Grocers accumulate and build “pandemic pallets” before winter

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Grocery stores and food companies are bracing for a possible increase in sales amid a further rise in Covid-19 cases and the looming 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 outbreak of virus cases and new restrictions. Food companies are ramping up production of their most popular items, and industry leaders say they won’t be caught off guard in the face of a new wave of the pandemic.

Southeastern Grocers LLC got holiday turkeys and hams over the summer months before they normally began inventory planning, CEO Anthony Hucker said. And grocery wholesaler United Natural Foods Inc. has stocked up on additional stocks of cranberry sauce, herbal teas and cold remedies, CEO Chris Testa said. “We started talking about Thanksgiving in June. It’s sooner than ever, ”he says.

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Associated Food Stores recently started building “pandemic pallets” of cleaning and sanitizing products so that they always have some inventory in the warehouses, said Darin Peirce, vice president of retail operations for the cooperative. more than 400 stores. The company is implementing protocols to better manage high demand scenarios.

“We will never be able to run our business again without being prepared for something like this,” he said.

These changes, a reaction to the sudden and massive shortages that grocers suffered in the spring, amounted to a shift from the just-in-time inventory management practices that have guided the rapidly evolving retail business for decades.

Now food vendors are stocking up for months, rather than weeks, of staples like pasta sauce and paper products to better prepare for this winter, when people should curl up in their homes. Ahold Delhaize United States, SpartanNash Co.

SPTN -2,55%

and others say they buy more food as soon as they can, stocking warehouses of wellness and vacation items. Many retailers are expanding distribution capacity, increasing warehouse space and changing schedules.

They say they want to be ready for a possible outbreak of Covid-19 which experts say could strike as early as this fall, as daily reported cases rise again in many states after dropping this summer. More than 200,000 people have died from coronavirus in the United States

A further increase in demand in the event that authorities reinstate restrictions on restaurants or workplaces would also run up against the normal boom in sales of groceries during the holidays, further increasing demand for items such as baked goods, pasta, meat and paper napkins.

Storage warehouses

Grocers aim to increase their stocks in the face of strong demand.

Supply, weekend September 13

Normal supply range before pandemic

Last March, “we didn’t know what we didn’t know,” said Chris Lewis, executive vice president of supply chain at Ahold Delhaize’s Retail Business Services.

Ahold Delhaize, owner of the Giant and Food Lion chains, already has its vacation inventory in its warehouses. The grocer is also stocking 10% to 15% more inventory than before the pandemic to ensure he doesn’t run out of items to sell quickly.

Industry executives say they don’t think a possible winter surge in demand for groceries will be as extreme as it was in March, when people panicked over fears of grocery store closings or food shortages. Consumers are better prepared this time around, said Sean Connolly, CEO of Conagra Brands. Inc.

CAG 1,41%

Some retailers are also betting that recent investments in warehouses and e-commerce will help them meet the demand for door-to-door deliveries in the months to come.

Still, some products such as cleaning wipes and canned vegetables remain difficult to obtain for stores, in part because of continued high demand and because manufacturers are still trying to keep pace. Some manufacturers fear that they will lose production capacity if infections break out among their workers or if other issues, such as lack of childcare, prevent people from working.

Aliments Hormel Corp.

HRL 1,16%

CEO Jim Snee said on a recent conference call that the company had 24% less inventory than a year ago. His bacon, pepperoni, Skippy peanut butter and SPAM canned meat could be missing if Covid-19 cases among workers disrupt production again, he said.

“We cannot afford any disruption,” he said.

General Mills Inc.

SIG 1,65%

said he had not responded to demand for Progresso soup, Betty Crocker cake mixes and Pillsbury chilled dough. It is increasing its production capacity and has hired 30 new subcontracting partners since March. The company said the industry as a whole is still struggling to replenish stocks of similar items.

Manufacturers have prioritized making their best-selling products, which has allowed some items to recoup their inventory in recent months.

General Mills et Kellogg Co.

K 0,69%

said they have been able to replenish stocks in their grain businesses, for example. “Even if the consumer can’t find the exact flavor they want, we’ll always have something on the shelf,” General Mills CEO Jeff Harmening said in an interview Wednesday.

Campbell Soup Co.

CPB 1,60%

The overall company inventory is only half recovered and the team is working to catch up completely by January, according to CEO Mark Clouse. He’s racing to grab his Chunky and Condensed Soups and Swanson Broths and add production capacity for snacks like Pepperidge Farm Goldfish crackers and Cape Cod chips.

“A lot of that will depend on how much capacity we are able to generate,” Mr. Clouse said.

Hy-Vee Inc., a chain of more than 240 supermarkets in the Midwest, stocks additional sanitizing, cleaning and paper products when possible, but the full variety has not returned, CEO Randy Edeker said. .

Walmart Inc.

WMT 0,42%

CFO Brett Biggs said the company is rolling back its grocery ordering algorithms at many stores to build up additional inventory now, after decades of growing leaner.

“We have been catching up,” Biggs said at a recent conference. “But you have to have supply all the way down the chain with our suppliers to be able to do that.”

Coke Co.

KO 0,04%

and its bottling network produces ever fewer varieties of drinks to meet the demand for its best drinks. This has made it difficult for shoppers to find things like Caffeine-free Fresca and Coke in the pandemic. Meanwhile, Coke’s business serving restaurants and other venues suffered declines.

James Quincey, CEO of Coca-Cola, told a recent investor conference: “We have a clear strategy on how we want to get out of this crisis, but getting through winter in the northern hemisphere will be the key. great test. “

Write to Jaewon Kang à [email protected] and Annie Gasparro at [email protected]

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