The business impact of COVID-19 on 4 major CPG companies
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Americans spend $5.5 trillion a year at retail stores, but the story behind what's on store shelves is hardly ever told. The Slotting Fee covers the business, politics, and technology behind the things we buy every day.
COVID-19 has had a tremendous business impact across the CPG landscape. Seemingly overnight the competitive landscape shifted. Faced with concerns about quality and safety, consumers returned to long-established brands. Some brands even exploded after restaurant demand evaporated overnight. This left major companies with an interesting operational decision. For years, CPG companies expanded and structured themselves to deliver unlimited choice for consumers—trying desperately to capture the ever-changing preferences. In the midst of unprecedented demand and uncertainty, retail partners are overwhelmed, preferring to stock safe SKUs—not experiment.
Internet or direct-to-consumers is always trotted out as the silver bullet for struggling companies in the coronavirus era. It’s basically the business version of telling unemployed people to ‘learn to code.’ It’s an unserious idea for a structural issue.
Food service involves selling and delivering one fifty-pound bag of coffee to one customer, retail involves selling fifty one pound bags to fifty customers. They have entirely different cost structures and operations.
But what about the largest CPG companies? They have the resources to pivot on a dime. I combed the largest CPG firm’s public statements to understand the business impact of COVID-19.