What it takes to run a Northern California food company during economic upheaval: 4 views from the C-suite
Facing inflation, supply chain issues and how to keep staff together, three area food producers took time answer some questions from the Journal.
Can you tell us if inflation for raw materials has had a strong, mild or no great impact on your production costs? In what areas, of most relied on ingredients has inflation been most apparent in?
We have definitely seen an inflation in ingredient prices. It has had a mild impact on our production costs. We try to cut costs in other ways where we can.
The effects of inflation are hugely apparent. We had to push an expansion project for our Petaluma facility from the fall of 2021 and now that we are ready to break ground, our initial quotes have increased by 20%-25%.
We are also seeing rises in production equipment by approximately 15%-20% from just nine months ago. In addition, we have experienced an increase in packaging supplies across the board as well as freight and delivery costs.
Every single vendor I work with has raised their pricing. That, along with freight prices being what they are, my COGs (cost of goods) have increased. It's been difficult.
With coffee beans, we had no issues with supply or distribution other than the price fluctuations of the coffee market. As an essential business, our roasting operation did not have to shut down enabling us to meet the demand for coffee and fulfill our orders.
Various items we utilize in our coffee bar have increased. Our vendors have been impacted by similar issues and unfortunately have passed on increases to us. The unavailability and back order of paper goods causes concern.
And in response, did your company raise prices of the product or hold the line? Or did you take any other action in response, such has reducing the size of your product or change packaging to reduce overall costs?
Kristin Bastoni-Frazee: We did end up doing a price increase on our products across the board last year. We always hold off as long as possible before we pass on our increases to our customers, but it came to the point where we had to do something.
Jill, Lynn & Diana Giacomini: We were able to refrain from increasing our prices throughout COVID, as this would have directly affected our consumers, many who were also feeling the financial effects of the Pandemic. For the first time in nearly three years, we increased our wholesale distribution prices by 5% in January of 2022.
Sarita Lopez: I had rebranded and reformulated, so my new line is relatively new. Currently, I am not raising my pricing to stay on shelves. I am making smaller runs and am not applying for reviews that require large slotting fees.
Carol Pool: Staggering price increases in the coffee market continue to trend upwards. This has definitely taken a toll on our growth and profits. Unfortunately, with the current state of the market, holding steady was no longer sustainable. We increased prices conservatively. We made no other changes to packaging