Nestlé has kept U.S. shelves stocked amid a surge in demand for its products like Hot Pockets and Nespresso coffee so far during the novel coronavirus outbreak, the head of Swiss giant's American operations told Food Dive, but it's too soon to know if the recent spike in sales will continue.
"We need to continue to produce in this crisis," said Steve Presley, who took the helm of Nestlé's U.S. operations in 2018. "That's the first step of normalcy for a lot of people is you show up to the grocery store and if there is food on the shelf, and so we have a big part in returning a calmness to the market."
Food manufacturers have been aggressively ramping up production as consumers stock their pantries, freezers, refrigerators and cupboards as the pandemic spreads.
Nestlé has added overtime hours and shifts in many of its 68 U.S. factories to make sure they are running full time to meet the demand. Campbell Soup CEO Mark Clouse told CNBC earlier this month that it was increasing soup production in response to the coronavirus outbreak. Conagra Brands also is adding more shifts and production at its plants, while PepsiCo announced plans to hire 6,000 frontline employees in the coming months.
"We need to continue to produce in this crisis.That's the first step of normalcy for a lot of people is you show up to the grocery store and if there is food on the shelf, and so we have a big part in returning a calmness to the market."
CEO, Nestlé USA
The data shows that consumer purchasing has skyrocketed since the outbreak began. Nielsen said last Friday that baking yeast sales rose 231% for the four-week period ended March 21 compared to a year earlier, canned meat surged 132%, pasta 95% and soups rose 90%. Other foods such as beans, dairy and indulgent snacks also posted robust increases.
Presley said the company is seeing strong demand for its coffee and creamers; frozen items such as its DiGiorno pizza and Stouffer’s meals; and as people bake more while spending additional time at home, products like its Toll House chocolate chips, Carnation evaporated milk and refrigerated cookie dough remain popular.
Its home delivery business, which includes its Nespresso coffee platform and ReadyRefresh water and beverage service, also has benefited. The strength in these areas has been offset partially by challenges in its foodservice business that has struggled as restaurants and other channels close or cut back on service.
For its part, Nestlé, the world's biggest food company, has yet to determine if the recent uptick in sales will continue or if it could eventually slow down after consumers aggressively stockpiled food at home during March. The U.S. is Nestlé's largest market globally, responsible for $29 billion in revenue annually, or 30% of the Swiss company's total sales.
"In total, we've seen an increase, but I think we need to wait and see how much of this is pantry running, how much of this will continue in the short term," Presley said. "We don't really know until you get more time under your belt with this crisis."
One portion of Nestlé's business that could be delayed in some areas is the debut of new products at U.S. retailers.
While spring is typically a time when grocers add new items to their product mix, this year those plans have been put on hold at some businesses. Retailers are instead keeping their workers focused on restocking shelves as the companies shift operations — from installing plexiglass sneezeguards to limiting customer count — to maintain a safe environment for both shoppers and employees.
Presley said Nestlé is moving ahead with its innovation plans and product launches in 2020, but will work closely with its retail partners as their reset plans take shape.
"The product rollout may slow," he said. "We just need to give our retail partners a little bit of time to work through this big push they had in March" to devote more manpower to the reset.
'Our people are how we win'
In just the last week, Nestlé, Conagra Brands, Mondelez International, Campbell Soup, PepsiCo, Tyson Foods, Hormel Foods and Unilever have joined a growing list of companies offering extra pay or additional benefits to employees during the outbreak.
To help its 36,000 U.S. workers, Nestlé recently announced a series of initatives, including giving full salaries for at least three months to employees if their facility is fully or partially closed because of coronavirus.
Workers who manufacture and distribute its frozen foods, water, coffee and other products are getting a 12% increase in pay for a minimum of the next 12 weeks. Nestlé's also expanding health benefits for telemedicine and prescription delivery, childcare, mental healthcare and testing for COVID-19 at no cost.
"It's more about providing the peace of mind for these guys to show up and know that if we have to close down ... we would be able to have their backs for at least 12 weeks," Presley said. "Anything we can do to try to make our teammates' lives easier in this crisis so they can continue to focus on making products and getting them on shelves for the American consumer."
CPG companies have touted additional steps they have taken to keep workers safe, including Nestlé, which has increased cleaning in common areas and taken steps to ensure people are able to practice social distancing throughout their buildings. Last week, Nestlé's Purina distribution center in Pennsylvania was cleaned and sanitized after a worker tested positive for the virus.
Nestlé also is providing workers who need them with gloves and masks, and has started conducting temperature checks of employees at some of its U.S. manufacturing and distribution facilities. Eventually, the checks will be expanded to all sites.
With food and beverage manufacturers defined as essential businesses, Presley said employees in its factories and distribution facilities have been given notes in case they are ever pulled over on their way to or from the building, or while they are out delivering products.
Presley underscored the importance employees have had in keeping products moving to store shelves, noting that "our people are how we win in the marketplace ... and drive this company forward." The company's response with its workers during the current pandemic also could pay dividends in the long term by strengthening the bond employees have with Nestlé, leading to better performance even after the outbreak ends.
"I think we'll come out of this a stronger company, to be honest," he said. "I think we'll have employees that are more engaged and committed to Nestlé more than ever because they'll understand that Nestlé is here in good and bad times and during a crisis and I think that builds a stronger company long term."