Consumer products companies are expanding factories and revamping production lines, betting that work-from-home habits like growing beards and preparing quick lunches will survive the coronavirus pandemic.
Millions of Americans worked from home much of the year. While legions of employers plan to reopen their offices, many have said they would let employees work remotely some or all of the time if the pandemic abates.
As a result, many companies are investing in food and consumer products in factories, equipment and brands to provide more of those items in the coming years, in an effort to meet consumers who brew more coffee, buy more casual clothes and groom beards with trimmers and balm instead of shaving them off.
Conagra brands Inc.
and Kraft Heinz Co.
buy and upgrade equipment to make more home lunch items. General Mills Inc.
added a Cinnamon Toast Crunch cereal production line at a Georgia facility, which the company said is one of the most expensive capital projects ever. Kimberly-Clark Corp.
converts a factory 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 an unparalleled growth period for grocery manufacturers, whose sales have soared with the outbreak of the pandemic. Those companies initially added shifts and narrowed product offerings to increase capacity, but many resisted making longer-term investments that could backfire if demand declined.
The pandemic has lasted so long that people have formed new habits and bought equipment to help them work from home for years, said Bob Nolan, Conagra’s head of Consumer Insights and Data. “This gives us confidence that this is not just another flash in the pan,” he said.
Conagra said it is adding a production line at an Iowa facility that would significantly increase the capacity to make Healthy Choice, Marie Callender’s and other frozen meals. The food maker has also invested to speed up machines that make Orville Redenbacher and Act II popcorn at an Indiana factory, predicting people will be watching movies at home for a while.
Conagra said it increases the capacity to make frozen meals, including those from Marie Callender, Healthy Choice, and others.
Photo:
Gene J. Puskar / Associated Press
Global Workplace Analytics, a teleworking research and consulting firm, estimates that about a quarter of U.S. workers will be home at least a few days a week by the end of 2021, compared to about 4% before the pandemic. For example Google parent alphabet Inc.
plans to have employees return to the office next fall instead of summer, but the tech giant will test whether its staff can continue to work from home for part of each work week.
Kate Lister, the president of GWA, said the more people make working from home a regular part of their routine during the pandemic, “the more adoption we’ll see when the dust settles.”
Campbell soup Co.
said this month that it expects remote workers to want more of its food after the health crisis, too. Campbell expands production capacity for Pepperidge Farm Goldfish crackers and Kettle and Cape Cod chips.
There is a risk. Campbell and General Mills have both said sales growth has been slowing since earlier in the pandemic. There is no guarantee that demand will remain high enough to require the additional production capacity.
General Mills said earlier this month that it is hedging its bets by primarily using short-term third-party manufacturers. “It allows us to scale as demand peaks,” said Chief Financial Officer Kofi Bruce. “We have kept ourselves nimble not to build much of these costs into our structure.”
Others also continue. Kraft Heinz Co.
increased production of the most in-demand items such as Kraft Mac & Cheese cups, Oscar Mayer deli meats and Philadelphia cream cheese by about 20% during the pandemic. Now the company is spending more than $ 100 million to add more production capacity next year.
“This is a company that has been relatively flat at best for a while,” said Adam Butler, president of Kraft’s Easy Meals Made Better division. “Now we want to double it.”
After ramping up production of its Kraft Mac & Cheese cups during the pandemic, Kraft Heinz is now investing more than $ 100 million to add more capacity.
Photo:
TNS / Zuma Press
Switching is especially costly and complicated for paper towel and toilet paper makers. Consumer-grade products are generally made on different equipment, with different materials than the thinner, more utilitarian versions used in public buildings and businesses. That meant consumers couldn’t find enough toilet paper during much of the pandemic.
Kimberly-Clark, maker of Cottonelle toilet paper and Scott paper towels, will move some of its consumer-grade production to a facility in Mobile, Ala., That makes office tissues and paper, said CEO Mike Hsu.
Amy’s Kitchen will open a factory in San Jose, California, and another on the East Coast in 2022 to create more organic soups and frozen meals that have skyrocketed in popularity during the pandemic, CEO Xavier Unkovic said.
Other companies expect to benefit from the return of employees to offices. Clorox Co.
, which has spent most of this year meeting the demand for cleaning products, from bleach to disinfectant wipes, is looking to expand sales to businesses.
“When people re-enter public life, they want to be reassured that the spaces they enter are clean and sanitized,” said Linda Rendle, CEO of Clorox.
Other manufacturers expect demand for home and office products to level off. Procter & Gamble, which makes Charmin toilet paper and Bounty paper towels, and Georgia Pacific LLC, maker of Brawny paper towels and Quilted Northern toilet paper, said they do not plan to add substantial capacity to consumer products.
But P&G has invested in products aimed at men with beard this year, in addition to Gillette razors and shaving cream. Estee Lauder Cos. And Coty Inc.
have expanded skin care lines as makeup sales have fallen.
JM Smucker Co.
has rebooted idle machines and retrofitted others to create sizes and varieties of Folgers and Dunkin ‘coffee, such as single-serve pods, which are expected to be popular with people working from home.
John Brase, Smucker’s Chief Operating Officer, said, “We’d be crazy not to be opportunistic.”
Write to Annie Gasparro at [email protected] and Sharon Terep at [email protected]
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