Manufacturing Pivots in a Post COVID World

And Brian, are you seeing the same things?

Brian Stepowany:

We're actually taking a slightly different approach. Our business is doing very well. We have a lot of large stable product lines that we produce in-house and we concentrate on that. Some things we're doing is relying on some of our suppliers, such as Amcor, to look at how we can improve becoming more generic. We actually had started this beforehand, just as far as thinning out the material. What material can we use that’s more common to have on hand, as well as the possibility of instead of preprinting all our shippers, we'll do a generic shipper in an inkjet, the item specific information, that's better for the plans because there's less inventory and easier for us for less changeover with different sizes and keeping track of what's what.

Also, with the current COVID situation, we are looking at co-packers. Secondary sourcing, also. You don't want to have all your eggs in one basket, in case something happens to one of our suppliers. If they're the lone supplier, we're stuck. If we have qualified a second supplier in the meantime, they we are able to go to the secondary source.

We weren't big in e-commerce, but that is growing. And we're just trying to now run more time at the plants, our major items and keep our pipeline full. Because obviously we don't want to have empty store shelves or people waiting on products or waiting on packaging for production. So, we're trying in the best way possible use one common material, generic shippers, and get the stuff out the door. And the specialized items, the new launches, things of that nature, going to co-packers. We’re going to some of these small specialized companies to at least get us into market for tests and if need be, bring it into house when it's available.

Beverly Rider:

Ethan, I'm wondering are you seeing that trend as well?

Ethan Haas:

Retailers are saying, look, we want our distribution centers to be just stocked with the main items because we don't want our store shelves empty. So, it puts a lot of pressure on us. One of the things that's the biggest pressure is as you go through the supply chain. As we go back, as we're seeing that increase in demand, it's very lumpy what the companies are ordering from us. So big surges, drop off, big surges, drop-off.

A lot of the work that the industry has done with just in time planning has really kind of gone out the window. And so, we've had to really bulk up our inventories so we could be much more responsive to the requirements of the food manufacturers.

Beverly Rider:

Makes sense. And talking about food manufacturers, as I mentioned, I work with a lot of protein processors. And one of the things they've shared with me is that there really has been a change from a lot of their protein going to restaurants and very large scale - which requires one type of packaging - to now going to the grocery shelves.

Have you see that, and do you think that this is going to be a permanent shift? Or what are your people telling you?

Brian Stepowany:

I think things will change in the long run. I think people are getting more used to and enjoying the cooking and working from home. There always will be people going out and doing things and dining out for special occasions or just a group get-together with some nature. But I think that we've seen at B&G Foods that the trend is going to continue. It'll come down a little bit, but I think when it levels off, it'll still be higher than what it was previous to the pandemic.

Robert Champion:

Yeah. The feedback I'm getting is, be prepared for any and everything. Because when you get feedback in, through your marketing and sales channels, as far as inputs into the organization on how you prepare from engineering standpoint and operations and production, it fluctuates.

Because consumers are going to want something different. And they are the food companies, and variety packs, e-commerce, specialty channels. Retail, club is being prepared from a facility standpoint and externally and internally to figure out where you want to play, where you want to win and hedge off competition. So, I think yeah, we're probably going to dip a little bit, but I think as far as going through retail versus institutional, but I think we need to be prepared. Be prepared for the new normal.

Ethan Haas:

At Amcor, one of the things we think about is the occasions of going out. Breakfast has been the biggest impacted occasion to be out, and we think that's going to take by far the longest to come back. So, breakfast is going to remain a challenge. If you look at what's going on in QSR traffic, it's already back to pre-COVID levels at lunch time. And dinner has actually increased because people don't really have as many opportunities or places to go out. So, we can see that as a really big opportunity for us. There's another opportunity that's just kind of emerging. It's the ghost kitchens. And a ghost kitchen is a professional kitchen that's on site that only does delivery through a service like Grub Hub or Eat Street. And we see that as an emerging channel. There's over a thousand in the US and it's growing very fast. And the diversity and convenience that they want to deliver is a great opportunity for packaging across the board and for food innovation.

Robert Champion:

I have a family member who's in that space and her business is booming because it's serving older people that can't get out. They're delivering meals to home and they're prepared dietarily for them. So that’s big, and it's growing very fast.

Beverly Rider:

As COVID came on, sustainability really needed to take a back seat to personal safety and other elements that have been brought to the forefront by COVID. How do you see it changing in the future? And do you think we'll go back to where you were and then even go further than that?

Mike Marcinkowski:

Personally, I think it's actually increased based on the feedback I'm getting from our clients. You know, me being on the R&D side, the material science side, we're busier more than ever working on more sustainable materials. For example, right now I'm working on a resin material that is certifiable home compostable with barrier and additives and properties that deliver like a backyard home compostable capability. And the whole idea is that we're creating a baseline resin that can be cross-functional amongst different platforms of packaging. So, whether it's an injection mold, thermal form, extruded film or bag material these are the types of requests that are coming in from customers. And virtually, now that I think more people have time at home to be more efficient and more focused on projects and tasks that they are responsible for, I just see more of a trend where the demand for greener materials is increased.

But it's a challenge because a lot of the development cycles and development labs are slow. Some labs are shut down, or they're short-staffed, so really getting into the creative way of how you can deliver R&D development around these types of materials is becoming more specific in terms of how you spend that time. I had a call this morning with a very large company and the first hour and a half was around sustainable products and portfolio. So, I think it's just going to increase more and more, especially with what's going on. And there's a lot of people watching the California legislation and the single serve packaging ban. That's in the back of everybody's mind right now, for sure.

Beverly Rider:

Ethan I'm wondering when you're instructing your clients, are you bringing up the sustainability impacts as well? And is that a main focus of your company?

Ethan Haas:

It's a huge focus. We were a signatory on the Ellen MacArthur, 2025 pledge. It is all consuming for R&D groups. So, we are spending a tremendous amount of time. We're getting asked more and more questions by CPGs largely because the role of packaging has never been clear and that's what COVID has brought forward. More packaging is going to be needed, it's going to be used. And we've got to find ways to create recycle streams for our customers. So, we're spending lots of time on that.

Beverly Rider:

That's awesome. Brian, how about you?

Brian Stepowany:

We're very interested in sustainability. However, we're doing more work with our suppliers and the R&D work upfront, and then lab standards. And even the lab samples are taking more time because of social distancing. You can't have 10 people in the lab running the microwaves. And the secondary point after the lab work is done is actually line trials at our facilities. And we really don't want to take line time for the facilities away from commercial production. So with that, we're trying to work hand in hand with our suppliers to get the materials, get it qualified before we go, and maybe at the end of a shift or a change over a product run, we can run the material because we need to validate it on the production machines. After the next step of the lab, then it's basically getting the artwork, getting it printed and making sure there's ample supply of that material moving forward for full production.

Beverly Rider:

Right. It sounds like you all feel the same way. Robert, do you have another viewpoint to it?

Robert Champion:

There's one other element, and I think Brian hit on it - commercialization. So, to get it to the consumers, the trials is where we need to start thinking about bringing it forward to the customer, the CPG. To get it in and doing some experimental trials because of functionality of the material, protecting other product and getting it through their production streams on how the packaging material is handled, because that's the robustness going through the system and into the supply chain. So that's always a big piece, a hurdle. But I'm agreeing with what everyone said. It's on every big CPGs to do a meeting on sustainability.

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