By Richa Naidu
LONDON (Reuters) - Kraft Heinz (O:KHC) speaks daily with Amazon.com (O:AMZN) and Walmart Inc (N:WMT), hoping to speed up deliveries as customers worldwide stay home and shop online to protect themselves from the COVID-19 pandemic, Kraft Heinz's CEO said on Friday.
Kraft Heinz, which makes packaged food products from Planters peanuts to Heinz Ketchup, is among several major food companies that has increased production to help retailers respond to panic-buying of staple goods like canned food, toilet paper and cleaning products.
“Amazon and Walmart and the others have faced a huge increase in demand. I think the bottle-neck is being able to deliver to people’s homes, not production,” Kraft Heinz Chief Executive Miguel Patricio said in an interview on Friday.
"Penetration has increased for them (Amazon), more people are subscribing - it’s big demand and you have to adapt your logistics system to attend this demand." Patricio said Kraft Heinz was producing “a lot” more for Amazon, but declined to provide specific numbers.
“They are trying to simplify their portfolio of products and focus on things that are more vital at this moment.”
Kraft Heinz is increasing overall manufacturing and shipping efficiency by cutting production of some items, for instance reducing less popular flavours of a given product. This has freed up enough people for Kraft Heinz to create a third shift in many factories, up from two, Patricio said.
Patricio said sales of Mac & Cheese, Oscar Mayer cold cuts and Planters nuts have increased, and that people are also buying more Heinz vinegar to use as an alternative to cleaning products.
“We’re breaking production records every day,” Patricio said, adding that a Davenport, Iowa-based Oscar Mayer plant he visited yesterday had increased weekly capacity by 40% compared with the same week last month. According to data firm Nielsen, sales of alternatives to fresh meat were up 206.4% in the week ended March 7 versus the year before.
President Donald Trump on Sunday held a phone call with more than two dozen U.S. grocery store and supply chain executives, including Patricio. He said Kraft Heinz has now had two discussions with the White House about how to make the food supply chain more agile, and that the company has also held talks with other global leaders.
The company is donating $12 million of food to people in the United States and several countries including Italy, Canada and the United Kingdom.