Food Producers Try to Meet Increased Demand
It was only a few months ago that grocery store shelves were depleted as consumers prepared to hunker down in their homes and avoid public spaces as the coronavirus pandemic spread throughout the United States. Today, food producers are still struggling to keep up with demand.
General Mills, for example, said its factories are running at or near capacity to meet demand, but it’s still not enough, according to The Business Journals. The company plans to increase the number of outsourcing manufacturing partners and suppliers by as much as 20 percent from pre-pandemic levels to keep up with demand for its products.
For its fiscal fourth quarter, the Golden Valley, Minn.-based consumer foods manufacturer and marketer reported better-than-expected sales and earnings as consumers started making more meals at home during COVID-19-related lockdowns. General Mills said U.S, meals and baking sales rose 75% and cereal sales increased 26%.
General Mills said it may expand its own production, adding third-party manufacturers is faster and less risky if demand declines later, according to The Business Journals. “It will cost us more to operate in this environment,” said CFO Kofi Bruce. “But these are the things that are necessary for us to be agile and nimble and prepared to deal with a longer period of sustained higher demand.
That higher demand may be sustained by the possibility of a second wave of COVID-19 later this year. As a result, Fox Business reported that packaged food companies like frozen food manufacturer Saffron Road are preparing now by increasing their inventory.
Saffron Road is reportedly buying 50% more inventory than before the pandemic and plans to increase its purchases later this year in preparation for another spike in demand.
“We feel like this is a time for us to not only deliver these products and to make sure they’re in stock in store so consumers can have their health needs and their product expectations met,” CEO Adnan Durrani said. “But also because we feel like this is an opportunity to grow the brand and get stronger household penetration.”