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April 7, 2020updated 25 Aug 2021 10:20pm

Covid-19 – Nestle facing production challenges – CEO

Mark Schneider, the CEO of Nestle, has admitted the world's largest food maker has been unable to hit its "normal" production levels during the Covid-19 pandemic.

Mark Schneider, the CEO of Nestlé, has admitted the world’s largest food maker has been unable to hit its “normal” production levels during the Covid-19 pandemic.

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Speaking to Bloomberg TV, Schneider said the KitKat and Maggi owner had faced issues along the supply chain.

“We’re trying to produce flat out in the face of strong demand but do keep in mind, with logistics limitations now kicking in and also a lower employee presence as a result of illness or precautionary measures, and also an enhanced safety protocol that we need to run at our plants, we’re not always able to give it 100% of the capacity that you would have under normal circumstances,” Schnieder said.

“We’re working extra shifts where we can, we’re trying to ramp up manufacturing where we can but do keep in mind, this is a very, very challenging moment and just getting to the normal levels of manufacturing is a pretty outstanding achievement right now.

“The minute we saw this crisis spread we were trying to improve inventory levels at all levels of manufacturing so input materials, working process, and also finished goods. Obviously there was very little time, and I think flexibility is what’s required right now.

“You do have logistics constraints, sometimes you need to resort to air-freighting, sometimes even that takes longer or capacity is limited. It’s really all about managing, in a very tight knit way, this crisis and ensuring flexibility and this is what our teams are focused on right now.”

Asked how he saw the coronavirus crisis affecting consumer behaviour in the long term, Schneider said Nestlé’s focus remained on shorter-term issues but he gave an indication of what the company is seeing in China

“I think long term it’s probably a bit far out right now. We’re very, very short-term focused at the moment to really meet demand where we can. I think this is the most essential service that we can provide to our consumers,” he said.

“What we’re seeing from China, for example, where there’s some improvement here, that even in the aftermath, that there’s strong demand for value products and quality products, maybe a bit less on premium and, given that we’re of course in a recessionary environment right now, I think that’s also a safe bet then for some of the other communities, as we emerge from the immediate healthcare crisis.”

Related Companies

Free Whitepaper
img

What is the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry?

While wanting to protect the country from being overwhelmed by Omicron, China’s adherence to a Zero-COVID policy is resulting in a significant economic downturn. COVID outbreaks in Shanghai, Beijing and many other Chinese cities will impact 2022’s economic growth as consumers and businesses experience rolling lockdowns, leading to a slowdown in domestic and international supply chains. China’s Zero-COVID policy is having a demonstrable impact on consumer-facing industries. Access GlobalData’s new whitepaper, China in 2022: the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry, to examine the current situation in Shanghai and other cities in China, to better understand the worst-affected industry sectors, foodservice in particular, and to explore potential growth opportunities as China recovers. The white paper covers:
  • Which multinational companies have been affected?
  • What is the effect of lockdowns on foodservice?
  • What is the effect of lockdowns on Chinese ports?
  • Spotlight on Shanghai: what is the situation there?
  • How have Chinese consumers reacted?
  • How might the Chinese government react?
  • What are the potential growth opportunities?
by GlobalData
Enter your details here to receive your free Whitepaper.

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