Diversification in a time of crisis

Having been in business for 106 years, there are a lot of lessons learned and then passed down through generations that help build strength, security and longevity for a company. We’ve all heard the saying: “Be careful not to put all your eggs in one basket.” It’s a lesson that has truly saved businesses in times of crisis especially like the current coronavirus pandemic.

Companies, including Velvet Ice Cream, that are strategically diversified across product lines and categories, as well as distribution channels and verticals, have a better chance of survival. We were in no way sheltered from the economic impact of the pandemic; however, our diversification allowed us to absorb significant sales reductions in some areas while generating spikes in others.

When most people think of Velvet, of course, they envision our product on the grocery store shelves. However, our wholesale foodservice business is a critical component of our success. Due to the mandated closings of schools and restaurants, our revenue within this segment was down 80-100%. Even in worst-case-scenario tabletop exercises, it’s difficult to actually foresee an almost immediate elimination of a channel of business. However, our purposeful and strategic diversification has kept us going.

While the lockdown was on one-hand devastating, the stay-at-home orders prompted a rare “pre-season” surge in ice cream sales at grocery and convenience stores across the country, where our sales were up almost 50%. I believe this is something the dairy and frozen foods industry experienced across the board. After all, what’s more comforting than a bowl (or a whole pint) of ice cream, especially when your current workspace is merely steps away from your home freezer?

For Velvet, this not only created a spike in sector sales, it also created an opportunity. We immediately looked at our channels and product selection to make sure we were providing all relevant items to meet consumer demands and help grocery and convenience stores keep their shelves stocked.

As a regional business, our strong relationships with area retailers, our robust networks and our relatively close proximity for efficient delivery provided us opportunities to fill and grow orders when larger national brands were struggling to provide product. We were able to be nimble and capitalize on decades-long relationships to ensure our partners were fully stocked when some of their competitors offered nothing but empty freezer space.

Client service and customer service are vital to the success of any business. They are the keys to securing longevity in relationships and are points of differentiation when securing new business. In times of crisis, however, these functions are nothing short of business-critical. They open new doors and push other doors open even wider because you have a track record of ensuring partners get what they need when they need it.

As business owners, each challenge we encounter becomes a teaching moment. Even after more than a century in business, we don’t have all the answers. We’re still learning and growing. What we do know is the decision in the past to creatively diversify and create a strong logistics network is a lesson that paid off in a time of crisis. 

We’re proud to say that during this time, Velvet was able to hold on to the majority of our workforce, supporting the employees and families that have helped build our company over the years. Moving forward, the lessons from 2020 will drive future changes and focus on the stability that strategic diversification brings.