Victoria Gutierrez has recently thought of avocados.
President Trump warned that high rates for food and other supplies came from Mexico, Canada and China. So Mrs. Gutierrez, the most important merchandising officer for SYCO, the global food distributor and a Task Force started within the company by browsing the thousands of suppliers with which the company works to see which products can be influenced.
The good news for SYSCO, a company with nearly $ 79 billion in annual income, was that the shortages and supply chain challenges resulting from the COVID Pandemie ensured that it was diversified and in some cases suppliers for important products were duplicated.
The bad news? Avocados.
“The majority of avocados ate in the United States comes from Mexico. Can we meet the full demand for avocados in the US today? No, “said Mrs. Gutierrez in mid -February. She added: “There is not much that grows in the United States in the winter.”
The rates threat became reality on Tuesday. The Trump administration placed a rate of 25 percent for all imports from Canada and Mexico. This year it has also added 20 percent rates for goods from China, on top of taxes that remain from Mr Trump's first term.
But even before Tuesday, companies such as SySco emerged to build up stocks, in particular of less perishable goods, or finding new suppliers in countries that are not the target of the new rates.
“We have a few million pounds we get from Mexico,” said Will Ford, the Chief Operating Officer at Westrock Coffee, a coffee manufacturer of private label that produces for McDonald's and Walmart, in an interview in February before the rates came into force. “We have tried to try to find a different middle -American origin. Maybe we replace Mexico by Honduras or by Guatemala. “
It is one thing to build a limited inventory of coffee or tequila from Mexico, but almost impossible to do this with perishable goods such as avocados. There companies have two choices: they either carry the extra costs of the rates or pass them on to consumers.
Mexico, the world's largest producer of avocados, supplies about half of the avocados used in the Restaurant Chain of Chipotle. That company said this week that it would not charge customers extra, at least for the time being.
“It is our intention if we are here today to absorb those costs,” said Scott Boatwright, Chief Executive of Chipotle, in an interview with “NBC Nightly News.” However, he warned that if the costs became a 'considerable headwind', prices could rise.
The Chief Executive of Target, Brian Cornell, on the other hand, told CNBC on Tuesday that the retailer would probably increase prices for fruit and vegetables imported from Mexico “in the next few days”.
The ability of companies to pass on the rates to inflation-requires consumers can be limited, some analysts warn. For example, packaged food companies must 'absorb at least some of the costs', instead of losing the risk of running market share, analysts wrote at S&P Global Ratings in a report mid -February.
Only a few years ago, the Chief Supply Chain Officer of Procurement Manager at large companies focused primarily on searching for the whole world for the cheapest producers or for companies trying to put sustainability to the market, those who can show that they produced their food or goods in a climate-friendly and ethical way.
The COVID pandemic, and the resulting deficits and shipping delays by distant manufacturers, led many companies to duplicate their suppliers or, in some cases, to 'Nearshore', for example from suppliers in Asia, to those who shift closer to the United States, such as Canada and Mexico. The idea was to build safety nets in the supply chain.
But on Tuesday those locations changed to a disadvantage when neighbors in the north and south were hit with rates.
Mondelez International, the snack giant based in Chicago, has a factory in Salinas, Mexico, which makes Oreo and Chips Ahoy! Cookies and Ritz Crackers. That factory accounts for around 18 percent of the American turnover, according to estimates of analysts at Piper Sandler. The factory, the analysts, wrote in a memorandum in February, “is also the most cost -efficient, making it difficult to repatriate production to the US without taking higher production costs.”
Mondelez did not respond to an e -mail to ask for comments.
Some alcohol companies are mainly exposed to the new rates. Last month, Demono, who distracted 45 percent of his American turnover to Tequila and other liqueurs that were imported from Mexico and Whiskey from Canada, could see a hit of $ 200 million in the second half of this year for his operational profit. Even so, analysts note that more than 75 percent of the turnover of constellation brands in the United States has come from beers from Mexico, such as Modelo and Corona.
Constellation Brands did not return e -mails looking for comments, and a spokeswoman from Diodeo pointed to a remark from managers to Wall Street analysts and investors at the beginning of February: the company hoped to reduce the impact of rates by no less than 50 percent via the supply chain and “other mitigation strategies.”
At SYSCO, which offers food and drinks to restaurant chains and large hospital and school systems, Mrs. Gutierrez said that the company had changed its supply chain considerably during COVID.
“We used to have one partner for a product,” said Mrs. Gutierrez in the interview in mid -February. “Now we had two or three. Or if we had someone from one country, they became two or three countries.
In addition, large global food companies such as SYSCO must increasingly adapt to climate -related or other problems that can send prices for ingredients or simply make them difficult to find, such as eggs that have risen in recent months from the outbreak of Aviaire Griep in America.
The most obvious parts of the permitted Syco Supply Chain are perishable fruit and vegetables.
“From Mexico and South America we get avocados, limes, tomatoes and onions,” said Mrs. Gutierrez. From Canada, Sysco Canola is importing oil and wheat, but also frozen potato products, such as fries.
In an e -mail on Tuesday, Sysco said that although there might not be an immediate alternative for every product that is affected by the rates, tried to identify the options for his customers.
“For supply chain officers, uncertainty and dealing with shocks for the system is the name of the game,” said Mrs. Gutierrez. “Whether it is storming in a certain geography or, now, rates.”
