CHICAGO — Communication and a pinch of creativity have helped Simple Mills tackle challenges brought on by the coronavirus (COVID-19) pandemic.
“I think flexibility is the name of the game,” said Katlin Smith, founder and chief executive officer of the snack and baking mix brand. “Our team has been very fluid, working and reworking and reworking plans. You figure out one way to do something, and then you have a wrench thrown into it.”
Increasing production to meet a surge in demand from retail has been top of mind, Ms. Smith said. The company has far outpaced pre-pandemic forecasts over the last few months, with brick-and-mortar sales increasing 72% year-over-year.
“Every year we see even more demand than the year before, but it's certainly complex to add heightened demand on top of heightened demand,” Ms. Smith said.
Double-digit growth continued even after the pantry-loading surge at the beginning of the pandemic ended, with sales of the company’s baking mixes increasing 150% in the e-commerce channel and 85% in the natural channel.
“The pandemic has changed how people approach grocery purchases,” Ms. Smith said. “They’re experimenting with foods that might make them feel better and with different ways of cooking. We’ve seen a huge amount of people trying out baking.”
Ramping up production during COVID-19 requires constant communication with suppliers, co-packers and retailers, she said. One area of focus is securing secondary suppliers across the board. In some cases, that extends to third, fourth and fifth suppliers.
“Oftentimes, it’s demand that throws you into needing that third or fourth supplier, more than some of the other market disruptions due to COVID,” Ms. Smith said. “That has been a huge piece, having extra orders on hand. If we increase an order at the last moment, then we can produce a lot more product at short notice.”
Another piece is focusing on what the company does well, she said. For Simple Mills, that means prioritizing top sellers like baking mixes, almond flour crackers and almond flour cookies.
“Focusing on your core SKUs and keeping those in stock has been critical,” Ms. Smith said. “Ensure the success of the largest SKUs first, then address the needs for your third and fourth best sellers.”
Increased market penetration and growing consumer interest in simple, better-for-you foods in recent years means the company has more leverage when working with co-packers.
“I think we're lucky in that we are a size and scale business now to where we are a meaningful partner to our partners,” Ms. Smith said. “I imagine for some of the smaller brands out there, it probably is very challenging to get the attention of their partners. Luckily, we've spent the past five years really focusing on building deep relationships. This environment is where those relationships really come to bear.”
New automated packaging equipment is helping Simple Mills meet unprecedented growth in digital sales. The company saw a 201% increase in e-commerce sales during the last few months, with daily year-over-year growth as high as 600%. It recently saw its highest-ever one-day sales volume on its own website.
“If you think about e-commerce, a lot of times you're selling multi-packs, which require you to repackage the product,” she said. “Being able to do that in an expeditious manner and quickly ramp up the volumes of kits you produce is important.”
Simple Mills is working with its partners to develop backup plans so that it can respond quickly when challenges arise. Still, some disruptions may be inevitable, Ms. Smith said.
“It won't be perfect,” she said. “There will probably be points where there will be hiccups, but you just kind of adapt and keep everyone informed. When someone says they’re going to shift this here or shift that there, you say, ‘Okay, we will make that work.’”