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Food Makers Hoarding Ingredients for Fear of Supply Chain Disruptions

The COVID-19 pandemic continues to impact the world at large as many nations struggle to balance public and economic health. Recent supply chain troubles have left many organizations fearful of further supply chain disruptions from the ongoing coronavirus predicament.

At the onset of the COVID-19 pandemic, consumers rushed to stock up on various necessities as “panic buying” took grocers by storm. Consumer purchasing habits shifted drastically from pre-coronavirus times as people began eating out much less often. Stay at home recommendations and business closures resulted in a massive increase in at-home food preparation and consumption. This resulted in a marked increase in demand for many grocery store products compared to recent years.

While the food supply system has mostly leveled out since the initial waves of panic buying, not all changes in consumer purchasing habits have returned to the pre-coronavirus status quo. In response to these new habits and the possibility of future supply issues, food companies are increasing their stockpiles of raw ingredients.

Food Makers Now Hoarding Ingredients

Prior to the global health crisis, modern organizations sought to minimize their costs by using a just-in-time (JIT) inventory system that reduces costs and increases efficiency. However, the JIT system is dependent upon the reliability of an uninterrupted supply chain.

With the world still struggling to deal with the impact of the novel coronavirus and concerns over another wave of infections on the way, many food companies are shifting towards stockpiling materials so they can maintain production in the advent of future supply chain disruptions.

How Consumers are Impacted

Many food producers are also cutting back on their variety of offerings, eliminating underperforming product lines as they focus on their core offerings instead. Keeping up with demand for staple products is likely to impact the overall variety of offerings and the rate at which new product lines are introduced.

Food makers are keen to maintain production and keep store shelves stocked so they can continue to operate during troubled times. Stockpiling ingredients should help food makers keep up with demand even in the case of future supply chain issues. As such, consumers should have a fair amount of confidence that shelves won’t go empty again in the coming weeks and months barring massive and prolonged disruptions of the global supply chain.

However, food costs have increased for consumers as a result of global supply chain troubles and the already rising costs of food in recent times. With food makers moving away from the more cost-efficient JIT inventory system, prices are likely to remain on the rise at least in the near future. Mitigating increased costs by bargain-hunting and eliminating food waste is probably the best way to keep grocery bills manageable.

Contact us today and see how we can help your business navigate through these difficult times.

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