For a company like Royal Caribbean, the real amount is $15, said Mike Jones, vp strategic operations, Royal Caribbean Cruises Ltd., and chairman of the Florida-Caribbean Cruise Association's Purchasing Committee.
'We have to feed them lobster once a week, and get steak into the menu. This is very, very good for the passengers but for purchasing [departments] it's very, very tough,' Jones told an FCCA conference workshop in Puerto Rico.
That's one reason why it makes sense to source food, especially produce and dairy, locally—to cut costs, on top of ensuring freshness.
But for suppliers looking to work with the cruise industry, it's a demanding business, the workshop's expert panelists said.
Over the past decade, RCL has labored to boost its purchasing in the Caribbean, and the company went from buying only fresh produce in Puerto Rico, for example, to soda, beer, water, pasta, bread and other groceries. Plus, RCL sources towels in Colombia and tomatoes in St. Kitts. Puerto Rico, the Dominican Republic, Jamaica and Mexico are now key suppliers, according to Vina Adams, procurement manager, food & beverage, RCL.
Other Caribbean-sourced items include pineapples, leafy greens, mangos, coffee, spirits and wine. 'It's a very solid base we hope to continue to grow. It takes time. Be patient,' Adams told FCCA delegates.
Puerto Rico got the ball rolling by sending a 15-member government entourage to give a six-hour presentation in the cruise line's Miami headquarters. Adams then flew to the island six times a year and 'visited every single farm.'
To ensure potential suppliers are on par with RCL standards, the company's purchasing team travels to the suppliers' fields or facilities to examine the products for size, quality and traceability. A plan is developed with local governments to monitor supplier transactions.
A big challenge was that Puerto Rico didn't work on weekends when ships turn around, Adams said. 'It took us two years to set up [the purchasing program] and then, to perfect it, another two years ... It took a solid five years to be where we are today.'
The Dominican Republic took even a bit longer. In the case of both places, the effort was worthwhile since Royal Caribbean had ships in San Juan and Santo Domingo.
Cruise line standards are high.
Companies require suppliers commit to ethical business conduct, fair labor practices and environmental protection. Some have extra hurdles. RCL's partnership with World Wildlife Fund entails a sustainable seafood procurement goal.
Ironically, though, it's not always more cost-effective to source locally. Eduardo González Cid, ceo, Café Azul, SA de CV Mexico, shared the weird twist of how Dos Equis beer bottled in Mexico costs less when shipped via container from Veracruz to the Netherlands and then Jamaica.
Listening to cruise line needs is vital, González said. His family business is coffee, and their high-quality brand, Punta del Cielo brand, has 200 coffee shops across Mexico.
'I don't sell it to the cruise lines. Why? It's more expensive and the name means nothing though it's very famous in Mexico,' he said.
'Learn about the industry. It's really complex,' Paolo Raia, vp global strategic sourding - food & beverage, Carnival Corp. & plc, told would-be suppliers. 'There are only six hours to bring on board 15,000 items. It's incredible.'
He said food products must be compliant with USDA standards.
Suppliers have to deliver in full quantities and their product capacities are vital, along with local market storage, said Rich Rowley, director of cruise sales, Sysco USA. The perishable date must outlast the cruise length.
Sysco, a global leader in the food service industry, does half a billion dollars in business annually with the cruise industry and has 196 cruise distribution points in North America, with 80% of the business in South Florida, supplying Caribbean ships.
'Provide ideas that help us differentiate our brands. We're not only competing with the ships but supply chain plays a very critical role in the success of our brands,' said Carl Robie, svp supply chain & logistics management, Norwegian Cruise Line Holdings, the parent of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises.
Robie's group works closely with each brand's culinary team. 'We're looking to constantly raise the bar,' he said.
Robie underscored that safety and security are 'paramount. We must have traceability.' Social responsibility, environmental commitment, quality, innovation and 100% fulfiillment of orders are key.
González shared a negative example related to fulfillment. Before a holiday cruise, on Friday, Dec. 18, a supplier couldn't provide the 16,000 yogurts that were due to be loaded Dec. 21. González 'went to every supermarket in Cozumel and Playa del Carmen' to buy yogurts, and he had to pay 4.5 cents per unit, though his price to the cruise line was 3.2 cents.
When Pullmantur looked to source in Mexico for a ship operating there, some companies scoffed that they supply 90,000 hotel rooms so of course they could meet cruise line needs. But they didn't understand the entire order has to be delivered in few hours on a single day—not over a period of days, which works for hotels. The business is very different.
And what happens if a ship misses a port due to weather? González's company offers two alternative ports for provisioning, at no extra cost.
Several aspiriing cruise suppliers in the FCCA workshop audience expressed frustration over trying to reach the right person at cruise lines. One woman said she'd been trying for 10 years.
'There are so many suppliers. It's very difficult to get access,' RCL's Jones acknowledged. 'These types of conferences give you a leg up. We will give you access and a response. But most of the time, it's not going to be a positive response.'
Cold calls or writing to a purchasing department are the least effective approaches, Jones said. A letter to a cruise line president or other high-level contact, though, may provide 'access but not influence' and get passed along to the purchasing department for consideration.
'They do come to me, about a dozen a month,' Jones said.
Governments, he added, can help suppliers by offering cruise lines rebates, and by grouping smaller suppliers into cooperatives that have a scale so they're cost-effective for lines to deal with.
As a distributor, Sysco may be able to help suppliers that don't have all the resources they need to meet the cruise lines' needs and high standards, Rowley said.
Robie explained most existing cruise line suppliers are doing a great job so they're rewarded with loyalty. However, companies may 'catch our attention' with items, for instance, that are handcrafted or all natural.
'Be patient. Persevere. It may take six months, it may take 12 months to get a product in,' Robie said. 'Try to understand what we're trying to solve. Maybe you can bring an answer.'
Of all the criteria cruise lines have, 'quality and innovation are crucial for a supplier,' Carnival Corp.'s Raia said. 'Quality is really important. From my point of view, it's the first thing we consider.'
Carnival makes a short list of qualified potential suppliers then tests the quality of their products. In the case of innovation, sometimes the company invites suppliers to improve the product—for example, coming up with a way to brew better coffee on board.
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