Child Nutrition Program South Texas Cooperative (CNP-STC) Members. SUBJECT: School Nutrition Program Food Items Proposal E1, Addendum #7,

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1 TO: FROM: Child Nutrition Program South Texas Cooperative (CNP-STC) Members Kristina B. Carrizales, Purchasing Cooperative Specialist SUBJECT: School Nutrition Program Food Items Proposal E1, Addendum #7, DATE: December 11, 2017 Please note the following addendums to School Nutrition Program Food Items Proposal E1, back up documentation enclosed. Labatt price changes effective September 1, Sysco price changes effective August 15, Excel Row: Bid Code: Change: Don Lee Beef Patty 200 count NOT AVAILABLE, removed Granulated garlic price correction from $36.61 to $36.60 *single warehouse discount price Garlic powder price correction from $39.29 to $39.27 *single warehouse discount price 1274 SY17-76 Price increase from $25.70 to $27.90 *total case cost 1276 SY17-78 Price decrease from $30.48 to $21.90 *total case cost Distributor Numbers for Sysco have been updated to reflect 7 (seven) digits for accuracy when placing orders. CNP-STC members are responsible for the selection of products available to meet the menu needs, nutrition goals, storage capabilities, and student preferences. For your convenience, the order guide has been revised on posted on the CNP-South Texas Cooperative Web page at Awarded Bids & Proposals. For additional information or questions, please contact the South Texas Cooperative: Lori Atwood Ramos, Purchasing Coordinator Phone: laramos@esc1.net Kristina B. Carrizales, Purchasing Cooperative Specialist Phone: kcarrizales@esc1.net America Retana, Purchasing Technician Phone: aretana@esc1.net Region One Education Service Center does not discriminate on the basis of age, race, color, national origin, gender, or disability.

2 From: To: Subject: Date: Josh Horn Kristina B. Carrizales Don Lee Monday, December 11, :16:19 PM Kristina, I wanted to confirm the pack/size on seq and per Don Lee. Don Lee Mfr Item: CNQ Product: Charboiled 100% Beef Steak Seas Pack: 240/2.25 OZ Itm UPC /2.25 OZ DON LEE BEEF STEAK BURGER-Q Vnd Itm CNQ DATED Shelf Life: 730 Min Days: 180 Thank You, Josh -- Joshua Horn Bid Analyst Labatt Food Service 4500 Industry Park Drive San Antonio, TX P: (210) EXT F: (210)

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4 Overview What is the extent of the increase? Garlic: +25% Vanilla: +100% Effective on February 15 th, 2017 Why is B&G taking a price increase? Raw materials costs have risen substantially since our last pricing. Spices are truly a global product, sourced from over 25 countries around the world with each subject to local and worldwide market pressures. Costing of each spice is impacted by factors such as currency exchange, weather, freight costs, worldwide supply/demand, as well as political and economical issues. We have used purchasing strategies, internal cost reduction, and continuous improvement programs to offset the additional costs to this point, and will continue those efforts to bring you competitive pricing. January 1, 2017 Confidential 1

5 Global Sourcing January 1, 2017 Confidential 2

6 Chinese Garlic Current spot market granulated pieces are at $4.75+/lb. Dehydration seasoning is complete, and industry continues to project shortage/tight supply situation. Production of fresh garlic has declined each of the last 4 years. 3 January 1, 2017 Confidential

7 Vanilla Over the past 2 years, vanilla bean costs have increased 500%, with the steepest increase occurring over the last 6 months. During that same period, we had increased prices +25% in March of 2016 on pure vanilla SKUs, but held since then. 4 January 1, 2017 Confidential

8 Vanilla Situation Demand Global demand is estimated at 2,700 to 3,000 tons, far exceeding supply Large scale food manufacturers are significantly increasing the demand as they continue to move their products to all natural flavors Supply 2016 Madagascar crop is estimated at 1,300 to 1,600 tons Farmers withheld as much as 40% of the crop Some, quality crop has been stored in vacuum packs Due to high demands, quality is falling. Vanillin content should range from 1.7 to 2.0, but has dropped in many cases to 1.3 to 1.5. Short beans and cuts (vanillin content of 0.5 to 0.9), the flavorless beans that should be discarded, are being sold. Alternatives It is better to use a high-quality imitation vanilla than a low-quality product that is pure in name only. These products are cheaper by the gallon, but will not provide the strength, aroma and consistency that our pure extracts continue to provide. January 1, 2017 Confidential 5

9 Commodity prices have increased significantly Summary The Spice and Extract Manufacturers have been subjected to steady, significant increases in cost over the past decade according to the Bureau of Labor Statistics PPI data. The last 12 months in particular have seen rapid inclines driven by a rising garlic market, offset slightly by a decline in the pepper market. Source: Bureau of Labor Statistics ( ) January 1, 2017 Confidential 3

10 Market Since Last Increase Announcement Black Pepper Cumin Seed Onion Powder Sesame Seed Source: Mintec ( ) January 1,

11 Commodity Market Distribution of Material Usage January 1, 2017 Confidential 8

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14 SY17-76 SY17-78 Memorandum Date: March 22, 2016 McCain Foods USA, Inc Cabot Drive Lisle, IL To: From: CC: All McCain Foodservice Distributors All Foodservice Sales Personnel All Foodservice Sales Agencies Frank D. Finn Marketing, Customer Service, Trade Spend Re: Potato Price Increase Effective May 15, 2016 McCain Foods USA will increase pricing on McCain and Distributor Label Foodservice Potato SKUs effective May 15, Potatoes: Chopped/Formed: $0.05/LB: All McCain and Distributor Label SKUs Potatoes: All other including Sweet Potato: $0.04/LB: All McCain and Distributor Label SKUs. All Operator and end-user contracts, price deviations, and bid prices will be reviewed on or before their expiration date and their pricing will be increased or their program decreased accordingly. Orders placed on or before May 1, 2016, to ship on or before May 14, 2016, will be honored at current price levels. We do reserve the right to limit buy-ins to historical two week purchase levels. There are several factors contributing to this price increase including increased operational expenses, infrastructure investment, rising healthcare and other costs. We will continue to work with our suppliers to find ways to manage our operational costs. More importantly, we will be working with our distributor and operator customers to protect and grow Potato sales with innovation in products, programs, and patron promotions. McCain Foods thanks you for your continued business and support.

15 SY17-76 SY17-78 McCain Foods USA, Inc Cabot Drive Lisle, IL Memorandum Date: September 7, 2016 To: From: CC: All McCain Foodservice Distributors All Foodservice Sales Personnel All Foodservice Sales Agencies Frank D. Finn Marketing, Customer Service, Trade Spend Re: Potato Price Increase Effective November 1, 2016 McCain Foods USA will increase pricing on McCain and Distributor Label Foodservice Potato SKUs effective November 1, IQF Hashbrowns: $0.02/LB: All McCain and Distributor Label SKUs All Grade-A Line Flow: $0.02/LB: All McCain and Distributor Label SKUs All Other Potato (including Sweet Potato and Chopped/Formed):$0.04/LB: All McCain and Distributor Label SKUs. All Operator and end-user contracts, price deviations, and bid prices will be subject to the pricing activities taken on 5/15/16 in addition to this announced increase taking effect 11/1/16. Orders placed on or before October 15, 2016, to ship on or before October 31, 2016 will be honored at current price levels. We do reserve the right to limit buy-ins to historical two week purchase levels. There are several factors contributing to this price increase including mix shifts in demand for premium and specialty products and increased global demand. Specifically, the U.S. Frozen Potato market has grown 4.2% in the last 12 months* and global demand for North American produced frozen potato products has surged 8.5% per year since 2002**. These shifts in market dynamics have resulted in unprecedented industry-wide tightness of supply, increased operational expenses, infrastructure investment, and other associated costs. We will continue to work with our suppliers to find ways to manage our operational costs. More importantly, we will be working with our distributor and operator customers to protect and grow Potato sales with innovation in products, programs, and patron promotions. McCain Foods thanks you for your continued business and support. Sincerely, Frank D. Finn *: NPD Potatotrac, 6/16, **: Potato Market News, 5/16

16 SY17-76 SY17-78 From: To: Cc: Subject: Date: Attachments: Importance: Dresch, Rebecca 013 Kristina B. Carrizales Lori A. Ramos; America Retana FW: Region One: SNP Food Items RFP E1 Price Changes Wednesday, July 5, :23:04 PM Simplot Frozen Potato Price Increase Effective October (004).docx Simplot Dehydrated Potato Price Increase Effective October (002)...docx Lamb Weston Price Increase Effective October pdf McCain Foods - Potato Price Increase Nov FINAL.pdf cavendish price increase letter.pdf High Kristina pleases see the price increase memos from Simplot, Lamb Weston and McCain Foods. Also, please remember that the FUEL / transportation costs also increased on these items. All of these products are from Idaho, Oregon and Washington States. Rebecca Dresch Government Contracts & Bid Manager Sysco Central Texas, Inc Schwab Rd. New Braunfels, Tx Dresch.rebecca@ctx.sysco.com Direct: Fax: From: Greg Wasielewski [mailto:greg.wasielewski@asmwaypoint.com] Sent: Wednesday, July 05, :27 AM To: Dresch, Rebecca 013 <Dresch.Rebecca@ctx.sysco.com> Subject: RE: Region One: SNP Food Items RFP E1 Price Changes Rebecca, Attached are copies of Simplot Price Increase memo s from last October and also price increase notices from all the major competitors for the same. Please let me know if you need additional information. Greg Wasielewski Bid Specialist WAYPOINT O: (248) Greg.Wasielewski@ASMWaypoint.com

17 From: Dresch, Rebecca 013 SY17-76 SY17-78 To: Subject: Date: Attachments: Importance: Kristina B. Carrizales FW: McCain - PPI Index Thursday, July 27, :12:22 PM image004.png image002.png image006.png image007.png image008.png High Below is our Purchase order screen print of our landed cost of the product. We have a bill back from McCain but not as much of an allowance as we had last year. NOTE: this product was not part of the Original bid 3 years ago.. it was added last year as the product came on line to sell to the schools. Also, further below is the Producer price index for Potatoes. ( the large increase in potato cost has also caused the reduction of the allowances given to distributors for bid pricing). In addition diesel fuel is below the potatoes - and the price of transporting foods has also started climbing up.

18 Rebecca Dresch SY17-76 SY17-78 Government Contracts & Bid Manager Sysco Central Texas, Inc Schwab Rd. New Braunfels, Tx Direct: Fax: The below is the screen print on what we pay for the above potato to McCain Landed cost to us is $ They do give us an allowance to bill back to for the schools. Rebecca Dresch Government Contracts & Bid Manager Sysco Central Texas, Inc Schwab Rd. New Braunfels, Tx Dresch.rebecca@ctx.sysco.com Direct: Fax:

19 SY17-76 SY17-78 From: Dresch, Rebecca 013 To: Kristina B. Carrizales Subject: McCain Date: Monday, July 24, :56:21 AM Attachments: image001.png Importance: High Kristina - Looking back over the paperwork I noticed that this add-on item to last year s bid (it was not an originally awarded item), that we failed to correct the pricing for this year. The price should be $ for the new school year. McCain had an increase as well as they mis-quoted the freight amount to us. Can you please correct this price? Let me know if you need anything else from me. Thanks! SY17-76 Ore-Ida Reduced Sodium Tater Tots Shaped Potatoes Sysco McCain Foods oz 190/2.52 oz 1,800 $25.70 The below is the screen print on what we pay for the above potato to McCain Landed cost to us is $ They do give us an allowance to bill back to for the schools. Rebecca Dresch Government Contracts & Bid Manager Sysco Central Texas, Inc Schwab Rd. New Braunfels, Tx Dresch.rebecca@ctx.sysco.com Direct: Fax: