would say that most of the time we spend is really focused on our own sort

of issues that are important. Oceans very of course. So, but that you know external markets greatly is who you know a fact, what consumers are able to spend, and what you know certain policies will deliver as relates to potentially inflation and otherwise. We always have a keen ear to the rail on things that are coming down the pike, and we definitely want to make sure we influence where we can. Well, Tom dare I say inflation transitory or not?

And I just wonder in terms of you know you are getting I'm sure intel when it comes to your supply chain and your need and as well as your member farmers about their costs and whether or not we see them continuing for a longer time or maybe for something that's beyond transitory. I guess it is at this point. Um, I'm just curious what you're hearing on that front. So, you know, the at the risk of you know, being a downer, uh, you know the the because this is

a fantastic week. Everybody is hopefully a lot to be thankful for, and you know, certainly do a lot of celebrating. We don't see these cost pressures as transitory. We do see them, you know, ongoing and continuing, and uh, we don't see signs yet and I'm hopeful that we will right now, whether it's steel cans like I mentioned, or if it's from materials transportation. Everything is moving in the

wrong direction now. Having said all that, you know, we also think at Ocean Spray there's a lot of opportunity for our products to be regardless of what comes at us in terms of inflation. Important to consumers because it's a super fruit and you want polyphenols and you know, antioxidants in our diet. We've got to figure out ways to do that, and we will continue to fight the good fight here for our farmer owners and for consumers. And we haven't, by the way, taken pricing in the

last ten years. This is the first time we're taking pricing uh in the market for you know, to cover some of those costs. But we do a lot, think a very good job of making sure that we contain our costs to make sure we deliver a great consumer proposition. You know, it's a really important time of year. You know, it's important to be optimistic. It's been a long year to pan of years and the very book, but what

is the health of the consumer? You know, you talked about the demand being there, but are you confident in the strength of consumer bank accounts and the economy going forward? Yeah, we we are, and we have seen it. I mean that if you know, other companies have not. They might be in spaces where uh, you know, just not thing that is uh. Consumers leaning towards these days with you know, being mostly at home. We're having been mostly at home

for a company like Ocean Spray. We've seen because of I've talked about earlier, the brand strength consumers really have spent and they continue to spend their dollars on our products, and we do see the consumer being extraordinarily healthy. As we look to see what the implications are when we come out of the government assistance, it does that have a change effect. Possibly could, but right now we're seeing

the consumer remaining extraordinarily strong and hopefully that continues. But for us, you know, and it's been we see a lot of tail went well, you know, and it's good that you brought up certainly the government assistance. It has been crucial to so many Americans at this point. Uh. And even though we talk about consumers being in better shape and they have more money in their bank accounts, we know for many those government payments have just kept

them going and kept their families fed. You're involved Ocean Spread a UM is involved with the No Kid Hungry organization. Talk to us a bit about your involvement, what you've been seeing, especially as we kick off this this holiday season, which for many it's great. For many, they still have to struggle through, absolutely, and we're keenly aware of that.

So being that it is the time in which people come together and they celebrate and they want to be with their families more so than almost any other holiday throughout the year. We thought it would be fantastic to start this Better Together campaign hashtag better Together. And what we did was we partnered with Jesse Tyler Ferguson and we have this national campaign going on that does benefit

no kid hungry. And what it is is offering inspiring holiday recipes, bringing nutritious, delicious sort of thank you packages to school staff across the country because it's great work they do. And we're hopeful that, you know, not only to provide recipes and excitement around the holidays as people get together, but to to continue to do this in a way that is benefiting kids. And we're very focused on making sure that we can do what we can from our perspective to make the world a better place

through food. Are you optimistic Tom for the the year to come for things to improve generally? I am. I would say a little bit cautious. Cautiously optimistic, just because we do see that we have some challenges right, challenges to face in terms of cost. What gives me the optimism is that this cooperative continues to face up challenges

all the time. So ninety year history, we invented cranberry and we sort of you know, through the company from there and it's been very successful you know, over the ninety years. And I would say we just continue to build that resilience. That's one of our values is grower mindset and I believe this is at work here. So people, although they see the challenges in front of them, they are fighting to get the best result that we possibly

can every day and for that, I'm very optimistic. Biggest risk you think going into so we have for us at Ocean Spray, we have certainly had not had a fantastic crop here and this is something that we're very focused on because if we have you know, for selling less, of course, then we're not going to make the same

proceeds for our owners. So we want to do is make sure that we get pricing in the marketplace that we have you know, all the costs you know, corraled as much as we can and make sure we only spend money where we need to and we will pull through in a way that is going to you know, shine bright light on the power of our team coming

together solved problems. But if there's something that you know sort of in front of us, is we've got a lot of headwinds, and you know, this year's crop has has been down and not the only crop in the industry, by the way, but the Cranburn crop has been so it just makes things just a little bit more difficult than they normally would be. Well, we wish you well and a better year certainly on that front, and a really healthy and happy Thanksgiving and really throughout the holiday

season to you and your cooperative members. Tom Hayes, President and chief executive Officer of Ocean Spray from Boston. That's gonna do it for Ed Ludlow. I'm Carol Masser and the whole Bloomberg Business Week team. Have a good and safe evening. This is Bloomberg