CPG employment rebounded after early pandemic plunge, report says

Source: fooddive.com

Dive Brief:

  • After an initial dip in employment at the start of the pandemic, the CPG industry brought employment back to 98% of pre-pandemic levels by October 2020, according to new data from the Consumer Brands Association. After losing roughly 170,000 jobs at the start of the pandemic, the CPG industry recovered 125,000 jobs by the end of the year, outpacing the broader economy.
  • Wages also remained strong, averaging 3.4% higher during the third quarter of 2020 compared to the same period a year earlier, even as pay declined 0.8% nationwide. 
  • Food manufacturers increased average overtime hours by 5.1% between May and December 2020 compared to the same period in 2019, while overtime dipped 9.6% across all manufacturing, the trade group noted, citing data from the Labor Department. 

Dive Insight:

Although much of the world went into quarantine during the early months of the pandemic, it did not stop consumers’ demand for CPG products. Shoppers went out less and in the case of food, spent more time stocking up and making more of their own meals at home.

Part of what kept industry employment afloat was the high demand for CPG products. Consumption remained high throughout 2020, rarely dipping below a 10% year-over-year increase from March 2020 through the end of December. Overall, sales grew by $131 billion, up 9.4% from a year earlier, to $1.53 trillion in 2020, according to the CBA report. This includes food, beverage, household and personal care products.

As consumption remain elevated, many companies of all sizes began to increase their staffing. Early in the pandemic, PepsiCo announced it would add 6,000 full-time jobs. General Mills boosted its third-party manufacturing and supplier relationships by 20% to keep pace with demand. The cereal maker, however, said recently if sales start to taper off, that capacity is what the company will shed first. 

The reason for the boost in hiring came as manufacturers not only were facing increased demand for their products, but also seeing a greater portion of their sales rapidly move online. This required them to add workers familiar with navigating that channel. Shoppers also were demanding more better-for-you offerings as the pandemic caused them to take a closer look at what they consumed. Both trends are likely to remain in place long after COVID-19.

Still, not all companies used the pandemic to boost their rolls. Coca-Cola said it would cut 2,200 jobs globally through buyouts and layoffs as part of a restructuring plan accelerated by COVID-19. And dairy giant Danone announced it would cut as many as 2,000 jobs, generating $1.2 billion in savings by 2023 that it would invest in supporting growth and improving margins.

In many cases, food companies struggled to balance the uptick in demand, supply chain challenges and their employees’ fears of safety and wellness. More than 40% of processors and 20% of suppliers reported their staff was afraid to come to work for fear of contracting the virus, according to a survey of 324 leaders across the industry done by Food Industry Executive.

For some brands, the pandemic has offered an opportunity to rethink old ways and pay greater attention to how consumer demand has shifted. Clif Bar recently announced a plan to double its sales to $2 billion. Part of the effort involves cutting 125 positions that no longer serve the company while adding 50 new roles in analytics and innovation. 

The question for many in the CPG industry is whether demand will remain elevated as many businesses reopen and conditions return to pre-pandemic levels. If demand begins to taper off, companies could begin looking for jobs to cut to offset the drop in revenue. But for now, many in the industry remain optimistic.

“We’ve never been this busy in 14 years — not even close,” Josh Wand, founder and CEO of strategic recruiting firm ForceBrands said earlier this year. “We’ve never seen such a high volume of job creation. There’s an incredible amount of optimism around immediate growth and sizable budgets [that] have been allocated” to hire new employees.

Wand‘s bullish outlook on hiring stems not only from the proliferation in data analysis, supply chain improvements, and the rapid adoption in e-commerce and other technologies but also an influx of capital from private equity groups and SPACs into emerging, mid-market brands.

Share