COVID-19 Survey: Early Results Reflect CPGs’ Current Resolve, Future Uncertainty

But once again, the most common answer was one of uncertainty. Summed up one respondent:

“Likely will wait to better understand long term effect of downturn on buying habits.”

Workforce under COVID-19: Safety & attendance concerns
We asked our audience directly, “What is your company’s biggest challenge related to COVID-19?” This was left as a write-in answer with no multiple choice or other prompting. Sifting through the varied results revealed two major categories of challenges into which just about every answer fit. Companies are having difficulty handling their workforce, and they are having difficulty navigating the demand shift from Foodservice to Retail sectors. First, we’ll look at the people-problem.

For those answers falling into the ‘people/workforce’ bucket, a few themes emerged. There were those worried about safety above all else. And there were more nuanced answers that showed concern about attendance, where to find labor in the case of poor attendance, or worse—COVID-positive employees. Some respondents identified both of these problems, so these answers aren’t mutually exclusive, but the numbers illustrate that both are top-of-mind. 

The number-one most referenced worry or challenge around this pandemic is keeping people safe. Of the 111 respondents, 25% (26 people) directly reference worker safety and keeping workers safe. Of course, some of this is just basic altruism and care for your fellow person. On another level, this stands to reason in an era where qualified labor was hard enough to find before the pandemic hit.

The number one verbatim answer, and there were two dozen versions or permutations of it:

“Keeping people/workers safe.”

A more detailed response said:

“Making sure all employees stay healthy and continue to practice safe hygiene at home the same as done in factory. Also, worry if their families are doing correct sanitation hygiene and their surrounding environment.”

But answers that expanded beyond the basic safety element worried about some human capital specifics. Communications was a common theme, with CPGs apparently challenged to effectively communicate to employees facts about the pandemic, like when to come to work and when to stay home. In fact, 13% of our respondents were specific about communication and education when it comes to worker safety. Said a few of their biggest COVID-19 challenge:

“Communicating company updates regarding COVID-19 to associates and reacting to changes.”

“Keeping employees informed and educated so they will each make the right decisions.”

“…ensuring anyone with symptoms does not come into work until cleared.”

And quite a few answers were quite specific about how social distancing would work on a factory floor. For instance:

“Social distancing of 6’ on the production floor,”

said one, and refrained two others:

“social distancing employees.”

“Keeping our employees separated, keeping the PPE they need and keeping them and their coworkers safe.”

One notable response indicated some worry about how stress and strain might lead to mistakes. Said the respondent:

“Ensuring the work force is healthy and not making mistakes due to crisis happening in the world.”

Of the 111 respondents, 23 said attendance and finding labor has been their biggest problem when it comes to COVID-19. This is the other side of the coin when it comes to CPGs’ workforce worries, not just keeping them safe, but keeping them there—especially during a hiring freeze (remember, 45% of respondents indicated a hiring freeze at their company is now in effect.)

Most of these were simple answers, as evidenced by responses citing:

“Employee attendance.”

“Keeping our employees working and paying bills.”

“Staffing issues,” or “Staffing.”

And, provocatively said one respondent:

“Today it’s labor. When we open back up it’s going to be credit.”

Shifting landscape for retail and foodservice
Among about 40% of the 111 respondents writing in, there was a tale of two problems. For about 21%, it was the problem of keeping up with increased demand. This fell mostly on the supermarket retail side. For the other 19% of respondents, the problem was the opposite. The closure of foodservice and non-grocery or non-essential retail locations meant that demand had plummeted. At least temporarily, the balance between supermarket retail and foodservice and other retail has been severely upset. This is felt most specifically for food and beverage, but also in other sectors.

While those with declining or held-up orders have it bad, those who are struggling to keep up have another problem to consider: supply chain disruptions that could shut them down when they are needed to be cranking the most.

Consider these two thoughtful responses describing their biggest COVID hurdles:

“Since retail demand is so high and foodservice has declined, our biggest challenge is getting enough packaging film to repackage product for our retail customers that was supposed to go to our foodservice customers. Printers are so overloaded they can’t deliver enough packaging for our production plants.”

“Dropping/sporadic foodservice and industrial business demands, meanwhile skyrocketing retail food product demand; and still there is no way to predict what customer and consumers will do next. Glad people are still shopping for and apparently consuming food.”

Those CPGs and food and beverage manufacturers who saw sales plummet are rightfully worried. Here’s what they had to say:

“Downturn in overall product sales due to retail establishments being closed.”

“Cancellation of bulk (foodservice) orders.”

“The impact that it has had on some of our largest customers in NYC has significantly reduced our revenues during this early stage.”

“The closing of all bars and restaurants changing the focus on which packages take priority.”

One specialty bakery referenced food distribution holding up payment:

“We are a wholesale specialty bakery. Our normal business mix is 90% foodservice and 10% retail. Our foodservice orders have all basically been cancelled in the last week (some hours before pick-up) and our retail has increased but not to the point that it can cover the lost sales. I have to lay some people off. Also, now my customers (large distributors) are holding up payments. Very frustrating.”

Chart 4—Are any new capital expenditures on temporary hold?On the other side of the coin, 21% are going like gangbusters, and just trying to keep up with demand. Here’s what they had to say about their biggest challenges with COVID-19:

“Meeting the demand for our products, we have experienced a 274% increase over the past two weeks.”

“Since we supply products to supermarkets, we are running 7 days a week.”

“Producing enough food to meet customer demands.”

“Keeping up with the increased demand from our retail customers.”

“… we produce snack foods and volume has increased over the last few weeks to astonishing levels never seen before.”

Seems like a good problem to have, right? But for those struggling just to keep up, there’s a worry about supply chain disruptions and problems with logistics to keep them on track. Here’s what they had to say:

“As a food manufacturer, our finished goods inventories are being depleted.”

“Worrying about ports and transportation of our product and whether we will have to shut down in the near future.”

“Supply chain risks and meeting unexpected increases in demand.”

“Packaging supply.”

"Bottle and label supply.”

Also important to note, those who are just trying to keep up with soaring demand may in fact be less likely to innovate; they don’t have the time to decommission a packaging line for a week to add new or better equipment. Consider these two prophetic responses:

“If we are going to add automated or update equipment on a production line, the production line will have to be shut down while the new equipment is installed and validated. To allow for that down time required to install new equipment, we would run additional line time to build inventories. Right now, we are getting a strong demand for our products so our inventories are being depleted and we cannot build up inventories. We are just concentrating on keeping our DC’s supplied and our supply chain stocked.”

Or more succinctly put:

“We have stopped allowing vendors in our plants—this significantly impacts bringing on new production lines & new capacity. We have stopped most trial work—this significantly impacts progress for new product/package innovations.”

Chart 5—Do you foresee ongoing changes to your capital equipment buying?Of course, the reverse should also hold to be true of those who are seeing reduction of demand for their consumer packaged goods. After all, what do toy manufacturers do after Christmas, and candy manufacturers do after Halloween?

Forward-thinking CPGs spell downturns and slow times with equipment upgrades, new lines, plant improvements, and other innovations that will make them that much more efficient when the better days inevitably return. But in the results of this survey, still very early in the crisis in a time of uncertainty, we have yet to see this dynamic play out.