Coronavirus: Consumer Food Product Companies Facing Production Disruption

The likes of Nestle India, Dabur, HUL and ITC have all cut down on production, except for essentials.
Coronavirus: Consumer Food Product Companies Facing Production Disruption
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With the coronavirus outbreak-enforced lockdown in India keeping people off the streets, there has been a subsequent surge in the need for essential products. At such a time, prominent consumer foods companies have had to shut down parts of their production and take necessary steps to ensure that products are not in short supply.

“The food industry supply chain is disaggregated and dependent on inter-state movement of goods. Due to the nature of the materials, inventories across the chain are low. If even one link in the supply chain is broken, the country could run out of stocks of packaged food in the next 7-10 days,” Varun Berry, managing director of Milk Bikis and Marie Gold biscuits-maker Britannia Industries, said in a statement.

Berry added that while the Centre has issued all necessary permissions, it was imperative for district authorities to take the necessary steps to ensure that production isn’t disrupted.

These comments come as several factories and manufacturing facilities across the country have seen partial or complete closure, which could potentially lead to lower stocks at the end of the supply chain.

On Friday, both Hindustan Unilever (HUL) and ITC said there had been a cut in operations owing to measures being taken in accordance with the need of the hour.

“The company’s factories manufacturing essential items like atta, noodles, biscuits, snacks, soaps, sanitisers etc. are operating partially with limited workforce. Apart from the factories manufacturing essential items...the company has suspended operations at its factories and plant locations,” HUL said in a filing to the exchanges.

HUL owns brands such as Annapurna and Kissan in the foods category while it is also the owner of the popular homecare brand Surf Excel. Some of the popular brands in ITC’s portfolio include Aashirvaad, Yippee Noodles and Sunfeast.

ITC said while the priority continues to remain the safety of its employees, it was also important to meet consumer demand for products such as hand wash, sanitizers, floor cleaners and hygiene products, that are critical under the current circumstances. “We are therefore working with the government authorities to enable continuity of operations at our manufacturing and distribution locations,” the Savlon-maker said in its filing.

Earlier this week, Ayurvedic healthcare firm Dabur, which owns the Real fruit juice brand, in a stock exchange filing said it has temporarily suspended production at all manufacturing units till March 31, except for products such as medicines, Chyawanprash, hand sanitizers, and hand wash. This announcement was made prior to Prime Minister Narendra Modi’s call for the 3-week-long lockdown till April 14.

“We believe this disruption is extraordinary and temporary in nature. We expect the business to revive once the situation improves,” the company had said.

On Tuesday, Maggi-maker Nestle India also said it has scaled down operations in some of the locations and had added that since it was into manufacturing and sale of food and beverages, the company was in talks with authorities to continue operations at affected locations.

“The impact on the operations of the company cannot be assessed at this point,” it said in a filing.

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