In the waning days of 2005, Billy Cyr was faced with a whole host
of problems.
The president and CEO of Sunny Delight Beverages Co. saw the
cost of his raw materials spike precipitously with no sign of ever
coming back down. Packaging costs went up, diesel fuel doubled
in price almost overnight giving his transportation costs a jolt, and
he had a customer base that had seen virtually no price increases
for his products in 10 years.
Hurricanes on the Gulf Coast caused the price of orange juice —
one of Sunny Delight’s primary ingredients — and fuel and materials costs for its packaging to follow a sharp upward curve.
For Sunny Delight and Cyr, it was somewhat of a wake-up call
and a time to embrace a new way of looking at how the company
would need to operate in the future — or perish.
Perhaps the most important realization for Cyr was that the days
of price stability were gone. If Sunny Delight was going to keep its
prices stable in the consumer market, hold onto its core customers
and remain competitive, it was going to have to find new ways to
control costs in a much more volatile environment.
“I think the first step was to accept that the new reality was here,
and that it was permanent, as opposed to a temporary phenomenon,” Cyr says. “So for us, it was when you get to the point that you
have a new reality, that oil is $65 a barrel on an ongoing basis and
it’s never going to return to $30 a barrel. You could no longer
assume that you were going to have relatively constant costs on an
ongoing basis.”
