CEO of snacking company That's How We Roll, the parent company to national brands ParmCrisps and Thinsters cookie thins, feels cautiously optimistic about how the CPG industry will fare during and post COVID-19.
"At the end of the day, the food supply is fine. There’s probably an overabundance of food in this country right now, it’s the logistics challenges that retailers, warehouses, and distributors are struggling to get through," That's How We Roll CEO Samuel Kestenbaum told FoodNavigator-USA.
While the company's snack brands posted record sales last month across brick & mortar and online channels, Kestenbaum clarified that he's not counting the increased revenue as a typical win.
"I want to be clear that I don't think that there's anyone that's truly benefiting from what's going on right now. There are many people that are really struggling."
The Department of Labor reported payrolls dropped by 701,000 in March, the first massive decline in jobs since the peak of the recession in 2009, which saw payrolls drop by 800,000.
And while the packaged food industry will not be immune to further job losses, the priority of every food industry stakeholder should be keeping their employees safe and healthy.
That's How We Roll has stepped up its sanitation practices at its dedicated manufacturing facility in Pennsylvania by doubling the amount of staff that clean "every surface they can find" and separating shifts among smaller groups of employees to adhere to social distancing guidelines.
"As long as we keep trucks on the road, as long as we keep people working in warehouses and food plants, we’re going to be just fine from an industry perspective," he said.
Short-term and long-term focus: Who are you in the foxhole with?
While the situation of COVID-19 is fluid with many companies adjusting their business plans on a daily or even hourly basis, Kestenbaum said his company is dividing its strategic business priorities into a short-term and long-term outlooks.
"I think this is a 12-18 month outlook, and that’s how we’re looking at it," he said. "Short term it’s about capital preservation and long term it’s about allocating resources to where the consumer is shopping.
"We’ve increased our inventories across the board to try to offset whatever may come to us, but at the end of the day it’s going to be our relationships on both sides of the equation that get us through this and ultimately make us stronger."
Relationships, Kestenbaum added, will be the most important part of getting through an unprecedented global health crisis.
"We have very long standing relationships with our best and most important suppliers dating back fifteen years. If you’re going to be in the foxhole with somebody, these are the people who we’re in the foxhole with, the people that have come through for us time and time again in peace time and they’re doing the same for us in war time. This is where relationships become the most important. Whether it’s creating additional credit, creating additional time, that understanding is what is putting us in a great place to offset the risk."
Food retail could see a 20-30% increase once things calm down
Once shelter-in-place ordinances lift which are in place state-wide in 38 states currently, Kestenbaum believes that weeks spent in the kitchen cooking and exploring new recipes and techniques will have a long lasting impact on consumption behavior.
"I think this is ultimately going to be an opportunity for the CPG industry and retailers as people continue to shy away from restaurants. The restaurant and foodservice industry is going to take a long time to get back," he said.
Customer transactions at quick service restaurants, which represent the bulk of restaurant industry transactions, decreased by 34% in the week ending March 22 compared to year ago, according to the NPD Group's CREST Performance Alerts. Transactions at full service restaurants dropped by 71% over the same time period.
"Food retail, as things calm down, could see anywhere from a 20-30% increase as people just naturally will be slow to go back to eating in restaurants, stadiums, move theaters, and other big gatherings.
"That’s where I see the biggest dynamic industry shift over the next 12 months."
'All the sudden, no one’s gluten free, no one’s keto...but that will come back'
As consumers report an increase in stress baking and are buying whatever brand is left over at the grocery store, Kestenbaum noted that consumers' commitment to certain health trends seems to have dropped off.
"All the sudden, no one’s gluten free, no one’s keto, but that will come back," he said as consumers are able to get back to their regular routines and re-prioritize better-for-you and clean label snacks.
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