Recipe for Success
The secret ingredients for Cains' success: research, scheduling, supplier relationships
By Tom Stundza -- Purchasing, 7/14/2005 2:00:00 AM
New Englanders are very loyal: They support a professional sports team for decades between championships (Boston Red Sox, 86 years); eat the same hot dogs made by the Monkiewicz family in Massachusetts (Kayem, 96 years); gobble cheddar cheese made at the same farmers' cooperative in Vermont (Cabot Creamery, 96 years); crunch the same potato chips made by the Croft family in New Hampshire (Granite State, 86 years), and insist on the same mayonnaise produced in Massachusetts (Cains Foods, 91 years).
Cains Foods distributes its products throughout the six New England states and a large portion of New York. "The people of New England are extremely loyal to this brand," says Phil Ferraguto, director of purchasing. Actually, this regional favoritism toward Cains mayonnaise especially borders on the obsessive: "We hear from many former New Englanders who have relocated all across the country and one of the things they miss most is Cains All-Natural Mayonnaise. And who can blame them?" asks Lyman Orton, whose father, Vrest, founded The Vermont Country Store on Route 100 in the picture-postcard town of Weston, Vt. back in 1946.
Charlie Burke, an organic farmer, cook, writer, and vice president of the New Hampshire Farmer's Market Association, recently posted a recipe for Great! (not just good) Coleslaw on the Heart of New England, a weekly online newsletter of all things Yankee. The owner/operator of Weather Hill Farm in Sanbornton, N.H., brazenly says his perfect amalgamation of cabbage, carrots, sea salt, vinegar, celery seeds, black pepper, and sugar also requires equal parts of regular and low-fat mayonnaise from Cains Foods.
Then there's the D'Angelo sandwich chain, which advises customers at its 200 shops in New England that it uses only Cains mayonnaise—especially on the company's signature summer-menu item, the double-stuffed lobster roll. It consists of two lobsters lightly coated in mayo in a grilled hot dog bun.
Just as in any type of cooking, making mayonnaise starts with high-quality ingredients that will yield well-balanced and good-tasting final products. The sourcing of those ingredients—soybean oil, eggs and vinegar mostly—is handled by purchasing director Ferraguto. He buys enough common and secret ingredients to make a million gallons annually of the flagship-brand culinary product. In fact, 40% of his purchasing budget is soybean oil.
But, there's a lot more to buying at Cains since the company, now headquartered in Ayer, Mass., about 35 miles west of Boston, garners an average $40 million in annual sales of hundreds of condiments, dressings and canned soups under the Cains, Olde Cape Cod and Caroline's brands as well as numerous private labels.
To support this manufacturing and marketing effort, purchasing director Ferraguto and buyer Andrea Geanacopoulos source $18 million in such key ingredients as soybean, canola and olive oils; eggs and egg yolks, vinegar, lemon juice, sweeteners (corn syrup and cane sugar), salt, pepper, paprika, mustards, other spices and pickles—and plastic (mostly PET) containers, glass bottles and corrugated boxes and other packaging materials. They also source enough labels to package 700 numeric identifier SKUs (stock keeping units).
A revered brand
Consultants say that valuing and protecting the brand is a critical objective for any successful company in the food and beverage industry. That's especially true at Cains, which manufactures and distributes its products to retail stores and to food-service organizations. In fact, consumer products made at the plant include 13 types of packaged mayonnaise, 49 types of packaged consumer salad dressings, and five types of packaged consumer tartar sauce and sandwich spread.
There also are almost five dozen specialty-label products listed on the company's website—ranging from plum jelly to clam juice, from lobster bisque to oyster crackers. And there are 86 food service-grade mayonnaises, tartar sauces, salad and cole-slaw dressings and cocktail-sauce products, eight barbecue sauces, 19 portion-control options and numerous bulk containers of products. "That's only the tip of the iceberg, though," says Ferraguto, "The company makes 700 or so food products under various brands and labels." Food is a hugely competitive marketplace. "There are some national brands of a mayo and a few large regional private-label manufacturers," says Ferraguto, "plus a zillion salad-dressing guys out there."
It's no secret that Cains is a sales-driven company. It has a test kitchen where new products are under development, existing products are upgraded and sanitary food-making processes are reviewed—and, if necessary, improved.
"Production scheduling is very important at Cains because we make lots and lots of private brands," Ferraguto adds. "We are the largest private-label producer on the East Coast of retail mayonnaise." Still, the firm must stay competitive against other firms marketing into New England, he says. So, purchasing works closely with the manufacturing team—in fact, the purchasing director's boss is Rick Duggan, vice president of operations.
That's because Cains always has been a quality-driven company first. Producing mayonnaise is a complicated process, according to a spokesman for the Association for Dressings and Sauces in Atlanta, "since commercial mayonnaise and mayonnaise-type dressings have to be carefully prepared under strict quality controls to ensure the final product is free of dangerous bacteria." So, says Ferraguto, "supplier involvement is important" since it all starts with buying the raw materials that become the mayo—which actually is an emulsion that is 80% oil, 10% eggs and 10% other ingredients.
Also note that Cains is a kosher plant, "which does limit the potential suppliers but insures quality," says Ferraguto. Achieving kosher certification re-quires that ingredient purchasing, handling and manufacturing follows a set of biblical dietary guidelines. (Kosher, in Hebrew, means fit or proper, and is generally used to describe foods that are prepared in accordance with special Jewish dietary laws, according to Rabbi Yaakov Rubin at Orthodox Union in New York, the largest and oldest supervising agency.) "Actually, rabbinical certification is a quality-assurance program," says Ferraguto, "that assures a quality paper trail from the suppliers to our material handling and warehousing operations and on through production."
Suppliers are important partners
Another important task for the buyers is strategic sourcing, supplier relations and supply contract management. "How you buy is through relationships," says Ferraguto, an avid Boston Red Sox fan (and season-ticket holder). He should know about marketplace relationships since he's been on both sides of the table: Once a giftware buyer with the Wallace International Silversmiths in East Boston, Mass., he's also been a production planner with Sweetheart Plastics in Wilmington, Mass., and worked in various other manufacturing environments.
Today, Ferraguto has to help Cains' 200 active suppliers stay on top of quality and delivery requirements and cost-savings goals. That's why the purchasing chief talks daily with his half-dozen or so largest suppliers of oils and eggs, and weekly with another 40 to 50 providers of key ingredients and packaging materials.
According to his boss, Duggan, the plant scheduling, manufacturing and purchasing operations have been organized to maintain close relationships between internal departments and with the supply base. "There's no way for any of us to escape from each other," according to the vice president of operations, "not when what you do is being judged by the court of your peers." He maintains this is the best approach: "There's no way any one of us wants to let the Cains Products team down." Duggan says that "the commodity market is an interesting yet frustrating game because it's so cyclical; yet, we also have to pay attention to our own manufacturing history when planning the buys."
And that's why there's such a hands-on approach by the buying team for the biggest buy, which is soybean oil. Oil is delivered to the manufacturing plant by rail. In fact, four 185,000-pound railcars are delivered weekly from such Midwestern agricultural product processors as Archer Daniels Midland, Bunge, and Central Harvest States. But they don't just appear by magic: Ferraguto tracks prices daily of soybean oil futures on the Chicago Board of Trade ( CBOT ) "because we have to be careful of spot and futures prices and supply and demand trends."
"Needs are based on historical usage trends," says the purchasing director. "The company's MRP (material requirements planning) system blows out the needed pounds for the week ahead." The team closely analyzes supply vs. projected needs before the crop harvest (August and September) and right after. "We track government data reports from the U.S. Department of Agriculture ( USDA ) and we also get input from suppliers on supply and demand trends," Ferraguto says.
Since "mistakes when buying oil can break the purchasing budget," the firm actually has an oil-buying team of Ferraguto, Duggan and their boss, president and owner Denis Keaveny. They try not to buy on the spot market and strive to structure their futures contract bids to coincide with manufacturing needs, supply availability, railcar availability, inventory storage capabilities and regional railroad logistics. (Interestingly, the western Boston suburb of Ayer has been a railroad town since 1860, when it was known as Groton Junction. Today, it is the area's railroad freight hub for Ford of New England auto dealerships, juice producer Veryfine Products, regional PepsiCo warehouses, and other commercial and industrial railroad users.)
USDA regularly analyzes the soybean market and periodically estimates crop production in the U.S. and offshore production centers. Estimates can impact the CBOT futures prices for soybeans, soy meal and soy oil in the U.S. and South America by indicating whether supply will be too much, too little or just right. That's why Ferraguto's personal computer charts the CBOT 's online commodity futures price quotes for soybean oil—where commodity market prices and quotes are updated continuously during market hours.
This is important because costs of soy oil are based on the CBOT daily settlement price for beans plus processing plus transportation, or soy oil plus transportation. Still, soybeans and soybean oil are commodities and their prices can be erratic—subject to such acts of nature as fire, wind, drought, flood, disease, and insects. Pricing also can be affected by unpredictable governmental legislation, like import-export quotas, embargoes, subsidies, and foreign exchange reevaluations.
Eggs (cooked, pasteurized, liquefied, and salted) are delivered in 2,000-pound totes from Papetti's Egg Products, which produces a broad array of egg products to the foodservice, industrial and retail markets, including extended shelf-life liquid eggs.
Now Playing: 