Consumer product companies are expanding factories and renewing production lines, betting that work-from-home habits, such as growing a beard and fixing fast food, will perpetuate the coronavirus pandemic.
Millions of Americans spent much of the year working from home. While legions of employers plan to reopen their offices, many have said they would allow employees to continue working remotely all or all of the time once the pandemic subsides.
As a result, many food and consumer companies are investing in factories, equipment and brands to provide more of these items over the next few years, looking to accommodate consumers who brew more coffee, buy more casual clothes and care for beards with clippers and balm instead of shaving them.
Conagra brands Inc.
and Kraft Heinz Co.
they buy and upgrade equipment to make more meals at home. General Mills Inc.
has added a Cinnamon Toast Crunch cereal manufacturing line to a Georgia factory, which the company said is one of its most expensive capital projects in history. Kimberly-Clark Corp.
is turning a plant to make toilet paper for homes instead of offices, and Procter & Gamble Co.
adds beard care products in addition to Gillette razors.
These decisions follow a period of unprecedented growth for grocery manufacturers, whose sales increased with the onset of the pandemic. Initially, these companies added changes and reduced the variety of products to increase capacity, but many were reluctant to make more lasting investments that could backfire if demand declined.
The pandemic has lasted so long that people have adopted new habits and bought equipment to help them work from home for years, said Bob Nolan, head of reports and data on Conagra consumers. “That gives us confidence that this is not just a flash,” he said.
Conagra said it is adding a manufacturing line to an Iowa factory that would substantially increase its ability to make Healthy Choice, Marie Callender and other frozen foods. The food maker has also invested in speeding up machines that make Orville Redenbacher and Act II popcorn at an Indiana factory, predicting that people will continue to watch movies at home for a while.
Conagra said it increases the ability to prepare frozen meals, including those of Marie Callender, Healthy Choice and others.
Photo:
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 home at least several days a week by the end of 2021, compared to about 4% before the pandemic. . For example, Google’s parent alphabet Inc.
plans to get employees back to offices starting next fall instead of summer, but the tech giant will prove that staff can continue to work from home for part of each work week.
Kate Lister, president of GWA, said that the more people make working from home a permanent part of their routine during the pandemic, “the greater the adoption when we see the dust reached.”
Campbell’s soup Co.
he said this month that he expects remote workers to want more of their food after the health crisis. Campbell is expanding its capacity to make Pepperidge Farm red fish cookies and Kettle and Cape Cod chips.
There is risk. Campbell and General Mills have said sales growth is already moderating since the pandemic. There is no guarantee that demand will remain high enough to require additional production capacity.
General Mills said earlier this month that it covers its bets through mainly short-term third-party manufacturers. “It allows us to shrink to the extent that demand comes out of its peak,” said Kofi Bruce, chief financial officer. “We have left with agility not to incorporate many of these costs into our structure.”
Others are also moving forward. Kraft Heinz Co.
increased production of its most sought-after items, such as Kraft Mac & Cheese cups, Oscar Mayer sausages and Philadelphia cream cheese by 20% during the pandemic. The company now spends more than $ 100 million to add more production capacity next year.
“It’s a relatively flat business for a while, at most,” said Adam Butler, president of Kraft’s Easy Meals Made Better division. “Now we want to double it.”
After increasing production of Kraft Mac & Cheese cups during the pandemic, Kraft Heinz is investing more than $ 100 million to add more capacity.
Photo:
TNS / Zuma Press
Changing gear is especially expensive and complicated for paper towel and toilet paper manufacturers. Consumer products are generally manufactured on different equipment, using materials different from the finer, more utilitarian versions used in public buildings and businesses. This meant that consumers could not find enough toilet paper for much of the pandemic.
Kimberly-Clark, a maker of Cottonelle toilet paper and Scott paper towels, will move quality consumer production to a factory in Mobile, Alabama, that makes office fabrics and paper, CEO Mike Hsu said.
Amy’s Kitchen opens a factory in San Jose, California, and another on the East Coast in 2022 to make more of the organic soups and frozen foods that have risen in popularity during the pandemic, said Xavier Unkovic, chief executive.
Other companies hope to benefit from workers returning to the offices. Chlorox Co.
, which spent most of this year striving to meet the demand for cleaners, from bleach to disinfectant wipes, wants to expand sales to businesses.
“As people re-enter public life, they seek to make sure the spaces they enter are clean and disinfected,” said Linda Rendle, CEO of Clorox.
Other manufacturers expect demand for home and office products to decline. Procter & Gamble, which manufactures Charmin toilet paper and Bounty paper towels, and Georgia Pacific LLC, a manufacturer of Brawny paper towels and Quilted Northern toilet paper, said they do not plan to add substantial capacity for consumer products.
But P&G has invested this year in products for bearded men alongside its Gillette razors and shaving cream. Estee Lauder Cos. I Coty Inc.
they have expanded their skin care lines as makeup sales have fallen.
JM Smucker Co.
has restarted idle machines and adapted others to make Folgers and Dunkin ’coffee sizes and varieties, such as single-serving pods, which it hopes will be popular with people working from home.
Smucker’s chief operating officer, John Brase, said, “We’d be crazy not to be opportunists.”
Write to Annie Gasparro to [email protected] and Sharon Terep to [email protected]
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