Jeff Koeze's Blog Good Food, Good Business, and the Good Food Business

6Feb/090

Cost Cutting Run Wild

Our company left the industrial peanut butter and granulated peanut business in 1994.  Up until then, we competed in the same markets as the Peanut Corporation of America.  Thirty years of relentless consolidation on the part of retailers (and a corresponding increase in their bargaining power) brought powerful cost-cutting pressure on grocery suppliers and on their ingredient suppliers in turn.  Price became the only consideration when selecting suppliers.  Decades-long supplier relationships were disrupted. Lip service, at best, was paid to issues of quality.  This was a game my father choose not to play.

Combine ruthless cost cutting across the supply chain with cuts in government's regulatory capacity and the outcome is predictable.  Food safety has to be paid for.   It can be in the grocery bill or in the tax bill.  But it has to be someplace.

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