While the U.S. has seen a new surge in COVID-19 cases in recent weeks, the food industry has struggled to keep pace with demand. As recently reported by The Wall Street Journal, “Prolonged shelter-in-place orders and restrictions on restaurants, as well as the battered economy, [are likely] to result in a longer stretch of eating at home. Added safety measures at plants are slowing operations, too. There is enough food in the U.S. to keep people fed, executives say, but every product might not be available everywhere.”
Here are some ways we may see the food industry, especially manufacturers and grocers, work to cope with demand as the pandemic continues to complicate life in the U.S.:
Amid the initial surge of coronavirus in the Spring, many retailers began rationing products in high demand by limiting the number of items that could be purchased per customer. We expect retailers to continue using this tactic to control inventory and distribute essential items throughout their communities. We may see manufacturers similarly establish quotas for where they distribute products if they struggle to meet demand.
2. Increasing Manufacturing Capacity
Many manufacturers are racing to increase their manufacturing capacity as demand surges, especially for long-declining products such as soup, flour, and other baking ingredients. Companies may opt to increase in-house production by adding shifts at manufacturing centers or opening new centers. Others may outsource production to manufacturers whose volume has decreased.
3. Finding Additional Suppliers
The food industry has been largely dependent on rigid and long-standing trading relationships, leaving many companies unprepared to adapt to shortages among their suppliers. This has added to strain on manufacturers seeing surges in demand, but for whom shortages in their supply chains have inhibited increased production. To build more resilient and flexible supply chains, many companies are choosing to expand their trading networks, giving them more options to source products and manage shortages.
4. Reprioritization in Retail
As consumers have turned to essentials to carry them through lengthy lockdowns and kitchen staples to increase their home cooking, some retailers have pulled lower-demand products from shelves in order to make space for more vital items. Some grocers, for example, have started stocking double their normal inventory of toilet paper.
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