COVID-19: CPG Industry Impact
The COVID-19 breakout has impacted the United States' Consumer Packaged Goods (CPG) Industry by causing an increased demand for cleaning products & shelf-stable foods, product scarcity, and disruption in the supply chain since the virus broke out in the country.
Overall, the COVID-19 has affected the CPG market in the following ways.
INCREASED DEMAND FOR CLEANING PRODUCT & SHELF-STABLE FOODS
- Since the COVID-19 outbreak, cleaning products have become a priority item for shoppers, and this has led to a massive demand for the products. According to a report, 30% of the United States shoppers buy hand sanitizers, 28% purchase disinfecting wipes, 25% shop for household cleaners/disinfectants, and 24% buy antibacterial hand soap.
- Shelf-stable foods like canned foods and bottled water also account for 20 & 22% of all shopping in the United States, a direct result of the sudden need to stockpile enough groceries at home to last through the stay-indoor period.
- In terms of sales volume, hand sanitizer sales have jumped by 313%, 114.5% for medical masks, 59.6% for bath & shower wipes, and 52.3% for first aid kits due to the increase in sensitization against the virus and as details of COVID-19 related death emerged in the United States.
- CPG companies in the United States that rely on raw materials from China will experience production problems and scarcity due to the lock down of factories in China. Procter & Gamble already announced that 17, 600 products could be affected by the COVID-19 outbreak.
- The increased demand for health & personal hygiene products due to panic buying of these supplies has far outweighed its supply. It has led to the shortage of supplies like toilet paper, wipes, face masks, etc., in the market.
DISRUPTION OF SUPPLY CHAIN
- Companies that manufacture CPG could experience labor shortage and face potential supply problems as the demand for their products increases in local stores, but deliveries are delayed or suspended due to the COVID-19 outbreak in the United States. Some companies could even find themselves without enough workforce to continue the production of goods.
- A lot of food supplies like garlic, apple juice, and seafood, which are imported from China where factories have been closed, will experience a disruption in the supply chain of such goods in the United States.
- For some companies that manufacture two or more CPG, they now forgo the production of most goods and focus mainly on making scarce commodities available while neglecting the supply of other products.
ADDRESSING THE CHALLENGES/OPPORTUNITIES
- Due to the overwhelming demand for hand sanitizers, some companies are now redirecting their resources into the production of hand sanitizers and other disinfectants.
- Some companies are practicing social distancing and have instructed their employees to work from home to contain the virus and stop the possibility of their employees getting infected. For example, Proctor & Gamble has instructed its employees to work from home till the end of March 2020.
To determine the impact of COVID-19 on the United States CPG industry, we searched for relevant articles on reputable websites like CNN Business, Washington Post, and Supermarket News to find out how the virus has changed the CPG industry since it was discovered in the United States.