JM Smucker said it faced “unprecedented demand” for peanut butter, and was working flat out to meet demand for coffee, in the latest sign of the surge in food demand as consumers stockpile for fear of coronavirus lockdowns.
The jams-to-pet food group, which owns brands such as Dunkin’ Donuts, Knott’s Berry Farm and Pillsbury, said that it was scrapping marketing campaign and a product launch to ensure supplies of peanut butter, for which customer clamour has been particularly strong.
“We have experienced unprecedented demand for peanut butter,” JM Smucker said.
While saying that, through its portfolio as a whole, it was “currently able to produce products that are in high demand”, it signalled some rationing among its fruit spreads, fruit juices, cooking oil and sandwich products.
“Order adjustments will be mad in the short term to maintain adequate supply.”
‘Nearing full production capacity’
For coffee, in which it owns brands such as Folgers and Café Bustelo, said that it was “currently able to fulfil customer orders”, and was altering its operations to favour output of the most popular products.
“Our coffee manufacturing facilities are, however, at or nearing full production capacity,” JM Smucker said.
The comment come amid a coffee market debate over the impact of Covid-19 on consumption, with Goldman Sachs earlier this week estimating a demand hit of 10% as the outbreak prompts customers to avoid drinking and eating out.
The “extreme shutdowns in places like Europe and potentially the US” prompted by officials anti-coronavirus drives “hurt both restaurant and coffee shop demand, negatively impacting… the demand for coffee.
“We believe the market focus will be on the near-term demand risks as Covid-19 spreads across the Western world, with attendance at coffee venues in China down dramatically during the quarantine.”
Coffee shops vs grocery stores
Starbucks two weeks ago cautioned of a dent of $0.15-18 dent to its earnings per share prospects for its financial second quarter, which ends this month, thanks to shutdowns, largely in China, prompted by coronavirus.
Investors were at the time group earnings of $0.58 per share for the quarter, according to Refinitiv data, although this consensus has now fallen to $0.49 per share.
However, Italian giant Massimo Zanetti Beverage Group - which sells its products largely through retail channels, although does have foodservice exposure and some coffee stores – said that its operations had performed well in the first two months of 2020, and flagged resilience in coffee drinking.
US-based importer Wolthers Douque earlier this week said that supermarkets and roasters were “asking for anticipation of deliveries” in an effort to guarantee supplies.
JM Smucker also touched on the issue of logistics upsets to supplies, amid reports of disruptions in some ports, including in South America, caused by coronavirus concerns.
“From a green coffee perspective, we are in regular contact with our suppliers to better understand their ability to meet existing orders and the potential impact of government actions on their business,” the group said.
“We are also in contact with global logistics providers to monitor potential shifts in capacity to confirm that our needs will be met.”
It also noted that in the US, transportation capacity overall was “starting to become constrained in the Northeast and Western parts… which could impact timeliness of future deliveries”.
‘Flying off the shelf’
The comments follow an update from juices-to-animal feed group SunOpta on Thursday showing a boost of $5m-10m to its revenues from the fallout of the Covid-19 outbreak, meaning they would now reach $320m-340m for the January-to-March quarter, compared with $305.3m a year before.
However, factoring in a $2.5m hit to the value of inventory, thanks to the devaluation of the Mexican peso, the group said that coronavirus would have a net negative impact on ebitda, of $0.5m-1.5m.
At Chicago-based broker Futures International, Terry Reilly noted that “up in Canada, flour for bread baking is flying off the shelf.
“For one miller, they told us individuals are visiting milling plants asking for bags of milling wheat, which they can’t provide.”