Dive Brief:
- Kraft Heinz has been ordered to continue providing fresh turkey to meat processor Mrs. Ressler’s Food Products — 36,000 pounds of fresh turkey breast meat twice a week — for the duration of the year per contractual obligations.
- Kraft had cut turkey production due to the effects of the avian flu, and in May, the company had reduced its shipments of turkey to Mrs. Ressler's by 10%. In September, Kraft Heinz notified the company that it would suspend all turkey sales indefinitely.
- However, Mrs. Ressler's said Kraft Heinz was still required per the contract to ship its turkey to Mrs. Ressler's because these were not new sales, and the company had already signed a contract that Mrs. Ressler's relied on for about 40% of its turkey supply.
Dive Insight:
"The result is a brazen attempt by Kraft to force Mrs. Ressler’s out of the market for finished turkey products — and out of business entirely — by completely withholding the raw turkey breast meat it had committed to sell Mrs. Ressler’s for no more than $2.70 per pound over the course of 2015, and, instead, using that raw turkey meat for both its own competing products and selling it to others on the open market where the price has soared to approximately $5.70 per pound," according to the complaint filed by Blank Rome's Jonathan Scott Goldman.
Without that turkey, Mrs. Ressler's could lose at least 25% of its business.
"The longer Mrs. Ressler’s is forced to go without sufficient raw turkey breast to support customers’ orders, the more likely it is that Mrs. Ressler’s customers become entrenched with a competitor such that they may never return to Mrs. Ressler’s at all," the complaint said.
Kraft Heinz isn't the only company that had its turkey supply impacted by the bird flu. May brought a wave of job cuts for Hormel's Jennie-O Turkey Store brand. In August, Hormel reported that Jennie-O had taken a hit and had reported a sharp drop in operating profit for the previous quarter. Despite these issues, Jennie-O is feeling optimistic about ground turkey going head to head with ground beef in the future.