Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Reza Vahabzdeh – Barclays Capital.
Reza Vahabzdeh – Barclays Capital
Just on the last topic of the fruit packs, I mean you’ve experienced ebbs and flows in the fruit packs in the past I’m sure many times. If the fruit pack ends up being somewhat short in a hypothetical scenario, what are the options that you have deployed in the past to deal with that. Is that a cost issue? Is it a volume issue? Can you somehow offset any headwind from that?
Richard G. Wolford
What we do typically in those circumstances Reza is we will move volume from lower margin businesses to higher margin businesses so in many respects it results in a positive margin impact for the business and that is typical of what we have done in the past. At this point I’m not sure we really would expect to have a real supply issue but we’re indicating here are some of the risks that we may see in this coming year but at this point the bloom is set, the bloom looks good, the chilled nights have been adequate and those are all key precursors to a good yield. As I say we’re concerned about water in the valley generally for both fruit and tomatoes and California is worried about it broadly. But, for our fruit business we should be okay in terms of total supply and the extent that we’re short we move it up the margin chain and should be fine.
Reza Vahabzdeh – Barclays Capital
If I could just ask one follow up, how do you feel about inventory at retail and have you seen any inventory adjustments by retailers?
Richard G. Wolford
We haven’t in our business scene any inventory adjustments with our retailers. In fact, I think one of the areas that we feel pretty good about is that we have been working really hard with our customers, with our supply chain to reduce inventory across the entire system ours and theirs. Actually, we’ve had some recognition here in the last quarter, very positive recognition as supplier of the year of a major customer that reflects the efforts that we have successfully made.
As I said earlier, we’ve taken 20 million miles out of our distribution system and that has been done in combination with careful, careful monitoring controls and systems that we’ve put in place to control our inventories and at this point we feel good about the overall inventory levels that we have, our customers have and we’ll continue to try and make those more efficient.
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