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Grocers build up stockpiles as CO VID -19 cases surge.
Grocers and food manufacturers build up inventories as second wave threatens
Supermarkets and food manufacturers are building up their inventories to protect against surges in demand as a second wave of COVID-19 infections hits parts of Canada.
Grocers and their suppliers don’t appear to be expecting the same level of hoarding that they saw at the outset of the pandemic this spring. But as daily case counts have sharply increased in Ontario and Quebec, some retailers are already reporting slight jumps in demand for what have become pandemic staples, such as toilet paper and flour.
For example, Kraft Heinz Canada has stockpiled millions of extra boxes of Kraft Dinner in anticipation of a second wave.
Before the pandemic, the company held an average of three-and-ahalf weeks’ worth of Kraft Dinner in its warehouse as “safety stock,” so it could still fill orders even if demand unexpectedly surged.
But that supply didn’t last beyond
April and the company was forced to temporarily cut more niche versions, such as KD with spiral pasta, so its production lines could focus on meeting the soaring demand for its biggest sellers, KD Original and KD Extra Creamy.
Through the summer, the Kraft Heinz plant in Montreal has built up a far larger safety stock of 4.6 million boxes of Kraft Dinner, or roughly eight weeks’ worth of average demand, said chief administrative officer Av Maharaj. The company has also expanded safety stocks of other in-demand, shelf-stable products.
“We are expecting an increase in demand, but we don’t anticipate that it will be as high as the beginning of COVID- 19,” he said. “The biggest issue is whether restaurants will close. That will affect demand at the grocery stores significantly.”
Calls to tighten rules on restaurants have been mounting in Ontario, which recorded a record- high 700 new COVID-19 cases on Monday.
But the main industry association for the food manufacturers said a second wave isn’t likely to cause major issues at the retail level, since suppliers have been adding extra shifts at their facilities and working to build inventories at their warehouses, as well as at retailers’ warehouses.
The worst impact, if demand increases, might be that “they just may not have the product I want on the day I go in,” said Michael Graydon, chief executive of Food, Health and Consumer Products of Canada. “Certainly, I’m less worried today than I was in March. We kind of got caught off guard in the first wave.”
The runs on products this spring forced manufacturers and retailers to rethink supply chain norms in Canada, which had focused on producing the right amount of products “just in time,” as a way of cutting down on warehousing costs, Graydon said.
Manufacturers are also quick to note that even in the most frenzied days of the pandemic this spring, the supply chain never actually ran out of food, but it did struggle to move food from warehouses to stores quickly enough.
“We all need to do a better job of reassuring Canadians that we’ ll make more,” Maharaj said. “You don’t need to panic buy. We’ll make more.”
Empire Co. Ltd., Canada’s second- largest grocery chain, which includes Sobeys, Safeway and FreshCo, on Tuesday said it has been working with its suppliers to increase its inventory of “key items we know Canadians have been looking for throughout the pandemic,” including toilet paper and flour.
“We are starting to see slight increases in shopping behaviour in regions where COVID cases are rising, indicating that families are planning to spend more time eating at home,” spokesperson Jacquelin Weatherbee said in an email. “Although you may see an empty shelf, from time to time, rest assured more product is on the way and it will only be for a very short period of time.”
Loblaw Cos. Ltd., the country’s largest supermarket chain, also stressed in a statement that it is “not worried about running out of food.”
But both Empire and Loblaw said they would consider reinstating per- customer limits on in- demand products in some cases.
“We’re making the preparations our customers would expect, including increasing inventories and limiting purchases in some very specific cases,” Loblaw spokesperson Catherine Thomas said in an email.
One manufacturer of toilet paper and paper towel said it hasn’t been able to restore its inventory levels because demand for paper towel has remained high since the spring, and demand for toilet paper is still higher than normal, though slightly down from its peak earlier this year.
Irving Consumer Products Ltd., which makes the Royale brand of paper towel and toilet paper, said its inventories have slightly recovered, but are still “far from pre- COVID-19 levels” despite its production facilities running all lines, with added staff and overtime.
“We continue to run all assets and optimize our runs to support our existing customers on household towel and other essential tissue products,” the company said in a statement.