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AURORA, Colo. — Bazooka Candy Brands Reacts to Tariff-Driven Price Increases
Last year, Bazooka Candy Brands faced challenges due to tariff-fueled price increases for sweets made in China and other Asian countries, coupled with weaker demand for these products. Erika Nava, VP of strategic supply and product development, shared that the company had to rethink its supplier strategy to navigate through this “perfect storm”.
The conventional playbook of trading higher volume for lower prices from contract manufacturers in a region that makes up 80% of Bazooka’s U.S. sales was no longer viable. Instead, the candy company and its suppliers collaborated to find solutions that would benefit both parties.
When dealing with tariff-induced price hikes, Bazooka’s strategy involved negotiating with vendors to share the burden. In some cases, the company agreed to split the tariff cost, while in others, Bazooka took on a greater share of the hit. This approach led to a more transparent relationship, with Bazooka gaining leverage in future discussions by understanding the supplier’s cost structure.
As part of their new partnership model, Bazooka made the decision to stop producing certain SKUs that were no longer cost-effective for both the company and its suppliers. The goal was to reach a mutually beneficial agreement that could be adjusted based on changing tariff scenarios.
Following these changes, Bazooka transitioned its supplier relationships from a price-versus-volume model to a true partnership. The company also plans to refund the portion of tariffs paid by suppliers, which were later deemed illegal by the U.S. Supreme Court.
Erika Nava emphasized the importance of building collaborative relationships with suppliers, highlighting four key lessons learned:
1. Know Your Suppliers
Understand your suppliers’ decision-making processes, capabilities, and current activities that could be beneficial in the future. Regular updates and open communication are essential for a successful partnership.
2. Track Performance Continuously
Establish yearly supplier KPIs, continuous improvement goals, and a growth and innovation plan. Conduct structured quarterly business reviews with strategic vendors to monitor performance.
3. Map the Value Chain
Utilize value stream mapping to identify cost-saving opportunities within the supply chain. This process helps in streamlining operations, reducing waste, and enhancing efficiency.
4. Recognize Supplier Achievements
Acknowledge and appreciate suppliers’ efforts in going above and beyond to support your business. Express gratitude through thank-you emails or gestures to strengthen the partnership and encourage future collaboration.
By implementing these strategies, Bazooka Candy Brands aims to foster stronger relationships with suppliers and navigate challenges effectively in the ever-changing business landscape.