A flour mill in Hertfordshire has been quick to react to the coronavirus pandemic. But rather than shutting down, like many businesses, it is ramping up.
The mill, which makes flour under brands such as Allinson’s for the UK manufacturer Associated British Foods, has cranked up production and is hiring staff after demand doubled from nervy British shoppers stockpiling goods.
It has moved to a seven-day operation, from five, and is producing an extra 350,000 bags of flour a week.
The mill’s owner is among many companies in the British food supply chain that have found themselves barely able to cope with the sudden spike in grocery purchases. As producers of cupboard staples from pasta to soup rush to fill empty supermarket shelves, Britain’s food supply lines are beginning to creak.
UK households started stockpiling in the final week of February, according to the data firm Nielsen
The surge — which could not be foreseen by algorithms used to set stock levels — has prompted supermarket chains to ration items and manufacturers and distributors to find ways to increase supply. Factories are moving to longer operating times and food producers cutting ranges to focus on volume.
In the first week of March, sales of pasta, canned meat and tinned soups spiked in the UK by more than 60 per cent compared with the same week a year earlier.
Other companies have reported rising purchases of ready meals, meat, fresh produce, and bread — a product that had suffered from weak demand in recent years.
Patrick Coveney, chief executive of Greencore, the convenience foods manufacturer that works with brands including Bisto and Heinz and produces own brand goods for all the major supermarkets, said his company was reducing its product ranges to focus on restocking stores — for example, cutting some different sizes and varieties of lasagne to push out the core types. This, he said, would also help prepare for future challenges such as more of the workforce being off sick.
“More concentrated ranges . . . are easier to make if you begin to see the incidence of sickness increase in parts of the supply chain,” he said. “They are also easier for customers to distribute and merchandise in store if they are under pressure to keep stores fully stocked. I think you will see ranges tightened by up to 30 per cent.”
There are also concerns around imports, which make up about 40 per cent of food eaten in the UK, as European countries limit border traffic. Liam Fassam, supply chain professor at Northampton University, said: “More border delays will add a day to fresh [food] transit times and result in increased wastage.”
Trevor Strain, chief operating officer at Morrisons, said the supermarket group was taking deliveries from an Italian supplier by boat, rather than lorry, and noted that the supplier was working around the clock despite tough restrictions on Italians’ daily lives.
Producers have been quick to try to reassure nervy consumers.
Nestlé, the world’s largest food manufacturer, said: “Stockpiling is unnecessary. This is an emergency situation and our priority is to continue supply under difficult conditions. Our factories and facilities remain operational.”
Kraft Heinz said the “production and distribution of all our varieties including store cupboard staples of Heinz Beanz, soups, pasta and ketchup continues at speed. Our supply chain is resilient, our stock levels are good and we are working very closely with our retail partners to deliver more supplies to them.”
Andrew Searle, managing director at the management consultancy AlixPartners, also stressed there was no underlying lack of food. “We are not in a crisis of the supply chain being empty. The UK supply chain will hold several weeks of packaging and several weeks of raw materials . . . What it’s causing people to do is temporarily ramp up production.”
Last week the UK government dropped delivery curfews and loosened regulations on driver hours to enable stores to stock up. But announcements of drastic measures to contain the virus appear to have fuelled panic buying further.
Trevor Strain, chief operating officer at Morrisons, said on Wednesday that the surge had continued: “[Tuesday’s] like-for-like was higher than Mondays, Monday’s was higher than Friday’s, last week’s was higher than the week before . . . and demand is still building.”
A similar increase at Ocado forced the online supermarket to suspend its service for three days this week.
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The crisis took by surprise retailers who can normally trust formulas used to set stock levels, taking into account factors such as the weather and local sporting events, according to Tim Smith, former group quality director at Tesco and a previous head of the Food Standards Agency.
“The order systems in retailers are sophisticated enough that they don’t normally have to be overridden . . . The modelling is excellent in a steady state — you don’t often see gaps in normal trading [and] availability is a critical measure for any retailer. It works perfectly until people don’t behave in the same way they are expected to.”
As consumers increasingly stay at home to avoid spreading infection, analysts expected longer-term shifts from the ravaged restaurant sector to dining at home. Clive Black at Shore Capital Markets predicted a 20-25 per cent continuing increase in grocery demand.
That will come as factories also adapt to new “social distancing” advice themselves, with some staff needing to self-isolate.
“Social distancing is tricky to do in the food industry but we are working our way through practical solutions — greater sanitation protocols, staggering use of changing rooms, how you increase the availability of locations for people eating food on site, building extra space into the production processes themselves,” said Mr Coveney.
As the epidemic wears on, more staff are expected to take time off sick. Companies have carried out scenario planning for the loss of up to 30 per cent of their staff at a time, said one industry figure.
“Very appropriately government is talking about the incredible need to support the NHS through all of this,” added Mr Coveney.
“I think a narrative of supporting the people who are at significant personal effort and risk . . . working to keep the population fed across supermarkets, distributors and manufacturers will also be very important.”
Additional reporting by Emiko Terazono
Source: Economy - ft.com
