Coronavirus forces manufacturers to move more production to retail

Coronavirus forces manufacturers to move more production to retail

As products fly from grocery store shelves amid a new coronavirus outbreak, major food manufacturers are constantly adjusting their manufacturing processes.

In the first week of March, Nielsen saw a huge increase in sales of cabinet staples and other food products, from oat milk to tuna. As a result, companies like Tyson Foods, Sanderson Farms, Cargill, Perdue Farms and Kraft Heinz are extending production hours and changing their manufacturing operations to meet increased demand.

From restaurant to retail

Because the national mandate is valid restaurants are temporarily shutting down or switching to delivery-only and take-away models only, manufacturing resources and production are shifting from food service to retail.

“While we have taken such steps in the past, this is the most significant change we have ever initiated.”

Dean Banks

President Tyson Foods

Dean Banks, president of Tyson Foods, wrote in a blog post that part of the meat industry’s giant chicken, beef and pork production is being moved from the food service to meet the growing demand for retail food. Still, he said, the United States’ food supply is “more than sufficient”.

According to banks with more than 100 US manufacturing facilities, the Tyson scale allows for rapid adaptation and meeting the current needs of the food and retail business. He said that “because of the built-in flexibility,” they can quickly change packaging from a hospitality product to a retail outlet.

“While we have taken such steps in the past, this is the most significant change we have ever initiated,” Banks said.

But Tyson isn’t the only company adjusting its operation to meet demand. Cargill Protein told Food Navigator that demand for meat and poultry products is typically 50/50 in retail and food supply, but has dramatically changed to around 85-15 last week alongside retail.

“We are starting to shift demand from food service providers to retail, but overall demand for protein has remained fairly constant,” said Daniel Sullivan, Cargill Protein and Animal Health’s director of media relations in an email to Food Dive. “At the moment, we do not see tight quantities – there is enough food to feed people and animals in times of crisis.”

According to Sullivan, food orders have not yet stopped and have been able to fulfill all food, retail and hospitality consumer orders so far.

Mike Cockrell, a financial and legal officer at Sanderson Farms, told Food Dive that if it was needed in the coming weeks, it could transform food for predominantly restaurant chicken to two grocery stores in Mississippi. He said Sanderson did this before 2018, when a customer requested an additional product and could do it again if the high demand for food continues.

“You can only do this for a short time, but we can do it again, and that will increase retail grocery manufacturing,” said Cockrell. “But demand for chickens from these plants is increasing right now. So we’re not going to do that in the near future. We can, we do, and we do, if circumstances warrant.”

Cockrell said that, at least for the time being, the need for retail groceries has outweighed all the demands that have been lost on food service, but that is not always the case.

“The million dollar question I don’t know how long will it take?” – He told. “How long will the demand for retail groceries remain strong enough to offset the decline in demand for food services?”

Diana Souder, corporate communications director for Perdue Farms, told Food Dive in an email that the company saw significant growth in demand through both retail orders and the new direct-to-consumer e-commerce website. Keeping pace, Souder said Perdue has shifted its total production in response to changes in demand and growth has moved towards retail. The company also made further changes to certain venues on Saturday and simplified the mix of the products they currently produce to focus on crowding out basic products like chicken breast, thighs, drum and clots.

“As the global situation of COVID-19 continues to evolve, we will continue to make demand-driven adjustments to best serve the needs of our customers and consumers,” he said. “As we know that this situation is very volatile, we value our policies as needed and take care to take care of our employees in this unknown environment as it evolves.”

Factories are moving for longer hours with greater security measures

Currently, Sanderson and other manufacturers are continuing to keep up with increased demand for hours. According to Cockrell, Sanderson experienced “significant” purchases from retail stores, and as a result, the company had to keep its plant up and running for the past two weekends, but “that’s all they can do.”

In addition to increased production, the company said manual disinfection stations were used in food processing facilities, nurses were trained to develop CDC protocols, and the company increased the frequency of cleaning common areas.

“We take a lot of precautions at our plant to try to keep our employees safe.” – He told. “This is our first priority every day.”

But for prevention, the virus continues to spread. Sanderson Farms confirmed Monday that an employee at the McComb processing plant in Mississippi was positive for the coronavirus.

“We take a lot of precautions at our plant to try to keep our employees safe.”

Mike Cockrell

Chief Financial Officer of Sanderson Farms

The company says the CDC and the local health department follow policies and procedures developed in consultation with the infectious disease doctor. Sanderson identified six workstations in the workplace that could be at risk and sent these workers, together with the infected worker, to self-quarantined pay. In addition, all the facilities were thoroughly cleaned over the weekend but continue their normal operations.

By far, Sanderson is not the only company working hours for its employees. Tyson, the largest US meat supplier for sales, worked with staff over the weekend to bring chicken, beef and other products to supermarkets, the Wall Street Journal reported. Kigu Heinz CEO Miguel Patricio told CNBC that some factories work three shifts a day.

“I have to say that our teams in our factories and distribution systems are incredibly proud and understand the responsibilities that lie ahead of them,” said Patricio.

However, manufacturers may not be able to maintain these longer hours. Representatives and analysts have already warned that beef and pork feel stressed and may face a shortage of labor, as workers may have to stay home due to school closures or illness.

While only a few confirmed cases of coronavirus have occurred in food-producing facilities like Sanderson Farms and Blue Diamond Growers, there are likely to be more patients. And at a Perdue Farms facility in Georgia, some employees went into a pay dispute on Monday, one employee noted in a video that he spends hours with no growth. These labor issues can be accelerated as the pay and benefits of line workers in both food and food draw national attention.

Food service distributors are taking advantage of the action

As food manufacturers compete to meet demand and produce enough products to keep grocery stores fully on the brink of a pandemic, all kinds of catering distributors are changing the food supply chain for the retail supply chain.

The International Food Service Providers’ Association and the Food Industry Association announced last week a partnership to develop an overcapacity foodservice distributor, such as products, transportation services and warehousing services, to assist food retailers and wholesalers they need additional resources to meet the needs of grocery stores.

Rick Stein, FMI vice president of fresh food, told Food Dive that while demand is slowing down, supermarkets should look into every possible way to bring their products to supermarkets.

“It’s a stopwatch type measure right now,” he said. “Until demand slows down.”

Lillianna Byington / Food Dive

While this may intensify competition for traditional food companies, Stein said grocery stores are likely to return to more traditional supply chain channels, but new relationships may emerge during the process.

Stein said the food service and supermarkets are often separate businesses; Some companies, such as McCormick or Campbell Soup, have two different divisions that do not coordinate often. He said the professional group did “great work in a very short time in crisis, bringing these two worlds together” and working with the trade union network.

“It’s unprecedented times and unprecedented demands, but if we think about partnerships and problem-solving, we can do it together,” said FMI president and CEO Leslie Sarasin in a statement.