Good bet: Consumer brands predict working from home is here to stay
Everyone has the same question – what does life look like after the pandemic fades away? Do we go back to life as it was before the coronavirus from China caused a national lockdown or do we continue on with life as we know it now? The manufacturers of consumer goods are betting that more of us will be working from home in the future. They are making adjustments accordingly.
Granted, for the majority of Americans, working from home isn’t a viable option. Global Workplace Analytics, a telecommuting research-and-consulting firm, found that about a quarter of U.S. workers will work from home at least several days a week at the end of 2021. That number is vastly increased from the pre-pandemic number of 4%. Some companies are pushing back return dates for office employees, allowing staff to continue working from home for at least part of the workweek. GWA’s president, Kate Lister, said the more the new routine is working from home, “the greater the adoption we will see when the dust settles.” Millions of Americans are working from home now. I agree that it’s a safe bet to assume that those who can continue to do so, at least part-time if not full-time, will.
Consumer product companies are planning ahead and betting on stronger demand for some products over others. In our new world, people work from home offices or family rooms and personal needs are different. Meals are prepared and eaten at home, including quick lunches during the workday. There is no need for purchasing as many business-appropriate garments or personal items like make-up. I’m not saying we’re a nation of slobs but our needs are different at home, right? Why bother with a nice suit or pair of khakis if jeans or even sweats are all you need around the house? So the products we buy now are adjusted to our circumstances. For example, more coffee and less razors.
As a result, many food-and-consumer-products companies are investing in factories, equipment and brands to provide more of those items for years to come, seeking to accommodate consumers who are making more coffee, buying more casual clothes and tending beards with trimmers and balm rather than shaving them off.
Conagra Brands Inc. and Kraft Heinz Co. are buying and upgrading equipment to make more at-home lunch foods. General Mills Inc. has added a manufacturing line for Cinnamon Toast Crunch cereal at a Georgia factory, which the company said is one of its most expensive capital projects ever. Kimberly-Clark Corp. is converting a plant to make toilet paper for homes instead of offices, and Procter & Gamble Co. is adding beard-care products in addition to Gillette razors.
Retail grocery sales are surging during the pandemic. While some food manufacturers resisted making too much investment into long-term changes, the strategy of adding shifts and limiting product variety to increase capacity is being re-visited now. The pandemic has lasted long enough that new habits have formed and routines are likely permanently altered. People who don’t enjoy cooking are purchasing frozen meals and since we no longer go to movie theatres, the demand for snacks like popcorn is up. Food makers are investing in machines that are faster and able to keep up with demand.
Conagra said it is adding a manufacturing line at an Iowa factory that would substantially increase its capacity to make Healthy Choice, Marie Callender’s and other frozen meals. The food maker has also invested to speed up machines making Orville Redenbacher and Act II popcorn at an Indiana factory, predicting people will continue watching movies at home for some time.
Campbell Soup Co. said this month that it expects remote workers to want more of its foods after the health crisis, too. Campbell is expanding manufacturing capacity for Pepperidge Farm Goldfish crackers and Kettle and Cape Cod chips.
Others are pushing ahead. Kraft Heinz Co. raised production of its highest-demand items such as Kraft Mac & Cheese cups, Oscar Mayer cold cuts 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 business that has been relatively flat for a while at best,” said Adam Butler, president of Kraft’s Easy Meals Made Better division. “Now we want to double down on it.”
Some businesses are planning to open new factories in 2021 or shifting operations to accommodate new demands.
Switching gears is especially costly and complicated for makers of paper towels and toilet paper. Consumer-grade products are generally made on different equipment, using different materials than the thinner, more utilitarian versions used in public buildings and businesses. That meant consumers couldn’t find enough toilet paper throughout much of the pandemic.
Kimberly-Clark, maker of Cottonelle toilet paper and Scott paper towels, will move some consumer-quality production to a factory in Mobile, Ala., that makes tissues and paper for offices, said CEO Mike Hsu.
Amy’s Kitchen is opening a factory in San Jose, Calif., and another on the East Coast in 2022 to make more of the organic soups and frozen meals that have soared in popularity during the pandemic, said chief executive Xavier Unkovic.
Some manufacturers expect demand to level off and are not adding capacity for consumer goods. Procter & Gamble, for example, makes Charmin toilet paper and Bounty paper towels. It has invested in products for beards along with shaving products because men are growing more beards during the pandemic. Beauty products companies like Estee Lauder and Coty are investing more in skincare items instead of make-up items. J.M. Smucker Company CEO John Brase said, “We would be crazy not to be opportunistic.” Smucker has restarted idle machines and retrofitted others to make sizes and varieties of Folgers and Dunkin’ coffee that will appeal to people working from home.
Consumer goods companies are working to cater to the new normal. Apparently, that includes Cinnamon Toast Crunch and mac and cheese. And sweat pants. Lots of sweat pants. Comfort foods and comfortable clothing are in demand.
