Grocery stores and food companies are bracing for a possible increase in sales amid a new surge in Covid-19 cases and the upcoming holiday rush.
Supermarkets are stocking up on groceries and stocking them early to prepare for the fall and winter months, when some health experts warn the country could see another widespread epidemic of virus cases and new restrictions. Food companies are accelerating production of their most popular items, and leaders across the industry say they won’t be caught unprepared for another wave of pandemics.
Southeastern Grocers LLC insured turkeys and hams for the holidays during the summer months before inventory planning normally begins, CEO Anthony Hucker said. And grocery wholesaler United Natural Foods Inc. loaded up an extra inventory of cranberry sauce, herbal tea and cold remedies, President Chris Testa said.
“We started talking about Thanksgiving in June. It̵
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Associated Food Stores recently began building “pandemic pallets” of cleaning and sanitizing products, so they always have stock in warehouses, said Darin Peirce, vice president of retail operations for the 400-plus cooperative. shops. The company is establishing protocols so it can better manage high demand scenarios.
“We will never again run our business unprepared for something like this,” he said.
These changes, a reaction to the sudden and massive grocery shortage experienced in the spring, amount to a shift from the just-in-time inventory management practices that have driven the rapidly changing retail business for decades.
Now, food vendors are stockpiling months rather than weeks of staple foods like pasta sauce and paper products to better prepare for this winter when people are expected to squat at home. Ahold Delhaize USA,
and others say they are buying more food as soon as possible, stocking warehouses with wellness and holiday items. Many retailers are expanding distribution capacity, increasing warehouse space and changing shifts.
They say they want to be ready for a potential rise in Covid-19 that experts warn could strike as soon as this fall, as reported daily cases are rising again in many states after falling in the summer. More than 200,000 people have died from the coronavirus in the United States
A new surge in demand should officials restore restrictions on restaurants or workplaces would clash with the normal holiday boom in food sales, further increasing demand for items such as baked goods, pasta, meat and paper towels.
Grocers aim to increase inventory amid high demand.
Refueling, weekend on September 13th
Normal pre-pandemic supply range
In March, “we didn’t know what we didn’t know,” said Chris Lewis, executive vice president of supply chain at Ahold Delhaize’s retail services.
Ahold Delhaize, owner of the Giant and Food Lion chains, already has his holiday inventory in his warehouses. The grocer is also stocking 10% to 15% more inventory than before the pandemic to make sure you don’t run out of fast-selling items.
Industry executives say they don’t think a potential winter surge in food demand will be as extreme as it was in March, when people panicked, fearing grocery store closures or food shortages. This time around, consumers are better prepared, said Sean Connolly, CEO of
Conagra Brands Inc.
Some retailers are also betting that recent investments in warehouses and e-commerce will help them meet the demand for home delivery in the coming months.
However, some products like cleaning wipes and canned vegetables remain difficult to obtain for stores, in part due to continued high demand and because manufacturers are still trying to keep up. Some manufacturers fear that they will lose production capacity if infections break out among their workers or if other problems, such as lack of childcare, prevent people from working.
Hormel Foods Corp.
CEO Jim Snee said on a recent conference call that the company has 24% less inventory than it did a year ago. Bacon, peppers, Skippy peanut butter, and SPAM corned beef could run out if Covid-19 cases among workers stop production again, he said.
“We can’t afford any interruptions,” he said.
General Mills Inc.
said he did not meet demand for Progresso soup, Betty Crocker cake mixes and Pillsbury chilled dough. It is increasing its production capacity and has hired 30 new outsourcing partners since March. The company said the entire industry is still struggling to rebuild inventory on similar items.
Manufacturers have prioritized making their best-selling products, which has helped some items recover inventory in recent months.
General Mills e
they said they were able to reconstruct inventory in their cereal businesses, for example. “Even if the consumer can’t find the exact flavor they want, we’ll still have something on the shelf,” Jeff Harmening, CEO of General Mills, said in an interview Wednesday.
Campbell soup Co.
Overall inventory is only half recovered, and the team is pushing hard to fully recover by January, according to CEO Mark Clouse. It is in the running to get its chunky, condensed soups and Swanson broths back in stock and to add production capacity for snacks like Pepperidge Farm Goldfish crackers and Cape Cod potato chips.
“A lot of this comes down to how much capacity we can generate,” Clouse said.
Hy-Vee Inc., a chain of more than 240 supermarkets in the Midwest, is stockpiling additional sanitizing, cleaning and paper products when possible, but the full variety hasn’t returned, said Randy Edeker, CEO.
CFO Brett Biggs said the company is ignoring its grocery ordering algorithms in many stores to rack up extra inventory now, after decades of getting leaner.
“We are trying to catch up,” Biggs said at a recent conference. “But you have to have supply down the chain with our suppliers to be able to do that.”
and its bottling network produces even fewer varieties of drinks to meet the demand for its best drinks. This made it difficult for shoppers to find things like Fresca and caffeine-free Diet Coke in the pandemic. Meanwhile, Coke’s business serving restaurants and other venues has suffered a decline.
Coca-Cola CEO James Quincey said at a recent investor conference: “We have a clear strategy on how we want to get out of this crisis, but getting through the winter in the Northern Hemisphere will be the big test.”
—Jennifer Maloney contributed to this article.
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Corrections and amplifications
Chris Testa is the president of United Natural Foods. An earlier version of this article incorrectly said he was the CEO. (Corrected September 27)
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