Food business prepares for effects of COVID-19
The food industry is preparing for significant changes as worries about the COVID-19 pandemic intensify. Disruptions to labor and the supply chain are important areas of concern, even though the full impact of the outbreak is still unknown.
In the short term, some food manufacturers and retailers may see an increase in earnings due to a spike in sales of shelf-stable foods and beverages in the US. Nielsen reports that during the final week of February, sales of goods containing powdered milk increased by 84%. As people race to fill their cupboards, sales of frozen meals, rice, beans, and other basics like bread and eggs have also soared.
Businesses are modifying their activities to accommodate the surge in demand. Purchasing teams are reorienting their attention from conventional bargaining to guaranteeing a sufficient supply of products that are in high demand. Conagra Brands and Campbell Soup Co., two food makers, said that they are producing more of their best-selling products. According to General Mills, the company is redistributing its inventories to where there is the greatest demand.
Infrastructure for the supply chain
Most businesses should have little trouble meeting short-term demand, but industry analysts and business leaders are unsure about the extent and duration of the outbreak’s effects.
The Coca-Cola Co. was among the businesses that started to face delays last month due to industrial pauses brought on by the COVID-19 outbreak in China.
Many businesses, both domestically and abroad, have put emergency plans in place to be ready for more significant interruptions to the supply chain. In order to mitigate the risk of cross-regional transportation restrictions, food sellers are concentrating on guaranteeing local sourcing. Food producers with operations abroad have started collaborating with regional vendors to maintain product flow.
Concerns regarding possible ingredient shortages were raised by the Consumer Brands Association in a letter dated March 15th to the US State Department and Trade Representative.
The letter stated, “During pandemics, non-perishable staples, cleaning and disinfecting agents, over-the-counter medications, and personal care items are essentials.” In the event that other nations restrict the export of base materials, food and nutritional inputs, chemicals, and other necessary manufacturing supplies and ingredients, Consumer Brands fears that manufacturers will not be able to increase production, which will ultimately prevent consumers from accessing products that are essential for treating and halting the spread of COVID-19 and maintaining their health.
Others claimed that although the US supply chain infrastructure is under pressure, it is adaptable and strong enough to survive the outbreak’s effects.
According to Greg Steltenpohl, the founder and CEO of Califia Farms, a company that makes plant-based milk, businesses with adequate funding and those that use local products would be better equipped to handle the situation as it develops.
The business has made plans for a number of eventualities that could have moderate, medium, or substantial effects on operations.
He declared, “We threw that out; we’re already past the light.” “We had to hold that one in there even two weeks ago. We would classify the current situation as moderately heavy to fully cataclysmic. That does not imply that Armageddon is imminent, but rather that normal operations will not resume for two to three months. Almost everything we formerly considered normal has completely changed.
Califia Farms, whose sales of shelf-stable plant-based milks increased by 323% during the final week of February, is bracing for a spike in demand.
Califia Farms, whose sales of shelf-stable plant-based milks increased by 323% during the final week of February, is bracing for a spike in demand.
In order to keep product flowing, Califia Farms is stepping up its manufacturing cycles and moving up to the head of the line with important suppliers and copackers. It is currently three to four weeks ahead of inventories.
According to Mr. Steltenpohl, “I think all companies should be thinking about vulnerable ingredients and what happens if a supplier goes down, all the way through their supply chain.” Saying, “Well, what if our biggest competitor has an outbreak in their plant?” has proven to be difficult. Then, they might not be able to ship at all for three or four weeks, so we need to be ready for far more demand than we would normally see for our own brand. Because you don’t want to be left holding the bag for your retailers, but you also don’t want bare shelves for the entire category, it does require entrepreneurial risk taking or risk management.
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Work
The possible effects of the COVID-19 epidemic on labor remain another unknown. Employers in every sector are implementing work-from-home policies and prohibiting employee travel.
Company executives are also preparing for possible effects on production facilities and line labor.
According to Tarick Gamay, vice president of sales and marketing at Dreampak, a company that creates liquid mixes for the beverage business, “it’s such uncharted territory, in terms of production.” “Remote workers can nonetheless yield valuable outcomes. Though it’s unlikely that you’ll achieve 100% production and productivity, I believe it’s fantastic if you can get 50%. But you will receive no value at all when it comes to critical workers in the industrial sector. That’s where you put the difficult questions you need to ask yourself to the test. I’m not sure whether there is a perfect response to it.
In order to maintain operations, businesses are limiting employee interaction and controlling who is permitted entry and exit into their facilities. Many have increased sick leave benefits and urged employees to self-report if they are ill. Some have started taking the temperature of their staff.
Businesses are creating preparations to reactivate as soon as feasible in the case of a plant epidemic.
Four weeks ago, Atlantic Natural Foods, LLC, the maker of plant-based brands like Loma Linda, Tuno, neat, and Kaffree Roma, prohibited non-employees from entering its facilities in Thailand. According to the corporation, the method was successful in stopping the virus from spreading and has been put into place at its American production facility.
Atlantic Natural Foods extended their annual sick leave policy and provided financial assistance to employees. The corporation is providing an additional $100 per person starting on March 20 to help with supplies and other requirements. Up to the end of April, the supplements will be offered every two weeks.
“We decided to take a proactive approach because we are in unfamiliar territory,” stated Atlantic Natural Foods chairman J. Douglas Hines.