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 Conagra Foods Lamb Weston Section - October 2007  |
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The View from Eagle:
Innovation has been Lamb Weston’s guiding force since the company’s formation in Weston, Oregon, USA, back in 1950. That was the year when the New York Yankees defeated the Philadelphia Phillies in four straight games to win the baseball World Series, and Uruguay’s football team won the World Cup. The Jack Benny Show debuted on television in the United States, and South Pacific received a Tony Award as Best Musical on Broadway. Bertrand Russell of Great Britain won the Nobel Prize for Literature for his significant writings on humanitarian ideals and freedom of thought. American hipster Jack Kerouac was still one year away from writing On The Road, the seminal guidebook for Beat Generation wanderers. The Korean War broke out, and the Nobel Prize for Chemistry went to three Germans for their discovery and development of the diene synthesis. It was the early days of the Post World War II Baby Boom, so time was needed for the kids to grow up and feed at the table of the fast food revolution that was to come. Lamb Weston founder F. Gilbert Lamb was a few steps ahead of the the QSR trend that began in earnest when entrepreneur Ray Kroc bought out Dick and Mac McDonald to launch the McDonald’s Restaurants chain in 1961. Just a year earlier Lamb perfected his invention of the Water Gun Knife, the world’s first device to utilize high pressure water flow to propel raw tubers through a blade box designed to rapidly and efficiently slice long-length french fry strips. He also perfected the blanching process to firm spuds prior to freezing. Consistency of quality, from day to day and down through the years, has made the company a reliable and respected brand name among buyers of value added potato products and appetizers from the shores of Lake Champlain to Al-Alamayn. Lamb Weston’s commitment to excellence begins with agronomists on the farm, extends throughout plant production, and continues up and down the distribution chain. From initial planting of seeds to harvesting, processing, packaging and delivery of finished products to end users, quality assurance is uppermost in importance. “One of our greatest strengths lies in constant attention to detail that is system-wide. We make sure that every i is dotted and every t is crossed,” said Mark Hayden, senior vice president in charge of supply chain management and distributor sales for ConAgra Foods Lamb Weston, which is the formal name of the division of ConAgra Foods, Inc. that produces and markets Lamb Weston potato products, appetizers and other hand-held foods.
“Good is not good enough for us. We have to make superior products all the time – from the bottom end of July to the following June,” he continued. “When potatoes are going straight from the fields into production, turning out great products is not that difficult. The real challenge is to maintain consistency in flavor, texture and profile long after harvest time, when raw materials are taken from storage for processing.” The Tri-Cities of Kennewick, Pasco and Richland in southeastern Washington state are the hub of Lamb Weston’s network of production and R&D in North America, where 12 state-of-the-art factories are spread out geographically from Washington and Oregon to Idaho, Minnesota and the Canadian province of Alberta. Eight plants operate in the Columbia Basin region, along with an administrative department, a technical center, a logistics management office and an ingredients blending facility. The research and development arm of Lamb Weston’s technical center in Richland is the place where numerous cutting-edge technologies and new products have been conceived and produced. They range from Stealth Fries® (which boast long holding time after preparation) and Generation 7 Fries® (which cook up 50% faster than conventional fries), to the patented forming of potato waffles marketed as CrissCut™ Fries, and more recently the formulation of My Fries™, made with premium Yukon Gold potatoes, and other trans-fats free products. My Fries™ Gold, launched at the National Restaurant Association show in Chicago during May of 2006, are prepared in 100% canola oil rather than hydrogenated oils which contain trans-fatty acids. Not only are there zero grams of trans-fats in the product, but overall fat is reduced by 25% on average versus conventional specialty cut fries – as long as operators follow recommended re-fry and handling instructions. Made with the company’s proprietary i3 Advantage™, My Fries™ are promoted as products that deliver “exceptional flavor and texture qualities, impede absorption of cooking fats and thus save on oil costs, as well as increase crispness and holding capabilities.” The three i’s in i3 stand for innovative, indulgent and intelligent. “My Fries™ Gold gives foodservice establishments the opportunity to offer more choice to their customers,” said Jeff DeLapp, president of ConAgra Foods Lamb Weston. “They’re a great alternative to traditional fries on the menu, and give consumers the best of both worlds – amazing taste from Yukon Gold potatoes, crisp, tender texture, appetizing color and up to 25% less fat than conventional fries.” Eagle-eyed Sales Crew
The “Eagle’s Nest” of the ConAgra Foods Lamb Weston operation is at the company’s Sales and Marketing Center overlooking the Boise River in Eagle, Idaho. That’s where President DeLapp and most of his staff officers, strategic planners and deployment specialists are based. In addition to Mark Hayden, a veteran whose depth of experience includes many years as a sales and marketing vice president, other VPs in the executive suite include: Gary Cuddeford, who is responsible for global operations; Joe Kunde, who directs the foodservice sales campaign; Sharon Miller, who leads the retail drive; and Andy Johnston, who is in charge of marketing. By the fourth quarter of 2007, approximately 90% of Lamb Weston’s value-added, premium products were certified as trans-fats free, pointed out Hayden. “We’ve been changing over for some time now, and have developed a proprietary trans-fats free oil which we blend ourselves,” he explained. This is an example of how the interlocking strength of Lamb Weston’s corporate muscle can be flexed when needed, as ConAgra has a separate ingredients division that is as expertly versed on edible oils as it is on flavorings and spices. The company maximizes its economies of scale advantages across many fields of procurement, including flexible film packaging, energy, transportation and insurance. The benefits of such bottom line cost containment are passed along to customers. For more than 20 years, advances in agriculture, better process technology and more efficient distribution logistics have kept prices for finished potato products relatively flat in the USA. Inflation, however, which is rearing its head in North America and across the world, is affecting the price of french fries and most everything else these days. “Literally, until the past few years you could look back and see that our product pricing had been relatively unchanged since the late 1970s. This was in great part thanks to advances in process technology which increased efficiencies. But we have reached a point now where, unfortunately, holding the line on prices is no longer possible,” said Hayden. When this writer asked for a detailed explanation, the senior vice president offered a lesson in Economics 101 that began with a chapter on commodity scarcity. “To start off, let’s look at the cost of stainless steel, which has gone through the roof due to exploding demand and limited supply,” he said. “Every time we have to replace a freezer tunnel or buy any other piece of equipment fabricated with steel, we have to pay market price. Add to that the rising cost of everything from potatoes and labor to energy, transport, packaging and edible oils [up roughly 60% from a year ago], and basic mathematics dictates the need for an upward price adjustment.”
The good news, though, is that potato products still provide quick service restaurateurs and other foodservice operators high profit margins. In fact, french fries rank right up there with beverages as the highest-margin money makers in the foodservice business. In fact, the wholesale price restaurateurs pay for frozen french fries generally amounts to only about 15% of the menu price charged consumers. The popular side dish’s contribution to bottom line profits for operator-customers in Japan was underscored a few years ago when, at almost a moment’s notice, clients asked for the elimination of beef tallow in potato pre-frying. And they needed container loads of replacement spuds pronto, or rather fa-suto! “It was quite a scramble, as our facilities were temporarily closed for the Christmas/New Year holidays,” recalled Hayden. “We quickly pulled together plant personnel and got newly specified oil blends in position to make tons of new product, much of which was rushed to customers by a fleet of cargo planes. This just goes to show that even with the added cost of air freight, good profits can still be made by menuing french fries.”
Whether nautical or statute in measure, Lamb Weston always goes the extra mile to get the goods to market on time. Its order fill rate is reportedly an astounding 99.7%! “You know, in our business, if you miss an order or don’t have the product available to deliver, you have lost a sales opportunity that will never come back,” said the senior vice president. “Being out of stock is, quite simply, unacceptable.” As such, the company prepositions huge inventories in forward warehouse distribution centers across the country – from Kennewick, Washington, and Twin Falls, Idaho, in the West, to Rochelle, Illinois, in the Midwest, to York, Pennsylvania, in the East, to Fort Worth, Texas, and Atlanta, Georgia, in the south. Freight trains are utilized to a great extent to transport product from production plants to rail spur-connected warehouses. To this day, it is estimated that more than 50% of all frozen foodstuffs consumed in the USA – including billions of pounds of potato products, fruits and vegetables – make the trans-continental trip to major markets by rail. ConAgra Foods Lamb Weston recently made a major investment in mechanical rail cars to assure that its products will keep rolling both economically and efficiently. That’s a major shift from the company’s former preference for cryogenic railcars. “The cost of CO2 refrigerant has become so high that it is no longer economically feasible to go the cryogenic route,” explained Hayden. “That’s why we have switched to predominant usage of mechanical cars. The new ones are large enough to ship 170,000 pounds in a single car.”
“In our opinion, there is no better place for potato processing than the Northwest when it comes to ensuring crop viability, overall quality and consistency,” said the senior vice president. “But the plants are a long way from the big markets east of the Mississippi and south of here. So we have shortened the supply chain by moving finished product close to the end-users.” An established network of brokers work with Lamb Weston’s in-house team of 31 sales persons on the foodservice front and an additional seven in the retail sector. The broker organizations, most of which have been associated with Lamb Weston for many decades, are very appreciative of distribution arrangements which minimize carrying costs and maximize inventory turns. “They pick up what’s needed when it’s needed, load it onto their trucks and get it delivered. And most of them have the luxury of invoicing their clients before they have to pay us,” said Hayden. “This kind of foodservice distribution network takes a lot of investment, but it’s worth it.” On the Foodservice Front Joe Kunde is the point man on the foodservice front for Lamb Weston. He heads up sales operations exclusive of the major restaurant chains, which are looked after by Mike Schanze, vice president of national accounts. Approximately 30% of the company’s business is rung up in Kunde’s domain, a broad swath of coast-to-coast territory which covers the hospitality industry from school lunch programs and hospital cafeterias to corporate dining facilities and mess halls. Kunde assessed overall market conditions in the US foodservice sector as favorable in spite of rising inflationary pressure. “While more consumers may be cutting back on discretionary spending, they still appreciate that a meal of french fries with a hamburger or other kind of sandwich is real value for money,” he said. Tantalizing Tantalizers®
Beyond fries, Lamb Weston’s extensive assortment of Tantalizers® not only provides end users with extra appetizer and side dish options, but also yields attractive gross margins to operators in the bargain. The $1.29 product cost for a serving of Mozzarella Sticks made with 100% Wisconsin cheese, for example, nets a $4.70 return when menued at $5.99. Available in many shapes and forms, the Tantalizers® range runs the gamut from Stuffed Jalapeños and Breaded Mushrooms to Battered Sweet Corn Nuggets, Italian Breaded Zucchini Sticks and bite-sized Stuffed Spudz loaded with Southwestern Cheddar Cheese. Battered Sweet Corn Nuggets are a tasty, visually appealing finger food especially popular in the southern regions of the United States. A crisp, golden batter surrounds bite-sized whole sweet corn kernels and sauce. They may be paired with a Cajun or blackened seafood entree, or simply served with a signature dipping sauce. Plump and crunchy in texture, Tantalizers® Stuffed Jalapeños are loaded with real cheddar and cream cheeses.
Relatively new to the appetizer line are Beer Battered Jumbo Onion Rings, which are made from thickly sliced, sweet Spanish onions coated in a premium beer batter to create an extra-large, crunchy sweet treat to eat. Here’s to Your Health Catering to the health and wellness concerns of customers is increasingly a front burner priority across North America, and Lamb Weston has long offered low-fat, no trans-fats, natural and organic products that are just what the nutritionist ordered. Nowadays, with a number of school districts pulling fryers out of kitchens or reducing the number of times that french fries may be served students per week, Lamb Weston is reminding buyers of its line of Supreme Oven Roasted Potatoes. “We market them for what they are – something other than french fries,” said Kunde. The assortment ranges from 100% fat-free Redskin Tri-Cut Dices to 99% fat-free Russet Wedge Cuts, Concertinas®, and Seasoned Russet Regular Cuts. A growing garden of USDA-certified organic offerings are available under the company’s Earth’s Garden® Potato Products range (see story on page 37), which contains zero grams of trans-fats. Among them are Natural Wedge Cuts, Country Dices and 1/2 Crinkle Cuts made with only four ingredients: potatoes, canola oil, apple juice (to accentuate oven browning) and citric acid (to promote color retention). Growing Retail Profile ConAgra Foods Lamb Weston is quite active on the retail scene. Its Inland Valley brand, which is familiar among consumers buying products ranging from Homestyle Mashed Potatoes and Home Browns to Tater Puffs and Munchskin Meals, has since 1986 been a highly visible presence in supermarket frozen food aisles.
How are today’s sales and marketing efforts going, and what might be in store on the new product front? Quick Frozen Foods International magazine put the question to Sharon Miller, vice president in charge of retail sales and business systems. “Key items under Inland Valley have been Twister® Fries, Seasoned CrissCut Fries®, Mashed Medallions and Home Browns. Our work around this particular brand has been in a quieter phase as we have worked on the acquisition of Alexia Foods Inc. (see story on previous page) in conjunction with ConAgra,” commented Miller. “Alexia represents a premium, natural/organic opportunity for frozen potatoes in retail, which has a lot of upside for the future. We think it will give us a great vehicle for bringing innovation to consumers.” While Alexia Foods’ sales department will continue to operate independently as in the past, the broader Lamb Weston organization will act as a reliable partner and source of information to help the Alexia team continue to be successful. “We will work together behind the scenes, or where appropriate, in front of the scenes with key customers,” said Miller. “This will ultimately lead to a better results for all of us.” On the “invisible” side of the business, at least to consumers, Lamb Weston is a major producer of store brands. In fact, the company’s combined private label and proprietary brand sales reportedly account for approximately 35% of the total US retail market for frozen potato products. How does it keep private label programs fresh and creative for so many different retailers – most of whom want their store brands to stand out against the competition? “Part of our success in this area comes from our willingness to help retailers deliver on their unique store brand position,” explained the vice president. “In some cases, it is with product innovation. Our extensive expertise in foodservice, and foodservice product trends, is something that our retail partners value highly in our relationships. Additionally, we deliver outstanding service levels through our sophisticated logistics systems, ensuring that we are furthermore a valued partner.”
When asked what is the biggest challenge in private label development, Miller responded: “It is trying to help retailers manage the category effectively. Too often we find private label and the brand being promoted simultaneously. This just lowers the value of the whole category in the mind of the consumer, and doesn’t help to grow the category.” As for major trends impacting the retail frozen potato business at the moment, the vice president identified health/wellness and convenience as the leading shapers and movers of the industry. She elaborated: “Historically, potato solutions have been driven from foodservice, where the dominant consumption takes place. I expect that the health-wellness solutions that we drive for foodservice will have a spillover effect into retail. The spin on this will be to create a product that also provides the consumer with greater convenience, like packaging and preparation options.”
Miller, who holds an MBA and has worked in the food industry for 18 years, has been with Lamb Weston since 1999. Until January of 2006, she was responsible for developing the company’s national chain foodservice business in Canada as well as building the foundation for a direct sales and local broker network. How does Lamb Weston manage the huge geographical territories that encompass the USA and Canada? “Firstly, we have a talented, experienced sales team that has expertise in store brands, Inland Valley and retail deli,” said Miller. “Consolidation of the retail marketplace in recent years makes it easier to handle the geography, and where possible, we have consolidated our broker interfaces to present a singular potato contact for the retailers. That in itself helps out sales folks to manage the geography, and set priorities around the best opportunities to excel at.” Sailing Ahead in Industrial Sales Another field in which Lamb Weston excels is in supplying potato-based ingredients and product development services to further processors of frozen food entrees, dinners and side dishes, as well as other industrial accounts. “For 50 years we have led the industry in developing the technologies and products that have changed the way consumers purchase, prepare and enjoy potato products worldwide. Our capabilities extend well beyond the products we offer, to our unique ability to custom formulate them for the specific needs of clients, while ensuring maximum quality, efficiency and food safety,” said Dave Griffiths, who runs the company’s Industrial Sales department. |
