Having weathered the storm for several months, Canadian food, beverage and agribusiness (FBA) businesses are now in a position to reflect upon what they have learned throughout this pandemic. Members of our Food, Beverage & Agribusiness group had the pleasure of connecting with some of our clients in this space to discuss these insights. Alice Lee, Vice President Legal at Bimbo Canada (Bimbo) and Daniel Holden, Senior Vice President, Human Resources & General Counsel at Nestlé Canada Inc. (Nestlé), share their perspectives on the impact that COVID-19 has had on their organizations. Key takeaways from these discussions include the importance of adaptability in business operations and the value of human components that drive every business, particularly during this COVID-19 pandemic.
PREPAREDNESS AND ADAPTABILITY
Although it would have been difficult to predict the effect that the pandemic had on the FBA sector, the speed of the shutdown ensured that companies with procedures in place to minimize strain on operations were better positioned to respond. Alice Lee remarked that, in anticipation of sharp demand increases and labour strain, “in February, Bimbo bakeries across the country jumped into action, baking day and night to build up bread inventories, and Bimbo’s purchasing team spent countless hours working to source large quantities of personal protective equipment.” While business continuity planning has always been a part of any business’s strategic planning, the recent events have demonstrated that proper planning can drive competitive advantage.
Preparation alone, however, would have been inadequate, given the volatility in the market. Adaptability was and continues to be a key component of survival. Daniel Holden and Alice Lee both stressed the constant re-evaluation that their organizations have undertaken, with the intention of addressing a breadth of challenges presented by this pandemic. To be successful in adapting as market forces change so rapidly, Alice Lee highlighted the importance of setting aside ego and recognizing the fluidity of the situation at hand. Decision makers need to acknowledge that their opinions and guidance will evolve in the face of new information. In addition, the ability to collect, analyze and assess data in real time will continue to be critical as businesses navigate through the reopening of the economy.
In response to sudden stockpiling behaviour by consumers in the early days of the pandemic, Bimbo made the decision to reallocate production capacity to fewer product lines in order to prioritize volume of certain products over variety. With stockpiling behaviours behind us and consumers regaining an appetite for affordable offerings beyond the basics, Bimbo has returned to its traditional assortment of products. In terms of lasting change, the shift to online grocery shopping will likely be a factor that FBA businesses need to account for going forward. Alice Lee anticipates that this shift will require manufacturers to adapt their strategies and practices in order to motivate consumers to add their products to a virtual shopping cart, rather than a physical one.
Given that various business lines were oscillating on a weekly basis, Nestlé found itself relying heavily on data inputs and intuition to modify plans relating to production, scheduling, warehouse capacity and distribution. It was important for Nestlé to balance scale and flexibility so it could maintain the reasonable product prices that come with the efficiency of a scaled model, while being careful to diversify to respond to unexpected challenges. Daniel Holden remarked: “I think there can be a misconception that longer term, more stable organizations don’t have the ability to adapt quickly. However, with clear priorities, a common sense of purpose and a will to adapt, Nestlé was able to move at an incredibly fast pace as it responded to the crisis.” Indeed, more established brands tended to fare better in this climate, largely as a result of market experience and consumer trust.
Since stockpiling patterns first developed at the onset of the outbreak, producers of staple food items have seen a surge in demand. Consumers are finding comfort in products that they are familiar with and that they know they can rely on. Daniel Holden has found that consumers are returning to brands that they trust, rather than experimenting with products or brands they are less familiar with: “It’s really reinforced for our people how important our products are to Canadians. That’s been wonderful to see. I think we feel more directly connected to our consumers and their needs.” Beyond the products themselves, Daniel Holden believes it is critically important in the current circumstances to build trust by responding to consumer needs in the social context, through a commitment to environmental sustainability, employee development and community support. This experience has raised the bar for social consciousness in the FBA sector and consumers will be looking for signs that companies take this seriously.
Throughout the pandemic, Canadians have been assured that our country has enough food available to sustain our population. Initial shortages resulted from difficulties in modifying packaging for retail purposes and transportation delays, rather than insufficient supply. As the fifth-largest agricultural exporter in the world, much of Canada’s economy is based on trade. The pandemic has exposed the fragility of this system and will likely ignite a shift towards greater reliance on domestic production that Canadians can trust. Alice Lee predicts that globalism will take a backseat to embracing all things local. Whether consumers are motivated by safety concerns or “taking a stand with their wallets,” Alice Lee found that Bimbo’s Canadian production model has proven to be a considerable advantage. The attractiveness of e-commerce and direct-to-consumer models has increased in response to COVID-19 for similar reasons. Consumers are gravitating towards systems prone to fewer disruptions that they can rely on to feed their families.
Flexible work systems have become popular over the last few years, with companies of all sizes introducing policies and infrastructure to support these practices. While many businesses scrambled to onboard hundreds of employees to a remote working system at the onset of the pandemic, others were fortunate to have been a step ahead. Bimbo had remote work operations in place before the pandemic, which allowed for a fairly seamless transition that permitted focused attention on planning, preparation and mitigation efforts in bakeries and distribution centres.
Like many businesses, Bimbo was in the process of converting its new head office space into a hoteling model separated by function before the pandemic struck. However, with the implementation of this model, employees do not have their own designated workspaces, and social distancing and surface spread mitigation can be significant challenges. Bimbo is addressing these challenges by installing physical barriers between workstations, promoting air flow through windows and limiting the number of employees that will occupy the office.
Aside from the operational element, the implications for individuals have been acute. The abrupt shift in workplace realities coupled with the demand on our food system have inflicted unique pressures on FBA sector employees. Daniel Holden describes the challenges employees are facing in balancing additional work with personal obligations like childcare and maintains that Nestlé’s greatest focus is “protecting its people and ensuring that they have manageable, sustainable ways of working.” This involves commitment to technological solutions and response to employee input.
To most, this experience has demonstrated the feasibility and efficiency of working remotely. Both Alice Lee and Daniel Holden have noticed their colleagues’ appreciation of flexible work systems and expect that this will be a key priority going forward. Businesses in all sectors will need to continually assess how remote working arrangements affect morale and collaboration. Face time culture may be superseded by empowering employees to determine their own productive work patterns.
Recognizing that food producers and processors along the supply chain are frontline workers, protecting their health and safety is paramount. Ultimately, these employees have chosen to leave the safety of their homes in order to feed Canadians. In support of these workers, Alice Lee explains that Bimbo is investing a great deal of care and attention in determining how to safely and efficiently maintain operations, such as considering temperature checks and informational questionnaires. As all businesses in this space are aware, there are significant costs associated with the additional personnel and technology required to implement such procedures. Bimbo and Nestlé strive to ensure that employees recognize that they are valued and appreciated through these technical inputs and supports.
The FBA sector has acknowledged the risks associated with the COVID-19 pandemic and worked tirelessly to adapt accordingly. In recognizing that change is not entirely behind us, a focus on relationships with consumers and collaborators is how these businesses can identify shifts and react swiftly. We look forward to the innovation that is to come.
For further information, please contact any member of our Food, Beverage & Agribusiness group.
Please visit our COVID-19 Resource Centre to learn more about how COVID-19 may impact your business.
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