- As concerns over the spread of coronavirus rise, analysts at Bernstein said consumption of shelf-stable and frozen packaged foods will temporarily increase as consumers prepare for potential quarantines, according to Food Navigator.
- The Bernstein report said this boost will likely benefit companies such as Campbell Soup, Conagra Brands in frozen, General Mills and Kellogg in cereal, Mondelez International and Kellogg in crackers, J.M. Smucker in peanut butter, jams and jellies, and Kraft Heinz in macaroni and cheese. But the analysts "do not expect any material impact on U.S. food companies' sales on a full-year basis at this stage."
- Campbell Soup said last week that it is increasing production after already noticing a surge in demand from both online and brick-and-mortar retailers. "We’ve upped that level of production to be able to maximize our inventory to be prepared for whatever unfolds here,” Campbell Soup's CEO Mark Clouse told CNBC.
As the number of coronavirus cases in the U.S. continues to increase, consumers are flocking to grocery stores to prepare for a potential quarantine. From canned goods to cleaning supplies, Americans are stockpiling and emptying shelves in some areas. Analysts are predicting that this trend will help boost sales for some CPG companies in the near term.
The New York Times reported Monday there are at least 539 coronavirus cases across 34 states in the U.S. with 22 deaths reported. Various shelf-stable and frozen products from CPG companies like Campbell Soup, Conagra Brands, General Mills, Kellogg and Kraft Heinz are expected to see an increase in sales as more states issue emergencies and the outbreak spreads. Some grocery stores, such as Costco, are also seeing a sales boost from panic shopping.
Although there is increased demand for CPG companies producing frozen and canned goods, there are challenges with production and international sales. Many companies have facilities in other countries where the coronavirus is more widespread, and it has already had a major impact on workers and their supply chain.
CPG companies in the U.S., including Coca-Cola, Mondelez and General Mills, said in mid-February that the epidemic has reduced sales in China where the outbreak started. Companies and analysts have cautioned that the outbreak could become a big financial drag to their business the longer it lasts and that it will likely overpower the short-term benefit that increased sales could bring.
But the more prepared companies are for the increased demand, the better off they could be. Campbell Soup's CEO Mark Clouse told CNBC the company is speaking with retailers to better understand what demand could look like and to try to prevent any supply chain interruptions. Only about 10% of Campbell Soup's products are sourced outside of the U.S., with less than 2% in China, so that could help the company keep shelves stocked. Many other businesses source more of their products outside of the U.S., which will likely create more difficult conditions.
The Bernstein report also cautioned that Big Food companies with a lot of involvement in the foodservice channel could face challenges if the outbreak continues to spread in the U.S. because consumers may not want to go out to eat. Analysts said companies like Beyond Meat, Tyson Foods and McCormick are the most exposed to disruption in that segment.
And it's not just large food companies that are feeling the impact of the outbreak. The annual trade show Natural Products Expo West was postponed indefinitiely last week because of coronavirus concerns, which has hurt many smaller food and beverage businesses financially. Like many sectors throughout the word, the food and beverage space is feeling the impact from the outbreak with companies keeping a close watch on what a prolonged spread of the coronavirus could have on their businesses.