Consumer products companies are expanding factories and renewing production lines, betting that habits of working at home, such as shaving and preparing quick meals, will survive the coronavirus pandemic.
Millions of Americans spent much of the year working from home. While legions of employers plan to reopen their offices, many said they would allow employees to continue working remotely for some time or all the time, once the pandemic subsides.
As a result, many food and consumer products companies are investing in factories, equipment and brands to supply more of these items in the coming years, seeking to accommodate consumers who are making more coffee, buying more casual clothes and grooming beards with trimmers and balm. instead of scraping them.
Conagra Brands Inc.
and Kraft Heinz Co.
they are buying and updating equipment to make more homemade meals. General Mills Inc.
added a manufacturing line for the Cinnamon Toast Crunch cereal at a Georgia plant, which the company said was one of its most expensive capital projects of all time. Kimberly-Clark Corp.
is converting a factory to make toilet paper for homes instead of offices, and Procter & Gamble Co.
is adding beard care products in addition to Gillette razors.
These decisions follow a period of unparalleled growth for food manufacturers, whose sales soared with the start of the pandemic. These companies initially added shifts and reduced the variety of products to increase capacity, but many resisted making long-term investments that could backfire if demand declined.
The pandemic lasted so long that people created new habits and bought equipment to help them work from home for years, said Bob Nolan, head of consumer data and information at Conagra. “It gives us confidence that it’s not just a flash in the pan,” he said.
Conagra said it is adding a manufacturing line at an Iowa plant that would substantially increase its ability to make Healthy Choice, Marie Callender’s and other frozen meals. The food maker also invested to speed up Orville Redenbacher and Act II popcorn machines in an Indiana factory, predicting that people will continue to watch movies at home for some time.
Conagra said he is increasing his ability to make frozen meals, including Marie Callender’s, Healthy Choice and others.
Photograph:
Gene J. Puskar / Associated Press
Global Workplace Analytics, a telecommuting research and consulting firm, estimates that about a quarter of U.S. workers will be at home at least several days a week in late 2021, compared with about 4% before the pandemic. For example, parent Google alphabet Inc.
plans that employees will return to the offices starting next fall instead of summer, but the technology giant will run tests, allowing employees to continue working from home part of each work week.
Kate Lister, president of GWA, said that the more people make homework a permanent part of their routine during the pandemic, “the greater the adoption we will see when the dust settles.”
Campbell soup Co.
said this month that he expects remote workers to also want more of their food after the health crisis. Campbell is expanding the capacity to make Pepperidge Farm Goldfish cookies and Kettle and Cape Cod chips.
There is risk. Campbell and General Mills said that sales growth has been moderating since the start of the pandemic. There is no guarantee that demand will remain high enough to demand extra production capacity.
General Mills said earlier this month that it is protecting its bets using mainly short-term third-party manufacturers. “This allows us to reduce as demand gets off peak,” said chief financial officer Kofi Bruce. “We are quick to not include many of these costs in our structure.”
Others are also moving forward. Kraft Heinz Co.
increased production of its most in-demand items, such as Kraft Mac & Cheese cups, Oscar Mayer cold cuts and Philadelphia cream cheese, by about 20% during the pandemic. The company is now spending more than $ 100 million to add more production capacity next year.
“This is a business that has been relatively stable for a while, at best,” said Adam Butler, president of Kraft’s Easy Meals Made Better division. “Now we want to double this.”
After increasing the production of its Kraft Mac & Cheese cups during the pandemic, Kraft Heinz is now investing more than $ 100 million to add more capacity.
Photograph:
TNS / Zuma Press
Changing gears is especially expensive and complicated for manufacturers of paper towels and toilet paper. Consumer products are generally made on different equipment, using different materials from the thinner and more utilitarian versions used in public buildings and businesses. This meant that consumers were unable to find enough toilet paper during much of the pandemic.
Kimberly-Clark, maker of Cottonelle toilet paper and Scott paper towels, will transfer part of the quality consumer production to a factory in Mobile, Alabama, which makes paper tissues and paper for offices, said CEO Mike Hsu.
Amy’s Kitchen is opening a factory in San Jose, California, and another on the East Coast in 2022 to make more organic soups and frozen meals that grew in popularity during the pandemic, said Chief Executive Xavier Unkovic.
Other companies hope to benefit from the return of workers to the offices. Chlorox Co.
, which has spent most of this year struggling to meet the demand for cleaning products, from bleach to disinfectant wipes, wants to expand sales to companies.
“As people enter public life again, they try to make sure that the spaces they enter are clean and disinfected,” said Linda Rendle, CEO of Clorox.
Other manufacturers expect demand for home and office products to stabilize. Procter & Gamble, which makes Charmin toilet paper and Bounty paper towels, and Georgia Pacific LLC, a maker of Brawny paper towels and Quilted Northern toilet paper, said they did not plan to add substantial consumer product capacity.
But P&G this year invested in products aimed at bearded men, in addition to razors and Gillette shaving cream. Estee Lauder Cos. And Coty Inc.
expanded skin care lines as makeup sales fell.
JM Smucker Co.
restarted idle machines and adapted others to make sizes and varieties of Folgers and Dunkin ‘coffee, such as single-dose capsules, which he hopes will be popular with people working at home.
Smucker’s chief operating officer, John Brase, said, “We would be crazy if we weren’t opportunists.”
Write to Annie Gasparro at [email protected] and Sharon Terlep at [email protected]
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