European confectionery manufacturer Cloetta said it has started a dialogue with employees over the prospect of temporary layoffs after it confirmed pick-and-mix sales had been hit by lower demand as a result of disruption from the coronavirus outbreak.
“The number of absent employees in the factories has increased, but the negative impact on production capabilities has been mitigated by prioritising production of branded packaged products,” the Sweden-based firm said in a statement today (8 March). “Following the lower demand for pick and mix, dialogue about temporary layoffs of merchandisers has been initiated in some markets as well as other actions to reduce costs, affecting a limited number of employees in the pick-and-mix business.”
Just over two weeks ago, Cloetta had said it expected demand for pick and mix to “temporarily be significantly reduced” due to a discontinued contract in Sweden and retailers taking measures to enforce social distancing, a concern the business has now confirmed today.
Cloetta said: “To partly compensate for the lower customer demand, measures are being taken such as utilising the pick-and-mix shelf space in stores for branded packaged products and using the floor space to sell packaged pick-and-mix products.
“For our branded packaged business, we continue to see a negative impact from sales channels such as entertainment and travel retail closing, partly mitigated by increased customer demand for branded packaged products in grocery retail and e-commerce.”
The Stockholm-listed firm added that consumer demand is “very volatile” and noted how purchasing patterns are changing such as hoarding of certain products “primarily within the candy and chocolate category”. It also noted a shift into retail and e-commerce from convenience stores and filling stations.
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Although Cloetta has not so far seen an impact on its supply chain, the business is concerned that may change as the coronavirus crisis drags on.
“With the rapid spread of the coronavirus heavily impacting markets where Cloetta has a presence in terms of offices and production, we see an increased risk of future disruptions to our supply chain,” it said.