WEBVTT - Ocean Spray Facing Cranberry Can Shortage

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<v Speaker 1>You're listening to Bloomberg Business Week with Carol Messer and

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<v Speaker 1>Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. We're thinking

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<v Speaker 1>of Thanksgiving and we know that is certainly on the

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<v Speaker 1>mind of our next guest. There's turkey there, stuffing, of course,

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<v Speaker 1>grave YouTube, but another must have it's a staple, cranberries

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<v Speaker 1>and cranberry sauce. Tom Hayes knows a lot about that.

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<v Speaker 1>He is the president and CEO of the agg Cooperative

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<v Speaker 1>Ocean Spray, He's former CEO of Tyson Foods, and he's

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<v Speaker 1>joining us on the phone in Boston. Tom. So great

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<v Speaker 1>to have you back with us. Happy almost Thanksgiving. How

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<v Speaker 1>are you. I'm doing great, Thanks Carol, and happy Thanksgiving

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<v Speaker 1>to you and the listeners. This is a special time

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<v Speaker 1>of year and we're so excited to be a big

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<v Speaker 1>part of it. Well, you certainly are a big part

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<v Speaker 1>of every Thanksgiving celebrations. Certainly we're in my house and

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<v Speaker 1>continue to be so. So tell me how this year

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<v Speaker 1>compares with last year, and how easy or difficult will

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<v Speaker 1>it be to get cranberries on our tables this year.

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<v Speaker 1>You know that the there's a couple of big factors

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<v Speaker 1>of course Number one is demand. So consumer we're coming

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<v Speaker 1>together more than they have in the last couple of years.

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<v Speaker 1>We're seeing a lot of demand not just on Cranberry products,

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<v Speaker 1>but all of our products, and it's something that is,

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<v Speaker 1>you know, not unexpected. They want to get together, they

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<v Speaker 1>haven't had a chance to be as family and friends,

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<v Speaker 1>and they're just really trying to take advantage of something

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<v Speaker 1>really positive. The other side of that is that the

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<v Speaker 1>costs are are a lot higher, So whether it's supply

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<v Speaker 1>chain impacts or you know, other things that are you know,

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<v Speaker 1>just making our lives a little bit more difficult in

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<v Speaker 1>terms of getting products to consumers. It does put us

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<v Speaker 1>in a position where we have high demand but also

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<v Speaker 1>high cost. So I think that's gonna put extra pressure

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<v Speaker 1>on not just on companies like Ocean Spray, but a

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<v Speaker 1>lot of consumer products companies to deliver everything to the

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<v Speaker 1>Thanksgiving table. But you know, so far, so good for us.

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<v Speaker 1>We're really happy about the position we're in and hopefully

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<v Speaker 1>everybody be able to find what they want and enjoy

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<v Speaker 1>the holiday. Tom I don't want to bring the mood

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<v Speaker 1>down ahead of Thanksgiving this week, but there any sort

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<v Speaker 1>of particular ingredients, particular products that all severely in short supply,

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<v Speaker 1>things that that if you haven't done your shopping yet

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<v Speaker 1>for Thursday, you should be worried about. You know, there's

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<v Speaker 1>I think that that depends on the retailer, depends on

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<v Speaker 1>the part of the country, and you know how the

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<v Speaker 1>supply is held up because of the increased demand. So

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<v Speaker 1>I think the you know, the the advice that we've

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<v Speaker 1>been giving consumers and you know people that are asking

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<v Speaker 1>us a question, is that you know, you need to

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<v Speaker 1>be a little bit flexible. Some of the consumers are

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<v Speaker 1>really excited about the iconic cranberry jelly sauce with the

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<v Speaker 1>ridges from the can they left to open that up

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<v Speaker 1>and slice of further family members, and but you know,

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<v Speaker 1>there could be maybe in a situation where they got

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<v Speaker 1>to pick up a whole berry or they have to

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<v Speaker 1>make cranberry sauce from fresh cranberries. So I think those

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<v Speaker 1>are the those are the things that surely make your

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<v Speaker 1>own cranberry source. Who does that? Yeah, well, you know,

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<v Speaker 1>there's certainly a lot of people that I think still do.

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<v Speaker 1>But we uh, like I'm a sample sizing one here,

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<v Speaker 1>but our family certainly loves the can cranberry sauce, well disclosure,

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<v Speaker 1>so do we we we make cause I made as well. Um,

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<v Speaker 1>you know your food supply chain. I mean this is

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<v Speaker 1>something you know, just like with the pandemic Tom, we've

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<v Speaker 1>learned about what it takes to create a vaccine. And

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<v Speaker 1>I think with all of the supply shortages were understanding

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<v Speaker 1>that a supply chain isn't just we go to a

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<v Speaker 1>store and it's not on the shelf. It's a lot

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<v Speaker 1>more complicated than that. What has the recent shortages, how

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<v Speaker 1>has it impacted you in terms of how you think

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<v Speaker 1>about your supply chain. It's really caused us to think

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<v Speaker 1>very differently, Carol, And is the thing that is the

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<v Speaker 1>most interesting to me is the way that the creativity

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<v Speaker 1>has just been on display. So are we have The

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<v Speaker 1>company is owned by seven hundred family farms, and those

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<v Speaker 1>family farms, you know, do things in their daily operations

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<v Speaker 1>that they've had the change as relates to getting whether

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<v Speaker 1>it's transportation or materials to their farms in order to

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<v Speaker 1>then produce the Grand braise and send them to the cooperative.

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<v Speaker 1>I would say that you know the the supply chain

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<v Speaker 1>parts that we've been head for example on steel cans

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<v Speaker 1>that we put Grandberry sauce into we've had to get

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<v Speaker 1>really creative because there's been a shorter supply of those

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<v Speaker 1>based on demand. We've had to go to another can

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<v Speaker 1>and a can size, and we've had to modify our

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<v Speaker 1>lines and our plants to accommodate that. The other thing

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<v Speaker 1>is on transportation. You may have heard about this, uh,

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<v Speaker 1>you know too much already, but transportation is really difficult,

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<v Speaker 1>particularly with you know, lanes from the plants to our customers,

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<v Speaker 1>to retailers and food service customers. It's really like the

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<v Speaker 1>cost has gone up, but it's not just the cost

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<v Speaker 1>but the availability. Sometimes you can't get those products to

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<v Speaker 1>the customers at the time in which they need them,

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<v Speaker 1>and so it's caused us to really really think differently

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<v Speaker 1>about you know, lead times and making sure that we're

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<v Speaker 1>properly allocating products of customers. So the creativity is is

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<v Speaker 1>front and center, and I'd say that overall that's a

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<v Speaker 1>good thing because you have companies that are just thinking differently.

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<v Speaker 1>We certainly have and has created new capabilities where we

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<v Speaker 1>didn't have them. Frankly, hey, you've got facilities um around

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<v Speaker 1>the country, and you've got obviously bottle facilities in various

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<v Speaker 1>state labors. Are you able to get the labors you

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<v Speaker 1>want and or are you having to pay up a

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<v Speaker 1>bunch to get them? The cost have certainly gone up.

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<v Speaker 1>We have been fortunate that we've been able to get

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<v Speaker 1>the team members that we would like to We've we

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<v Speaker 1>did experience and what has been difficult thing for us

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<v Speaker 1>to overcome has been you know, team members have left

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<v Speaker 1>and retired. We have people come to and spray they

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<v Speaker 1>stay with our company because of the values that we

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<v Speaker 1>have and the purpose that we are driven by. But

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<v Speaker 1>you know, there have been people that have decided to

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<v Speaker 1>retire during the pandemic. So we're training a lot of

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<v Speaker 1>new team members. Of course, some of those team members

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<v Speaker 1>turn over, but we have you know, thank goodness that

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<v Speaker 1>we've been in a pretty good spot in terms of

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<v Speaker 1>retaining the folks that we need to get the job done. Uh,

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<v Speaker 1>you know, the transportation side it is a little bit

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<v Speaker 1>more difficult, but you know, so far, I would say

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<v Speaker 1>that the team has done a wonderful job, you know,

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<v Speaker 1>keeping team members engaged at the plant level. Tom just

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<v Speaker 1>got about a couple of minutes and then we'll take

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<v Speaker 1>a break, do some more news and come back and

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<v Speaker 1>contin in. You with you. But I think about your

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<v Speaker 1>background former presidency. You have Tyson Foods, chief supply chain

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<v Speaker 1>officer of at Hillshire Brands and Saraly You've been at

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<v Speaker 1>Canagara Craft. What are the most interesting food trends that

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<v Speaker 1>you think you're that that are happening right now? Um,

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<v Speaker 1>I think right now it's uh food trend is getting

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<v Speaker 1>the food to the table. The outside of that, you know,

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<v Speaker 1>the vality check, right. The biggest thing that is has

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<v Speaker 1>been before the pandemic, and certainly you know, I think

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<v Speaker 1>coming through the pandemics has been accentuated is that consumers

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<v Speaker 1>just want to feel emotionally connected to what they're you know, buying,

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<v Speaker 1>and they have been really looking for products with fewer

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<v Speaker 1>ingredients and they're really taking an active role in, you know,

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<v Speaker 1>not only what they consume, but also how they feel.

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<v Speaker 1>And it's really the health aspects of you know, food

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<v Speaker 1>in the front and center. The other thing I would

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<v Speaker 1>say is, and this is I've seen this in the pandemic,

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<v Speaker 1>is that people are coming back to brands that they

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<v Speaker 1>know and love. So there's a lot of a lot

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<v Speaker 1>of focus on you know, what makes me comfortable, Like

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<v Speaker 1>I said, an emotional attachment. But what do I know?

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<v Speaker 1>What do I trust? What's a brand that I can

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<v Speaker 1>feel comfortable with and I've been, you know, using for forever,

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<v Speaker 1>or maybe I've not used it in a while, and

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<v Speaker 1>I can come back to it. And we certainly have

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<v Speaker 1>seen that at Ocean Spray. Our consumers are excited about

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<v Speaker 1>our brand. They have come back to us to a

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<v Speaker 1>large degree. We're excited about the households that we're keeping

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<v Speaker 1>and you know, hopefully we earned that trust every day

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<v Speaker 1>by quality products we produced, right, and you continue to

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<v Speaker 1>really build out the brand in a thoughtful way. And

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<v Speaker 1>maybe we'll get into that a little bit more when

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<v Speaker 1>we come back on the other side. Tom Hayes, President

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<v Speaker 1>CEO of Ocean Spray, you know the name Ocean Spray.

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<v Speaker 1>I remember Ocean Spray as being about cranberries. But Tom,

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<v Speaker 1>I'm delighted to speak with you. I won't be in

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<v Speaker 1>the United States this year for Thanksgiving, and it's actually

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<v Speaker 1>sag because it's the first time I won't be for

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<v Speaker 1>a couple of years. But we were discussing how more

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<v Speaker 1>more people than ever will get together. Essentially, there's so

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<v Speaker 1>much to consider around supply chain inflation, higher input costs,

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<v Speaker 1>but at the end of the day, you're still the

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<v Speaker 1>sea have an important company this time of year, how

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<v Speaker 1>much attention do you pay to things like the president's

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<v Speaker 1>nomination of J. Powe's FED chair and Dr Lele Brain

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<v Speaker 1>and his vice chair going forward? We certainly, you know,

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<v Speaker 1>do we have a government relations team that is trying

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<v Speaker 1>to make sure that our interests are best served, and

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<v Speaker 1>so we constantly tell our likely officials what we think

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<v Speaker 1>that would be helpful for our seven hundred farm our

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<v Speaker 1>owners as well as consumers. So that's something that's certainly

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<v Speaker 1>front and center. I would say that most of the

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<v Speaker 1>time we spend is really focused on our own sort

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<v Speaker 1>of issues that are important. Oceans very of course. So,

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<v Speaker 1>but that you know external markets greatly is who you

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<v Speaker 1>know a fact, what consumers are able to spend, and

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<v Speaker 1>what you know certain policies will deliver as relates to

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<v Speaker 1>potentially inflation and otherwise. We always have a keen ear

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<v Speaker 1>to the rail on things that are coming down the pike,

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<v Speaker 1>and we definitely want to make sure we influence where

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<v Speaker 1>we can. Well, Tom dare I say inflation transitory or not?

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<v Speaker 1>And I just wonder in terms of you know you

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<v Speaker 1>are getting I'm sure intel when it comes to your

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<v Speaker 1>supply chain and your need and as well as your

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<v Speaker 1>member farmers about their costs and whether or not we

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<v Speaker 1>see them continuing for a longer time or maybe for

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<v Speaker 1>something that's beyond transitory. I guess it is at this point. Um,

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<v Speaker 1>I'm just curious what you're hearing on that front. So,

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<v Speaker 1>you know, the at the risk of you know, being

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<v Speaker 1>a downer, uh, you know the the because this is

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<v Speaker 1>a fantastic week. Everybody is hopefully a lot to be

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<v Speaker 1>thankful for, and you know, certainly do a lot of celebrating.

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<v Speaker 1>We don't see these cost pressures as transitory. We do

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<v Speaker 1>see them, you know, ongoing and continuing, and uh, we

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<v Speaker 1>don't see signs yet and I'm hopeful that we will

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<v Speaker 1>right now, whether it's steel cans like I mentioned, or

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<v Speaker 1>if it's from materials transportation. Everything is moving in the

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<v Speaker 1>wrong direction now. Having said all that, you know, we

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<v Speaker 1>also think at Ocean Spray there's a lot of opportunity

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<v Speaker 1>for our products to be regardless of what comes at

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<v Speaker 1>us in terms of inflation. Important to consumers because it's

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<v Speaker 1>a super fruit and you want polyphenols and you know,

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<v Speaker 1>antioxidants in our diet. We've got to figure out ways

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<v Speaker 1>to do that, and we will continue to fight the

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<v Speaker 1>good fight here for our farmer owners and for consumers.

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<v Speaker 1>And we haven't, by the way, taken pricing in the

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<v Speaker 1>last ten years. This is the first time we're taking

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<v Speaker 1>pricing uh in the market for you know, to cover

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<v Speaker 1>some of those costs. But we do a lot, think

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<v Speaker 1>a very good job of making sure that we contain

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<v Speaker 1>our costs to make sure we deliver a great consumer proposition.

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<v Speaker 1>You know, it's a really important time of year. You know,

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<v Speaker 1>it's important to be optimistic. It's been a long year

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<v Speaker 1>to pan of years and the very book, but what

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<v Speaker 1>is the health of the consumer? You know, you talked

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<v Speaker 1>about the demand being there, but are you confident in

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<v Speaker 1>the strength of consumer bank accounts and the economy going forward? Yeah,

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<v Speaker 1>we we are, and we have seen it. I mean

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<v Speaker 1>that if you know, other companies have not. They might

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<v Speaker 1>be in spaces where uh, you know, just not thing

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<v Speaker 1>that is uh. Consumers leaning towards these days with you know,

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<v Speaker 1>being mostly at home. We're having been mostly at home

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<v Speaker 1>for a company like Ocean Spray. We've seen because of

0:11:10.280 --> 0:11:13.680
<v Speaker 1>I've talked about earlier, the brand strength consumers really have

0:11:14.400 --> 0:11:18.440
<v Speaker 1>spent and they continue to spend their dollars on our products,

0:11:18.440 --> 0:11:21.520
<v Speaker 1>and we do see the consumer being extraordinarily healthy. As

0:11:21.559 --> 0:11:25.040
<v Speaker 1>we look to see what the implications are when we

0:11:25.120 --> 0:11:27.840
<v Speaker 1>come out of the government assistance, it does that have

0:11:27.880 --> 0:11:31.640
<v Speaker 1>a change effect. Possibly could, but right now we're seeing

0:11:31.679 --> 0:11:36.600
<v Speaker 1>the consumer remaining extraordinarily strong and hopefully that continues. But

0:11:36.840 --> 0:11:39.000
<v Speaker 1>for us, you know, and it's been we see a

0:11:39.040 --> 0:11:41.680
<v Speaker 1>lot of tail went well, you know, and it's good

0:11:41.679 --> 0:11:44.640
<v Speaker 1>that you brought up certainly the government assistance. It has

0:11:44.679 --> 0:11:48.520
<v Speaker 1>been crucial to so many Americans at this point. Uh.

0:11:48.559 --> 0:11:50.880
<v Speaker 1>And even though we talk about consumers being in better

0:11:50.920 --> 0:11:52.679
<v Speaker 1>shape and they have more money in their bank accounts,

0:11:52.760 --> 0:11:56.680
<v Speaker 1>we know for many those government payments have just kept

0:11:56.679 --> 0:11:59.720
<v Speaker 1>them going and kept their families fed. You're involved Ocean

0:11:59.720 --> 0:12:04.000
<v Speaker 1>Spread a UM is involved with the No Kid Hungry organization.

0:12:04.120 --> 0:12:05.760
<v Speaker 1>Talk to us a bit about your involvement, what you've

0:12:05.800 --> 0:12:08.640
<v Speaker 1>been seeing, especially as we kick off this this holiday season,

0:12:08.679 --> 0:12:11.320
<v Speaker 1>which for many it's great. For many, they still have

0:12:11.320 --> 0:12:15.439
<v Speaker 1>to struggle through, absolutely, and we're keenly aware of that.

0:12:15.600 --> 0:12:18.720
<v Speaker 1>So being that it is the time in which people

0:12:18.760 --> 0:12:20.520
<v Speaker 1>come together and they celebrate and they want to be

0:12:20.520 --> 0:12:23.400
<v Speaker 1>with their families more so than almost any other holiday

0:12:23.440 --> 0:12:25.920
<v Speaker 1>throughout the year. We thought it would be fantastic to

0:12:26.040 --> 0:12:30.520
<v Speaker 1>start this Better Together campaign hashtag better Together. And what

0:12:30.559 --> 0:12:33.960
<v Speaker 1>we did was we partnered with Jesse Tyler Ferguson and

0:12:34.040 --> 0:12:37.640
<v Speaker 1>we have this national campaign going on that does benefit

0:12:37.720 --> 0:12:41.080
<v Speaker 1>no kid hungry. And what it is is offering inspiring

0:12:41.120 --> 0:12:45.360
<v Speaker 1>holiday recipes, bringing nutritious, delicious sort of thank you packages

0:12:45.400 --> 0:12:47.960
<v Speaker 1>to school staff across the country because it's great work

0:12:48.120 --> 0:12:51.000
<v Speaker 1>they do. And we're hopeful that, you know, not only

0:12:51.040 --> 0:12:54.319
<v Speaker 1>to provide recipes and excitement around the holidays as people

0:12:54.360 --> 0:12:56.720
<v Speaker 1>get together, but to to continue to do this in

0:12:56.720 --> 0:13:00.440
<v Speaker 1>a way that is benefiting kids. And we're very focused

0:13:00.440 --> 0:13:02.600
<v Speaker 1>on making sure that we can do what we can

0:13:02.760 --> 0:13:05.920
<v Speaker 1>from our perspective to make the world a better place

0:13:05.960 --> 0:13:10.520
<v Speaker 1>through food. Are you optimistic Tom for the the year

0:13:10.600 --> 0:13:14.280
<v Speaker 1>to come for things to improve generally? I am. I

0:13:14.280 --> 0:13:18.640
<v Speaker 1>would say a little bit cautious. Cautiously optimistic, just because

0:13:19.000 --> 0:13:21.760
<v Speaker 1>we do see that we have some challenges right, challenges

0:13:21.760 --> 0:13:24.720
<v Speaker 1>to face in terms of cost. What gives me the

0:13:24.800 --> 0:13:29.360
<v Speaker 1>optimism is that this cooperative continues to face up challenges

0:13:29.440 --> 0:13:33.440
<v Speaker 1>all the time. So ninety year history, we invented cranberry

0:13:34.240 --> 0:13:36.559
<v Speaker 1>and we sort of you know, through the company from

0:13:36.559 --> 0:13:39.640
<v Speaker 1>there and it's been very successful you know, over the

0:13:39.720 --> 0:13:42.600
<v Speaker 1>ninety years. And I would say we just continue to

0:13:42.640 --> 0:13:46.679
<v Speaker 1>build that resilience. That's one of our values is grower

0:13:46.760 --> 0:13:50.880
<v Speaker 1>mindset and I believe this is at work here. So people,

0:13:51.120 --> 0:13:53.200
<v Speaker 1>although they see the challenges in front of them, they

0:13:53.240 --> 0:13:56.280
<v Speaker 1>are fighting to get the best result that we possibly

0:13:56.320 --> 0:13:59.680
<v Speaker 1>can every day and for that, I'm very optimistic. Biggest

0:13:59.760 --> 0:14:04.400
<v Speaker 1>risk you think going into so we have for us

0:14:04.520 --> 0:14:07.400
<v Speaker 1>at Ocean Spray, we have certainly had not had a

0:14:07.400 --> 0:14:10.040
<v Speaker 1>fantastic crop here and this is something that we're very

0:14:10.040 --> 0:14:14.000
<v Speaker 1>focused on because if we have you know, for selling less,

0:14:14.040 --> 0:14:17.360
<v Speaker 1>of course, then we're not going to make the same

0:14:17.400 --> 0:14:19.760
<v Speaker 1>proceeds for our owners. So we want to do is

0:14:19.840 --> 0:14:22.720
<v Speaker 1>make sure that we get pricing in the marketplace that

0:14:22.760 --> 0:14:25.680
<v Speaker 1>we have you know, all the costs you know, corraled

0:14:25.720 --> 0:14:27.040
<v Speaker 1>as much as we can and make sure we only

0:14:27.040 --> 0:14:30.520
<v Speaker 1>spend money where we need to and we will pull

0:14:30.600 --> 0:14:32.400
<v Speaker 1>through in a way that is going to you know,

0:14:32.520 --> 0:14:35.560
<v Speaker 1>shine bright light on the power of our team coming

0:14:35.600 --> 0:14:38.720
<v Speaker 1>together solved problems. But if there's something that you know

0:14:39.000 --> 0:14:40.800
<v Speaker 1>sort of in front of us, is we've got a

0:14:40.840 --> 0:14:44.080
<v Speaker 1>lot of headwinds, and you know, this year's crop has

0:14:44.240 --> 0:14:47.240
<v Speaker 1>has been down and not the only crop in the industry,

0:14:47.240 --> 0:14:49.920
<v Speaker 1>by the way, but the Cranburn crop has been so

0:14:49.960 --> 0:14:51.920
<v Speaker 1>it just makes things just a little bit more difficult

0:14:51.920 --> 0:14:54.000
<v Speaker 1>than they normally would be. Well, we wish you well

0:14:54.040 --> 0:14:57.520
<v Speaker 1>and a better year certainly on that front, and a

0:14:57.680 --> 0:15:00.840
<v Speaker 1>really healthy and happy Thanksgiving and really throughout the holiday

0:15:00.880 --> 0:15:04.080
<v Speaker 1>season to you and your cooperative members. Tom Hayes, President

0:15:04.080 --> 0:15:07.560
<v Speaker 1>and chief executive Officer of Ocean Spray from Boston. That's

0:15:07.600 --> 0:15:10.360
<v Speaker 1>gonna do it for Ed Ludlow. I'm Carol Masser and

0:15:10.360 --> 0:15:12.080
<v Speaker 1>the whole Bloomberg Business Week team. Have a good and

0:15:12.120 --> 0:15:13.640
<v Speaker 1>safe evening. This is Bloomberg