The growth of super-premium and ultra-premium pet foods has exceeded expectations for at least the past 10 years growing in the US at a rate of nearly 6% CAGR year-over-year between 2011 and 2017 according to market research company Euromonitor International. With the super-premium category of products now reaching across all retail channels, the challenge of sourcing top-quality ingredients and producing those products to exacting standards leaves brands struggling to meet the demand for these high-end products. For more than 30 years, co-manufacturer and private brand producer C.J. Foods, headquartered in Bern, Kansas, has been the secret partner helping brands satisfy the pet owners’ need to feed super-premium and ultra-premium dry, extruded pet foods and treats to the pets they love.
Co-manufacturers allow brands the flexibility to respond to rapid change in the markets they serve. During General Mills Inc.’s investor day presentation in July, Blue Buffalo Pet Products, Inc.’s President William W. Bishop addressed what he called the company’s hybrid manufacturing strategy which includes company-owned facilities as well as co-manufacturing partners. He listed many benefits to this approach. It allows Blue Buffalo to gain flexibility and productivity, remain innovative and control its supply chain as well as drive margins, he said.
Often, pet food companies turn to C.J. Foods to solve the processing challenges created by the expectations of today’s consumers. C.J. Foods currently produces dry kibble for 35 of the top U.S. super-premium and ultra-premium brands. To meet the needs of its customers, C.J. Foods employs nearly 500 team members at its six processing plants — two in Pawnee City, Nebraska, two in Bern, Kansas, one in Baxter Springs, Kansas, and one in Brownwood, Texas — for a combined total of 620,000 sq. ft. of plant space from which the company produces more than 400 million lbs. per year of extruded pet foods and treats.
This past July, C.J. Foods invited Pet Food Processing to tour the plant referred to as BP30 in Pawnee City, which was custom built to C.J. Foods’ specifications in 2011. Chuck and Joyce Kuenzi established C.J. Foods in 1985 and purchased what the company now calls BP10 in Pawnee City.
That facility was expanded in 1995, and again in 1999. In 2002, C.J. Foods purchased an existing pet food plant in Bern, which has been expanded upon several times and where the company is headquartered today.
In 2016, the company purchased an existing pet food processing facility in Baxter Springs, and in March of this year acquired Bern-based Lortscher Agri-Service (now referred to as C.J. Foods Ingredient Division), a provider of ingredient and milling services. But, back in its humble beginnings in 1985, C.J. Foods was first a human food processing company until a unique request came along.
For the birds
C.J. Foods transitioned to extruded pet food in 1992 to meet a customer’s request for 100% organic certified caged bird food. To meet that need, C.J. Foods became the first organic certified pet food processor in the United States. The company was kosher certified when it manufactured human food so the leap to organic certified was not that difficult. The company requesting organic caged bird food in 1992 is still a customer of C.J. Foods today.
“Becoming organic certified ended up being something that really paid more dividends years later than it probably did then,” says John Krehbiel, vice president of corporate sales for C.J. Foods. “What John Kuenzi did then is really what C.J. Foods does today, which is to be the only company who can or the only company who will meet the customer’s requirements. That’s been the real key to our success. We’ve always been a co-manufacturer, so our business from Day 1 has been to make other companies’ products to their exacting specifications.” The company established a niche for itself by saying “yes” to the more challenging projects and opportunities that customers offered.
This approach has led to many firsts for C.J. Foods in addition to organic certification. The company was the first pet food producer in the U.S. to gain China certification and the first co-packer in the U.S. with the capability of introducing inclusions such as freeze-dried meats and dehydrated fruits and vegetables into finished kibble. In 1996, C.J. Foods was the first pet food processor to completely automate an extrusion line from beginning to end.
When brands asked for treats and pet food to be packaged in stand-up, resealable pouches (SURP) and subsequently requested small, quad-style bags, C.J. Foods invested heavily in technology to fill SURPs and then eventually to convert from SURPs to bags and to either box or bale those small package offerings.
All the firsts came as a result of the drive to find a way to say “yes” to customers. That drive, and the growth of the natural, organic super premium pet food category, has created significant capacity pressure. “Our biggest challenge historically in the past 20 years is to have, and maintain, adequate capacity for customers to continue to grow their businesses,” Krehbiel says.
Prior to 2018, C.J. Foods’ expansion of existing manufacturing plants and the acquisition of new facilities was part of its strategy of growing in the extruded pet food space and increasing capacity to support customers. But the Lortscher acquisition goes beyond extrusion. “The purpose of that acquisition was to get deeper into the supply chain than we previously could be and to have more control over a relatively large, and vitally important aspect of the supply chain,” Krehbiel explains.
Although C.J. Foods has strong partnerships with other pre-mix providers, well over 50% of the dry ingredients the company requires for processing is provided by Lortscher. “It’s much more than purchasing ingredients that we need,” Krehbiel says. “Lortscher, along with several other pre-mix providers, sources the ingredients, stores them, blends them according to each unique recipe, grinds them, loads them onto a pneumatic tanker and delivers what we need when we need it to whichever facility we request. We felt that we needed to make sure that this source and supply was protected because it’s so vital to our business.”
“Private brands provide retailers a sense of control over their footsteps and helps drive loyalty with their customers,” says Heather Govea, vice president of private brands, C.J. Foods.
Responding to another challenging request led C.J. Foods to start a private brands division two years ago. The company believes that at some point, the growth in the super-premium category will level off. “If we, as a company, want to continue to grow, we must ask, ‘what else we can do with the assets, knowledge, understanding, experience and reputation that we have?’” Krehbiel says. “The most obvious is private brands, so we elected to move in that direction. An opportunity presented itself with one account and one situation. We dove in and learned together through the process.”
The private brands division of C.J. Foods provides services beyond the kibble to include product launches, positioning, production, in-store education and marketing support from initial concept to the shelf to the consumer. Heather Govea, vice president of private brands for C.J. Foods, says, “Private brands provide retailers a sense of control over their footsteps and helps drive loyalty with their customers.”
Same but different
C.J. Foods has five fully automated extrusion cooking systems that combine to produce in excess of 400 million lbs. of extruded pet food, treats and high-end caged avian diets annually. Across the company’s four facilities dedicated to pet food processing, the extruder systems include a Wenger X-165 single screw, two Wenger X-185 single screws, a Wenger C2TX twin screw and an Extru-Tech E750 single screw. Five dryers, two from Extru-Tech, a Wenger Series VI and two Wenger Series VII plus five Extru-Tech vertical coolers that cool the products before material handling systems from HorizonPSI, Air-Lanco and MPE Chicago deliver them to the Wenger and Extru-Tech enrobing systems and on to one of 13 packaging lines: four from Thiele, three from Parsons, two from JEM, a Roberts C1500 SUP rollstock line and a PSG-LEE SUP pre-made line.
The common denominator among all four C.J. Foods extrusion facilities from an equipment perspective is each location has the ability to produce and package anything that the company makes today for 35 different companies. Although each location has the ability to produce all the diets, it doesn’t mean that each location does produce every diet. A key difference from location to location starts with certifications. One location (Baxter Springs) can produce bovine diets, while three of the locations are certified as “Bovine Free” facilities. Additionally, two locations are Taiwan certified and two locations are organic certified.
Another difference from plant to plant is the minimum order requirement. Each facility has a minimum order quantity and they incrementally get larger as the extruders get bigger. “Because of different certification requirements, we have two customers that we use all four facilities every month to produce 100% of their product,” Krehbiel explains. “We don’t use all four facilities for capacity in that regard. We use all four facilities because their whole product portfolio requires something from every one of our facilities.”
There are a lot of packaging similarities between the sites. “We can blend inclusions into finished kibble prior to packaging in all of our sites,” says Tim Friesel, plant site director. “The larger extruders all have the downstream packaging capabilities to fill both big bags, 10 lbs. and up, and small bags, 0.8 kg. to 8 lbs. Three of the four large extruders are fully automated to hang, fill, seal, bundle and palletize the small-bag, finished goods. For the big bags, the automated packaging lines can fill, seal and palletize them. Baxter Springs has a semi-automated packaging line and BP10, the original Pawnee City facility, produces a larger number of smaller-volume runs which means more changeovers per day so the packaging process in that plant is typically fairly manual. With that many changeovers, it’s quicker to just change a bag manually.”
People as a priority
C.J. Foods invests in an immense amount of sophisticated equipment to produce hundreds of millions of pounds of extruded pet food and treats per year but it’s clear when speaking with the company’s management team and visiting the processing facilities that their team members are the secret ingredient to C.J. Foods’ recipe for success. The company’s priorities are posted on doors, windows, walls and handed out on small cards: safety, people, courage, team and speed.
With nearly 500 team members spread across the six processing facilities and a corporate office in Kansas City, recruiting is a challenge. The company’s plants are located in low-density population areas that all have low un-employment rates in the surrounding counties. President of C.J. Foods Elliott Haverlack is driving the focus on people and keeping the purpose they pursue together at the forefront. It’s clear that the company sees a direct correlation between being the processor of choice to super-premium brands and being the employer of choice in the communities in which they are located. Safety is at the heart of all things they do from both a team member perspective and a food safety perspective.
Going with the flow
The larger, 135,000-sq.-ft. Pawnee City facility the company refers to as BP30 was built by C.J. Foods in 2011 and designed specifically around preventing microbial cross contamination by having three distinct areas of separation — raw material and meat handling, extrusion and packaging. The other locations, which were existing plants, have two areas of separation, processing is separate from packaging and finished goods storage.
In all locations, C.J. Foods has a unique system for managing air flow plant wide. “The air comes into the cleanest part of the plant which is your finished-product warehouse and flows through to the other end of the plant where your raw materials are coming in,” Krehbiel says. Friesel adds, “There is a tremendous amount of air coming into the plant and it all makes its way backwards through the process. From the packaging room to the dryer room to extrusion and then out of the building.” C.J. Foods also intentionally manages the access and flow of people. BP30 was designed with three separate entrances and break rooms, only two people per shift have access to the raw materials and meat rooms and when touring the plant, visitors can only look into these two rooms through windows. The raw meat room also has its own separate air flow system.
“We’ve taken a much more intentional approach to containing the product and having it less exposed or accessible to minimize as much as possible that a human being or something in the air could contaminate the product,” Krehbiel says. The segmentation sets PB30 apart from more typical extrusion systems.
Suppliers for the dry pre-mix ingredients provide just-in-time delivery. Those raw, dry materials are conveyed into the raw materials area which is a separate room from the extruder. The meat room, which is also a separate room, processes frozen meat blocks into custom slurries that, depending on the diet, can include multiple protein sources as well as fruits and vegetables. Raw meat slurries are pumped into the raw materials room and into the preconditioner along with the dry, pre-mix ingredients and liquid oils and fats. The extruder sits in a separate room one level below the preconditioner. Extrusion operators have no exposure to ingredients in their raw state.
The HorizonPSI pick-up hood system used to pneumatically convey the kibble off the end of the extruder does not pull in air from the floor of the extruder room. It pulls in clean air that goes through both a HEPA filter and a burner as a microbial kill step before it comes in and picks up the kibble and takes it to the dryer.
Kibble travels from the dryer through a dense phase conveyance system to the coating room while it’s still hot to receive external coatings. Those coatings can be fats, oils and dry powdered digest palatability enhancers. Some products get either a liquid or a dry coating and some products get both depending on the formula. The coated kibble travels back into the dryer room through a dense phase conveyance system and passes through a vertical cooler that reduces the temperature of the kibble down to the ambient temperature of the room. QA tests at this point measure the density, the actual size of the kibble, the moisture content, the water activity of the kibble and the temperature of the kibble.
An Eriez vibratory conveyor with a magnetic separator transfers the product out of the cooler and drops it into yet another dense phase system that ultimately delivers that kibble to one of the packaging bins. A different ingredient can be stored in each bin including freeze dried inclusions that have been high pressure pasteurized. A combination of the stored ingredients can be added in specific percentages to the conveyor that runs underneath those bins. Once the product goes from this conveyer through the dense phase to the packaging line, it’s fully blended.
Packaging calls the shots
Packaging capacity determines the plant capacity. Just-in-time delivery of packaging materials, a wide variety of diets and an immense number of separate SKUs requiring multiple changeovers means packaging is often a bottleneck. “One of our facilities averages 60 distinct formulas per month with an average of three SKUs per formula for a total on average of 2,000 finished SKUs per month across all of our plants,” Friesel says.
Managing the just-in-time delivery of packaging materials for thousands of SKUs requires a lot of coordination. “We produce too high of volume at any of our locations for us to stock more than a few months of packaging materials for any one production run,” says Tami Mars, customer support manager. “It would require much more storage space than we have. We try to have all packaging materials at least seven days in advance. In order to do that, we have a very solid relationship with our suppliers and there is a lot of conversation that goes back and forth every single day.”
To maximize efficiency and accurately identify bottlenecks, C.J. Foods has adopted an interactive plant floor productivity efficiency system. Redzone digital score boards are located on every packaging line and available on company issued iPads. “Using everything that we know about the product from custom benchmarks we set, Redzone calculates the productivity based on the optimal rate,” says Bill Brock, vice president of operations. “We currently use this technology in the extrusion and packaging areas. Redzone helps us identify and manage our bottlenecks. We set the targets and as we get better we can stretch the targets and raise the bar to keep pushing for more improvements. After implementing Redzone we did some work on line balancing and we improved that line by 24% in actual output and it was simply by going back and making sure we were doing things to support the timing and we weren’t overpowering or underpowering the line.”
“Investment in equipment or more space is not always what you need to have more capacity,” John Krehbiel, vice president of corporate sales, C.J. Foods, says.
Information is the tool C.J. Foods employs to address packaging speed and capacity challenges. “Redzone supplies the operational metrics but there is also quality, service and cost metrics that I look at that are not in Redzone,” says Brian Lundquist, chief operating officer. “I look at seven or eight metrics every single day. We plot a course for the year then break it down into quarters, months, weeks and days. We focus a lot of time on the areas that get off track and how to get that back on track.” This systematic approach to operational efficiency helps C.J. Foods grow capacity with existing systems and meet customer needs now and in the future.
“As we’ve evolved, we have a much better understanding of the capacity we already have,” Krehbiel says. “Investment in equipment or more space is not always what you need to have more capacity. We have an amount of unrealized, untapped capacity that we will explore and exploit before more thought is given to expansion and new equipment.”
Serving the customers that it does, C.J. Foods has been on the forefront of the super-premium, dry pet food trends. “From the meat-first, to higher and higher meat content, to grain-free and limited ingredient diets (LID), the common goal has been to develop a level of service that is remarkably different from anything else that’s available,” Krehbiel says. “And we did that for many years with just the kibble itself. We have gotten to the point where changes are more subtle. We’re starting to see inclusions with these already incredible kibbles becoming but one of the growing trends.”
Krehbiel adds, “At the end of the day no matter how innovative we can be, if it doesn’t resonate with the consumer and sell then it doesn’t matter how good it is, how innovative it is, what’s in it or what’s not in it. C.J. Foods can’t answer that question because we don’t market and sell pet food. Our job and our business is about taking our customers’ ideas and aspirations and figuring out a way to produce, and package, that product. That’s our world. And we rely on our customers being right about what the consumer will purchase.”
From its broad, insider view of the pet food market, C.J. Foods seems to have said “yes” to the right kibble challenges and invested in the right capabilities at the right time as the demand for unique, value-added, super-premium, extruded pet food has climbed.