This article was originally published on March 20
At the sprawling Kraft Heinz Co. plant in Montreal, the Kraft Dinner production lines are running every minute, every day, pumping out box after box of what has become one of the biggest panic buys of the COVID-19 crisis.
Sales of the Canadian pantry staple last week spiked 35 per cent compared to the previous four weeks, and grocers have struggled to keep it on shelves.
“Kraft Dinner is such a critical line,” said Danielle Nguyen, the plant manager. So critical that Kraft Heinz has a series of backup plans to keep pumping out KD should employees fall ill or need to isolate.
It’s a feeling that’s very hard to describe. It feels like you’re serving your country
Danielle Nguyen, Kraft Heinz plant manager
“We have Plan A, Plan B, Plan C, Plan D,” she said.
Plan A is to keep the two KD production lines running at full steam, in three shifts, 24 hours a day, seven days a week, making macaroni, drying it, filling the sachets of powdered cheese and packaging it all up, at a speed of roughly 400 boxes per minute.
As a Plan B, the plant is training a team of replacements, who usually work on less-essential product lines such as Philadelphia Cream Cheese, to take over if need be. If those back-ups can’t make it in, the plant will ask the mechanics to run the KD lines. And if the mechanics can’t make it in, managers and supervisors will step in.
“Plan D, worst case, me, as the plant manager, I will go and run the line,” Nguyen said. “I will be the first person to raise my hand and go on the line and pack those cases.”
Kraft Dinner is far from the only in-demand consumer product during this crisis. Sales of canned baked beans in Canada, for example, jumped by 75 per cent last week. At the Montreal plant, Nguyen said Cheez Whiz, peanut butter and barbecue sauce have also been designated as critical production lines, each with its own backup plans.
But KD is as good as any to focus on if you want to understand the domino effect touched off when a grocery shelf is emptied.
In March, as grocers increased their orders, Kraft Heinz ramped up production on KD from five days to seven days. The 960 employees at the plant, which produces 90 per cent of Kraft Heinz’s total output in Canada, slipped into crisis mode so gradually it was hard for Nguyen to recall when things ceased being normal.
Walking the floor in Montreal, she said, something feels different, not panicked, but more like the employees really want to be there, despite all the public health calls to go nowhere but home.
“It’s a feeling that’s very hard to describe,” Nguyen said. “It feels like you’re serving your country.”
About 15 million boxes of KD have been sold this month, more than double the average of seven million boxes per month in January and February
About 15 million boxes of KD had been sold by mid-March, more than double the average of seven million boxes per month in January and February.
“It’s humming off the shelf,” said Michael Graydon, chief executive at Food and Consumer Products of Canada.
“Even rational people that walk into stores thinking they’re just going into buy their regular amount of stuff get caught up in the momentum of hoarding, because they see everybody else doing it,” he said. “It’s kind of weird. You think, ‘Well maybe I’ll just grab an extra one of those.’”
The flood of customers buying up easy-to-prepare, shelf-stable products has not slowed despite constant reassurances from grocers and politicians that food is not running out.
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Loblaw Cos. Ltd. — the country’s largest grocery chain — has scaled its hours back to give employees a break, and limiting the number of customers allowed at one time.
“Our incredible store teams are exhausted and concerned,” Loblaw executive chairman Galen Weston said in a letter to customers.
Other grocers have similarly shrunk their hours.
The panic buying has thrown off demand forecasts for both retailers and manufacturers, who typically depend on historic data to predict what people will want next week.
The just-enough model, where a manufacturer only produces what stores need in a given period, is the most common inventory management method in Canada, since holding inventory is expensive, even for shelf-stable products, said Evan Fraser, director of the Arrell Food Institute at the University of Guelph.
“If you want a big warehouse full of Kraft Dinner, you’re going to have to have a big warehouse, and you’re going to have to have that climate controlled and built in such a way that rats and insects can’t get into it,” he said.
As a result, to save money, most manufacturers stick to producing just enough.
Grocery stores generally allot a part of one shelf for products such as Kraft Dinner. Now, Kraft Heinz Canada president Bruno Keller is advocating that stores just drop an entire palette of KD, and other high-demand products, somewhere in the store to avoid the constant empty shelves.
“Otherwise, it’s very hard on a daily basis to keep replenishing the shelves,” he said.
Those empty shelves aren’t a sign of shrinking supplies, but the result of a natural lag in logistics. If demand spikes and stock runs out, a store has to order more from its regional warehouse. If the warehouse has KD in stock, it’s added to the next delivery and usually arrives in a day or two. But if the warehouse is out, it has to order from Kraft Heinz.
The Montreal factory sends finished product to the main Kraft Heinz distribution centre in Milton, Ont., just west of Toronto. From there, orders are prioritized for those warehouses already out of stock. It sends orders for Ontario and Quebec by truck, while orders for Western Canada are sent by rail.
During the crisis, the company has been able to rush orders to anywhere in central Canada within a day.
Even with the surge in orders, Kraft Heinz is confident it can keep pace. The plant can produce 600,000 boxes of Kraft Dinner per day, or four million a week.
“That’s why we keep saying to people, there is no need to panic buy,” Keller said. “We will make more.”
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