Supply chain management: A key ingredient in Gardein’s export growth in a competitive market

Supply chain management: A key ingredient in Gardein’s export growth in a competitive market

Yves Potvin, founder of plant protein food maker Gardein, says business is like surfing; you have to be there when the wave arrives and then you have the catch it.

Having successfully ridden business waves to dizzying heights of success, Potvin knows what it takes to succeed in the hotly competitive food market. He says for food exporters, securing the right distribution partners is pivotal.

In 2009, Potvin was working with chef Tal Ronnen who had prepared vegan meals for Oprah Winfrey. When Ronnen was invited to be a guest on the Oprah Show, Potvin saw a once-in-a-lifetime opportunity to promote the Gardein brand.

Prior to the show, he went to several chain stores and told them Gardein was going to be featured on Oprah and asked them to stock the product. He signed up 1,500 stores, including the California-based Ralphs chain.

When the show was taped, “I was ‘dancing’ in the audience, Oprah mentioned Gardein 12 times,” Potvin recalls. Today the plant protein meals and snacks are in about 25,000 supermarkets in the U.S.

Gardein is Potvin’s second venture into the plant protein food sector. He first earned acclaim for inventing the meatless wiener, which he began selling under the Yves Fine Food brand in 1985. In 2001, he sold the successful company. While Yves-brand products were “between the bun” – the world’s first veggie dog and veggie burgers – Gardein produces centre-plate meals like meatless “chicken,” scaloppini and Szechuan beefless strips.

While the Oprah show gave Gardein a foothold in the U.S., innovation has been core to the brand’s success and growth. A buyer for one of America’s largest retail chains told him: “You’re not the biggest in the category, but you bring the most innovation and that’s why I always give you more shelf space.”

Potvin says Gardein tries to stay just ahead of evolving consumer tastes, so that it is ready to launch the right products at the right time. The approach is often driven, in part, by intuition.

“If you’re too far ahead of the wave – like the Segway, it’s too futuristic – people won’t use it. If you come out with a fat-free item now, you’re too far behind, it’s passé,” he says. “Three or four years ago, we weren’t into gluten-free; now we have four items that are – and we’re working on items that are soy-free.”

Even with the right products, exporters typically face several key challenges, and a major one is currency fluctuation, says Potvin.

“You have to be able to be profitable with a dollar that fluctuates. You need to able to modify costs,” he says, noting that 95 to 98 per cent of Gardein’s inputs are sourced in North America.

In the past, the company tried to hedge, but often found itself on the wrong side of the equation. The company no longer hedges. Instead, it strives to secure annual contracts from its suppliers so that costs are known in advance, adds Potvin.

Distance to market and supply chain are also always top of mind.

“I remind people that the distance between Vancouver and Florida is about the same as the distance between Paris and Siberia – distances are very, very big in North America,” he says.

While all Gardein products are manufactured at the firm’s Richmond, B.C. facility, a new east coast warehouse in Maryland has eased the pressure on the Coquitlam, B.C. warehouse.

Finding the delicate balance between having enough inventory, turning inventory to maintain cash flow and monitoring orders to ensure there are enough ingredients to manufacture the products, are all part of the supply chain challenge. Planning is critical.

“Plans are based on projections of what Gardein needs to produce at any time,” says Potvin. “But it’s not an exact science when you’re growing at 30 or 40 per cent a year – sometimes an item grows at 50 per cent in some months. It’s challenging to know which item is going to grow and at what rate.”

A good enterprise resource planning (ERP) software management system is essential, says Potvin. When the planning is complete it is input into the ERP and it checks to ensure the ingredients are in stock and, if necessary, gives a signal to reorder.

Potvin adds that by scanning everything that enters and leaves the warehouse, the company has real-time inventory management.

“Before we had an ERP, our records would show we had a pallet of an ingredient and then we would find someone had used it without recording it. That’s when you press the panic button, phone the supplier and beg for it,” he says.

He acknowledges an ERP “is a pain to implement” and it needs to be upgraded every five or six years, but he believes it is essential to enable a business to scale.

However, growth also requires capital. Potvin’s experience is that traditional banks don’t necessarily embrace rapid growth.

“In my previous business, we grew at 50 per cent for 13 years in a row. One of our bankers suggested we stop growing for two years, build up our cash flow and then start again. But it’s like you’re on a white-water raft – you’re going fast, you can’t stop the boat,” he says. “ If you stop, you’re going to crash. You have to go with the flow, find the capital, find the people, and find the capacity. It’s a good problem to have, because the other problem of no growth is a worse problem.”

To grow Gardein, Potvin accessed funding from private equity firm TSG Consumer Partners. He and TSG sold Gardein’s holding company, Garden Protein International Inc., to Pinnacle Foods in late 2014. He says the company was too small for an Initial Public Offering (IPO) and the sale to Pinnacle ensures access to capital.

“Gardein could be a billion-dollar business,” he says.

Get more export insights from Yves Potvin here.

Categories Exporting

Comments are closed.

Related Posts