Consumer product sales jumped 9.4% to $ 1.53 trillion last year

Growing demand from the coronavirus pandemic caused sales of consumer packaging products, from toilet paper to canned soup, to increase 9.4% to $ 1.53 trillion last year. , according to the new report from the Consumer Brands Association.

But the demand boom has not yet subsided, and the trading group said manufacturers are still struggling to recover inventory. To meet the challenge, companies are hiring more workers, adding new factory lines and raising wages amid prolonged rising demand.

“This was the biggest test the system has ever been able to experience,” said Geoff Freeman, executive director of Consumer Brands. “It may be that our wildest imagination has not been able to imagine the 12-month hike we just spent.”

While the pandemic is easing, Consumer Brands predicts that industry sales for 2021 will continue to increase 7.4% to 8.5% from 2019. January sales are up 16% from the same time period. a year ago, which represents the highest year-on-year change since last March. February sales growth slowed slightly, but remained in double digits. Prior to the pandemic, strong growth for a CPG company meant an increase in low single digits.

“This industry is still running a marathon,” said Katie Denis, vice president of research and narrative for the Consumer Brands industry.

Last year’s growing demand means manufacturers are still trying to regain supply and that every hurdle can result in millions of dollars in sales losses. Freeman cited a conversation with an executive director who saw that more than a quarter of its manufacturing plants were closed for a week in February due to the Texas winter storm. The blockade of the Suez Canal in March caused even more headaches.

General Mills and Clorox are some of the companies that turned to third-party manufacturers to temporarily fix the soaring demand. The situation has motivated some CPG companies to rethink their inventory targets and the degree of proximity of products to retailers. Freeman said some manufacturers won’t be able to retrieve inventory until new capital spending goes online.

The current stress in the supply chain makes some shortages, such as the shortage of packets of ketchup reported by the Wall Street Journal, more difficult to predict.

“That’s the kind of thing we should see six or twelve months in advance,” Freeman said.

The increase in demand has resulted in higher wages for GPC manufacturing workers. PepsiCo and Hormel were among those who gave bonuses to their front-line employees last year. According to the Consumer Brands report, the remuneration of food manufacturing workers rose by 3.4% between July and September, compared to the same period last year. Non-agricultural wages nationwide fell 0.8% in the same period.

“I do not know if [wages] it will go up higher than in 2020, but there is no reason to believe there will be a decline, according to the companies we surveyed with McKinsey, ”Denis said.

CPG companies also increased their hiring. After the initial loss of jobs, it affected the industry, especially for food service providers, other manufacturers of food, beverages and household products struggled to get more workers. Some companies hired between 10% and 20% more workers than they really needed to account for employees who were in quarantine or caring for sick relatives, according to Freeman.

According to the Consumer Brands report, current manufacturing employment in the industry is down just 2% from January 2020 levels, while the overall U.S. employment rate was 6% in March.