Owning the Supply Chain to Deliver the Highest-Quality Products: A Conversation with Dan Phipps, CEO of Red River Foods

March 29, 2023
  • Private Banking
In the feature article of this issue of Owner to Owner, we speak with Dan Phipps, CEO of Red River Foods, about how the company has approached global expansion, what it takes to ensure the highest-quality products, and where he feels the most excitement in the food industry.

Since the beginning, Red River Foods, a leading global supplier of nuts, seeds, dried fruit, and specialty snacks, has been on a mission to source the highest-quality foods, provide expert market insights, and develop sustainable supply chains around the world. With more than 500 employees worldwide and over 60 products sourced from 30-plus countries, the multigenerational family business remains laser-focused on being involved in every aspect of the global supply chain in order to deliver an ethically sourced, sustainable product to end consumers.

We recently met with CEO Dan Phipps at Red River’s new warehouse and processing plant in Richmond, Virginia. Phipps took over the business from his father and has continued to drive the company to deliver on its mission while expanding its involvement in the global supply chain. During our conversation, we spoke about how the company has approached global expansion, what it takes to ensure the highest-quality products, and where Phipps feels the most excitement in the food industry.

Tell us about your professional journey – what led you to join Red River Foods?

I went to the University of Richmond for my undergraduate degree and majored in political science, with the intention of going to law school to become a sports agent. However, after graduation, I decided to take some time before going back to school. I had the opportunity to work at Red River Foods for my dad, who was CEO, right after graduating, but I wanted to prove to myself and others that I could make it on my own. I got a sales job at a local web-based startup and worked there for six years until the company was sold.

In 2008, I was ready for something new. Red River’s parent company at the time was divesting of its nontobacco businesses. Red River was purchased, and developing a succession plan became a priority for the new ownership group. I had always been interested in the business, so I decided to join and see how it went. I fell in love and have been here ever since.

You mentioned your dad, so let’s take a step back. Talk about Red River Foods – how and when did the company get started?

I’ll go even further back than when my dad joined Red River and first talk about the reason we are even in the food business! That dates back to 1972, when President Richard Nixon granted U.S. companies permission to start business with China. My uncle, who has always thought trade is the best way to improve relationships between China and the U.S., started one of the first five companies that received permission to trade with China at that time. My father joined him, and they found their niche in food (like nuts and dried fruit), honey, and tea.

While my dad liked building relationships with suppliers, he eventually decided he didn’t see a career path at the company and started looking for other opportunities. As fate would have it, he found out that one of his customers, Red River Commodities, wanted to hire him as a buyer for a new company they were starting: Red River Foods. My dad joined, and two weeks later, he found out that the two contacts who recruited him were leaving to start their own company. Management held a meeting to determine the next steps, and my dad said that they should shut down the company because they were losing money and weren’t focused on the right attributes of importing – delivering high-quality products, building strong relationships with suppliers, and providing those in the supply chain with expert market advice. They called him the next day and said they were going to implement his suggestions and that he was going to be president of the company.

That was 1986, and the company has been profitable since then and grown into what it is today.

Talk about how the company has evolved and expanded over time. How do you service the regions in which you are present, as well as your suppliers and end customers?

For two decades, it was difficult to figure out who the good suppliers were in different countries around the world. We wanted to find partners who could produce the best quality items and adhere to contracts. Getting the product from the origin country to our end customers was also challenging. There was tremendous value in being an importer that established relationships with suppliers, provided good market information, and delivered on what we promised.

Today, we have better communication and technology, so it’s easier to stay in touch with suppliers and monitor what is going on at different sites. At the same time, the value of an importer has become somewhat diminished, so we’ve needed to search for additional ways to provide value to our customers. We’ve always felt the best way to do that is to have intimate knowledge of all links of the supply chain, and the best way to do that is to be invested directly in all aspects of the supply chain. So, we’ve evolved from being a pure trading company, where we were buying and selling products from third parties, to being a fully integrated supplier, where we buy products directly from farmers, process those products within our own factories, ship them to the U.S., and then store them in our own warehouse here in Richmond.

About 70% of the products we import still come from third parties, but how we engage with those third parties has evolved in important ways over the past decade. I’ll use cashews, which account for 55% of our business, as an example. Eighty percent of the cashews consumed in the U.S. come from Vietnam. For us to continue to source properly from Vietnam, in addition to having our own facilities, we need to maintain a consistent presence and remain engaged with those facility owners to provide guidance, feedback, and market insights. This enables us to ensure the best quality product as well as the most ethical labor and business practices. We now have 30 employees in Vietnam whose sole focus is working with those third parties to make sure they’re meeting our requirements for safety, quality, and labor.

For other items, like pepitas and pine nuts, we have our own factories in China, where we are sourcing the raw material, processing it into the finished good, and shipping it to consuming countries around the world.

Still, there are other products where we work solely with third parties. For example, we have a program with one of our suppliers in Ghana, from whom we import dried fruits. Although we have close relationships and helped them develop regenerative organic certifications and programs, they are tasked with sourcing the raw materials from farmers, processing them in their facilities, and then shipping those items to us. But again, it goes much further than just a trading relationship. We are intimately involved in how they are sourcing products, who they’re sourcing raw materials from, how they’re managing their factories, and then making sure they’re shipping us the quality products we need.

We’ve invested in boots on the ground and are actively involved in the supply chains of the items we source. To put some numbers around it, we have more than 500 employees worldwide, with over 60 products sourced from 30-plus countries.

You’re a global company working with exporters and farmers all over the world. Tell us about your plans for your two most recent expansions in West Africa and Richmond.

In order to provide the best value to our customers, we need to be the primary processors of our products and manage them from farm to doorstep. The West Africa expansion we’ve planned will allow us to continue to do this with cashews. The decision to build a factory there has been 10 years in the making. We now have the know-how, people, and experience in place to do it successfully. It’s another step in our progression toward processing as much of the product we sell to customers under our own roof from start to finish.

Why West Africa and cashews? We continue to have demand for high-quality, ethically sourced cashews, and we recognize that getting 80% of your product from one country isn’t very sustainable, especially when global pandemics disrupt supply chains. West Africa produces more than 50% of the world’s cashews, but over 90% of those nuts get exported to Vietnam, Brazil, and India to be further processed into kernels before being shipped to consuming countries. So, there’s been a desire in both the food industry and at Red River to establish processing capabilities in West Africa.

There’s value in creating backup supply chains in the region, but there’s also a tremendous amount of good we can do in the local communities by creating jobs in factories in the areas cashews are produced. There are environmental impact improvements associated with limiting the supply chain as well.  There’s tremendous value in having a fully traceable, single-source product from one facility.

At the same time, we’re going to retain that value of the cashew nut within the countries that produce it. We talk about always putting people first. Cashew farmers are taken advantage of more than anybody else in the supply chain. They grow, gather, and take care of the quality of the product, all to ship it to someone else who processes it. They receive 25 to 30 cents per pound, whereas a processor sells for $3 a pound.

Our Richmond expansion allows us to warehouse our own products in the U.S. We want to own as much of the supply chain as we can, but we were missing the last leg of it – the warehouse in the U.S. We started looking for opportunities to own and operate a facility. We found this space in 2019, renovated it during the early days of the COVID-19 pandemic, and opened the doors in July 2020. We’ve built a best-in-class warehouse in terms of the quality of the building and cleanliness, as well as the service we provide.

What are Red River’s mission and values? How have these evolved over the years?

Our mission is to source the highest-quality foods, provide expert market insights, and develop sustainable supply chains around the world. That is all driven by our values, where we want to put people first, strive for excellence, and act with integrity.

The only way we can provide value to our customers is by providing them with strong market information and insights. To do this, we need our own boots on the ground – we can’t rely on third parties or brokers to say what is happening. So, investing in the producing countries in which we operate is vital to achieving our mission.

We also can’t provide high-quality food in a safe, transparent, traceable manner unless we have control over the supply chain. This goes beyond producing it ourselves and in our factories; we need to have our own people in the third-party facilities in which we operate around the world. Being in the factories is vital to the mission and providing that value to the customers.

When we talk about our company’s values and what drives us, it all relates back to that first management meeting my dad had. If you don’t focus on quality, relationships, and taking care of people, you’ll never have a profitable commodity importing company. We’ve expanded upon those values over time, but what drives us in every relationship that we have is doing the right thing.

Mission Values

Source the highest-quality foods, provide expert market insights, and develop sustainable supply chains around the world

  • Put people first
  • Strive for excellence
  • Act with integrity

Sustainability is clearly core to Red River. Talk about how the business approaches this.

Our mission and values tie into developing sustainable supply chains. There is a lot of variation in terms of what sustainability is and how it relates to different companies. For us, a sustainable supply chain is one that will be here when we’re no longer here; it will be able to be sustained without any artificial inputs.

In order to have a sustainable supply chain, you need to have people willing to grow cashew trees and harvest the nuts and those willing to work in facilities and process raw cashew nuts into kernels. And you need to make sure the trees will grow, so the environment needs to be conducive to that. Sustainable supply chain management involves not just working at the farmer and processor level, but also making sure the people and the planet are protected.

Our mission involves all of these different factors in terms of investing in the supply chain to provide that value for customers.

How do you support the communities in which you are present?

It depends on the community. When entering a new region, we will meet with community leaders to try and understand what they need. We have some thoughts on what a community may need in terms of sustainability projects, but we want to hear from them as well. We ask a ton of questions, and after hearing from the community, we develop our sustainability programs.

Our projects have ranged from helping farmers thin out their cashew farms so that the cashew trees – which need space to grow and achieve their full potential – can produce more product, to beekeeping initiatives, as this helps cashew trees produce much better quality and volume. Other communities have said they needed help in social efforts – women empowerment, malaria prevention, a maternity ward, and so forth. We have many different sustainable interventions depending on the need of the community.

You’ve been focused on sustainability from the start, and it seems like you have thought about everything in terms of building a sustainable supply chain. What barriers still exist?

The biggest hurdle we have is cost. Not necessarily the cost for sustainability initiatives, but getting people to actually support these projects by paying a premium for ethically, sourced products. In a poll, 81% of people said they wanted sustainably sourced products, but just 66% said cost was a barrier, so they’re not always willing to pay a premium.

Another challenge is certification. I worry that as the pressure continues to grow for companies to focus on sustainability, we will see people paying for more certifications that don’t necessarily mean much.

Last, the areas where we want to have a positive impact are remote. Making sure we have people who can add value in those communities, which can be far from one another, is a challenge. There are over 2.5 million cashew farmers in Africa alone. To reach each community is challenging.

"Meeting the people who are putting in the hard work to grow and produce the products we are sourcing is the most rewarding part of doing the job."

What industry trends are you currently watching that you expect to have the most impact over the coming years?

The biggest trend isn’t just driven by consumers wanting to know that their food is ethically and sustainably sourced. It’s that this demand among consumers is pushing retailers to want to know where a product came from and to own as much of the supply chain as possible. Over the past 10 years, we’ve seen retailers taking trips and asking questions they’ve never asked about the supply chain. It’s been beneficial to us because we can answer these questions properly since we’re engaged along the entire supply chain.

There is also a big move toward plant-based food and regenerative agriculture. Organic food is good for us, but people want to go beyond that and make sure they have a holistically produced product that is good for them, the environment, and the people that produce the product. That excites us because it’s core to who we are. We have worked closely with some of our supply chain partners to develop regenerative organic certified products.

We like to think we’re a pioneer in this space. We were promoting and expanding supply chain operations and farmer trainings in different parts of West Africa for a decade. We’ve been telling our customers that sustainability is important for years and that we can be a resource and sustainability arm. For 10 years, no one was interested; no one wanted to fund these projects. In the last one or two years, it’s been a 180-degree turn. Not only are people asking us about sustainability, but they want to be involved. They want product directly sourced from projects and to help fund them. It’s been remarkable for us to realize that everything we have been doing for 10 years because we knew it was the right thing to do, and it mattered to us, now matters to everyone else, and we have a platform and foundation that we can leverage to give people what they want.

What projects are you and the company working on or planning for now that you are most excited about?

What gets us out of bed every day are the exciting things we’re doing for sustainability, supply chains, and the people who work for us.

The two most recent projects we have been working on are both in Bolivia and include creating a regenerative quinoa business and developing a brand new tree nut, the baru nut. Quinoa has exploded in popularity for years, but the way we are sourcing and producing it is unmatched in terms of product quality and the positive impact it has on the community. The baru nut is brand new, meaning we get to build the supply chain from scratch. The nut is nutrient dense, high in protein, nonallergenic, and tastes like a combination of a cashew and peanut. It’s also an amazing climate protector – it is a fire-resistant carbon sequestration tree and can grow in deforested areas. It has been around forever, but no one has ever recognized that it’s a product you can turn into income. It’s an incredible integrated land management opportunity.

You have a lot going on! What’s your favorite part of the work you do?

The people! The areas in which we are developing our supply chains are very different. Meeting the people who are putting in the hard work to grow and produce the products we are sourcing is the most rewarding part of doing the job.

Turning inward to Red River, we wouldn’t be here without the incredible foundation my dad and other colleagues developed. We have people who have been here for 30 or 40 years. My dad instilled in the company that people are most important, and we’ve been able to expand on that. We care about our people and treat them right. If we do that and work well together, the future is bright for all of us. We want to maintain that as we continue to grow.

Dan, thank you for your time and insights. BBH is honored to have Red River as a client.

Interview conducted and article written by Kaitlin Barbour.

If you would like to discuss any of the topics covered in this article further, please reach out to a BBH relationship manager.

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