This is a case study on which an in-depth analysis needs to be done for better understanding.

International Nut and Food & Company (Innutco), a small Brazilian food sector company, has shown significant growth rates in the volume of its operations, obtained through consistent and committed performance aligned with the needs of its customers. Their activities are based on business-to-business (B2B) relationships, supplying food ingredients to a few large customers.

Innutco's business is concentrated in the processing and delivery of ingredients made from peanuts (mainly) and other nuts (secondarily). In this sense, the company has two strategic focuses:

First, as a manufacturer of ingredients for the food industry, which includes the processing (selection, roasting, granulation, finishing, and preparation) of nuts purchased directly from producers. The outputs (roasted peanuts in parts, peanut fudge, crispy peanuts, and flour, among others) are provided as inputs for food manufacturers. This activity is responsible for 65% of their total U.S. $12 million annual revenue. Second, as a service provider, which includes the preparation of food items for large companies in the sector, such as fruit fillings, coated nuts, marshmallow syrup, dry mixes, and other components, using inputs provided by various food manufacturers. Such activity requires the purchase of packaging, labels, and other supplementary materials from third parties, as well as the management of the suppliers' quality and the logistics flow.

Innutco's Supply Chain

Innutco`s supply chain presents several challenges, both upstream and downstream. These are related to the concentration and size of Innutco's trading partners. Figure 1 below represents Innutco's supply chain of Innutco`s providers. In Brazil, the peanut is characterized by a highly concentrated culture, both in terms of geography and, in particular, regarding production ownership. Thus, about 90% of Brazilian peanuts are produced by a single cooperative of producers. Despite being an advantage in terms of logistics, for its geographical proximity, such concentration allows this cooperative to have a high bargaining power over its customers, which hinders the development of a more collaborative relationship with Innutco. Negotiations occur in accordance with market prices, comparing the prices negotiated to those charged in the commodities spot market.