Importation of Finished Products from Abroad
Pickling Cucumber Improvement Committee Meeting Abstract
Guillermo Brun
Brun Foods
World conditions in the pickle industry today are not at its best. Low margins and slow growth, increasingly expensive and scarce hand labor, aging equipment and facilities, and large inventory costs call for companies to rethink the traditional ways of operating the pickle business.
Additionally, the quality of products manufactured in the summer by unskilled temporary workers on overtime and kept in storage for months, or else packed with imported “fresh” (but extensively refrigerated) cucumbers, don’t help the market’s growth.
The new globalized world economy and its open borders are demanding and producing huge changes in the way we all do business; markets are forcing companies to shift production facilities or to manufacture their products at the most efficient, highest quality alternatives around the world. Borders no longer exist, and the market is unforgiving to those who do not understand it. Practically free importation, thanks to agreements that most developed countries have with poorer nations, make outsourcing finished products from abroad an even easier process.
The concept of virtual companies that outsource the totality of their products and invest their resources on increasing their brand value, is proving to be successful. In the pickle industry, outsourcing finished product from abroad is a real alternative already in use by many processors. Fermented, machine-packed products represent little advantage for processors established in developed, summer-growing countries, but some of the concepts of the new global economy can work in today’s pickle industry for refrigerated and fresh-pack products.
Processors in the U.S., Canada or Europe that outsource their fresh-pack or refrigerated pickled products abroad will benefit from better product quality, real freshness, better inventory management (size reduction and flexibility for last-minute adjustments to sales), net cost savings, and reduced capital expenditures.
Of course there are disadvantages to this idea. The “Product of XXX” label requirement still scares some marketing people. There are quality risks involved in outsourcing, the freight times and unreliability and the communications problem, but most of these fears are either not real or manageable by two serious companies that work together.
Before a company tries a co-packing experience, a reliable source for co-packing has to be found as close as possible to its market. Present alternatives that we are aware of are India, Turkey and México.
The decision-making process can be long and difficult. It will require an important logistics and planning effort, emotionally letting go “old times” and dealing with the power-loss effects that most plant managers feel when loosing part of their plant volume. Reductions or reallocations of overhead cost are also inevitable.
It is important that all EPA, USDA and FDA regulations are met rigorously by the co-packer to assure continuos, trouble-free access into the country where product is being imported.
Kosher certification is now required by most processors, who must also require their co-packers to do so. Plant certification and availability of locally supplied kosher certified ingredients are important issues to verify.
Finally, other issues that need to be studied carefully to assure trouble-free relations with the market through the media are the environmental practices of the co-packer and its hand labor conditions, specially being aware of child labor and health issues.
For further information, contact:
- Guillermo Brun
- Brun Foods, S.A. de C.V.
- Km 2.3 Carr. Villa de Álvarez-Minatitlán, Villa de Álvarez, Colima, México 28970
- Telephone: 52(331)6-0700; Fax: 52(331)6-0720
- E-mail: gbrun@brunfoods.com