Göteborgs Food Budapest is a Hungarian chocolate, compounds, fondant and fillings manufacturer with customers mainly within bakery, confectionery and ice cream manufacturing. As a mid-size company that produces 17,000 tonnes this year, its size gives it an agility that means it to react to current supply chain challenges.
We are living in a time of increased uncertainty and unstable prices. What has been the impact for producers such as yourself, and for your clients?
"The obvious effect has been that the cost of everything from raw materials onwards has increased tremendously. Chocolate production for one is also very energy consuming and the whole sector is of course struggling with increased production costs and higher energy bills.”
"It is also clear that our own suppliers are less flexible as a result. With raw material contracts, for instance, we buy a certain quantity and there is a time period for which we need to call off the purchase. In the good old days, it was not a big problem if you needed to extend that delivery by a couple of weeks, whereas now that flexibility is decreasing.”
"And while everybody is now very strict on call-offs, it's also much more difficult to plan lead times on materials. Flavours, food colours and other products that usually had three to four weeks lead time now have three-month lead times."
How has this affected priorities for your clients?
"I would say that availability has a higher value in this time. For example, I had a meeting recently with a customer who operates within the bakery industry. Whereas normally, the discussion is about price, the executive claimed it is not anymore – availability is almost more important. All producers are having problems in supplying what they need to supply, and that changes priorities.”
Göteborgs Food Budapest lists flexibility as one of its key unique selling points (USP). Could this be one solution to the ongoing issues the sector is facing, and if so, how?
"I definitely think so, to some extent. For instance, we get inquiries from existing customers to reformulate current recipes to try and make products cheaper in light of things getting more expensive. We have the flexibility to be able to reformulate the product and try to find some cheaper materials – and we have the ability to make it a quite quick and easy process for the customer.”
How do you ensure the quality stays high when offering this kind of flexibility?
"Flexibility and quality always need to go hand in hand, of course. If you don't have the quality, you're out of business in no time."
What is it that allows Göteborgs Food Budapest to uphold flexibility as a USP? Why is this special versus other producers?
"Bigger companies are less flexible, for obvious reasons. Realistically, we can maintain this kind of flexibility as a smaller company. Although we're not that small, we're producing around 17,000 tonnes of product this year, but it's not much compared to the bigger companies.”
"If a customer turns to bigger companies looking for a tailor-made recipe, they often require a minimum of 50 tonnes to look at the project. A smaller production and organisation like ours, allows us to produce tailor-made products down to six tonnes.”
"There is definitely a big demand for this, and we hear it from customers all the time – they really appreciate the speed and flexibility. We have a good R&D department, we are sending samples quickly, we have a dedicated production staff and we are a small organisation with small overheads."
What other benefits might a small to mid-sized player such as Göteborgs Food Budapest have over a large player when it comes to flexibility?
"One would for sure be our capability to supply products in different forms, depending on the customers need. We do supply a lot of liquid, but we have great flexibility to mull or pelletize to solidify the product to be packed into bags or cartons and shipped to the customers for melting.”
“For one, many customers cannot take liquid deliveries because they don't have the ability to unload a liquid bulk truck. And in the crisis times, it’s also beneficial to provide options to buying liquid as customers sales volumes are more uncertain. Buying a full truck of liquid in bulk is a lot of money, buying products solid and in bags of course provides flexibility in allowing you to commit to smaller quantities.
|Anders Turos, co-founder and export manager of Göteborgs Food Budapest