Key highlights:
- Heinz scrambled to meet the demand.
- The price of ketchup will go up.
- Heinz will increase production by 25%.
French fries and ketchup, one of the best combinations. But COVID-19 is breaking the combo.
COVID- 19 hitting the supply chain of ketchup
The demand for ketchup is increased as pandemic led to take away orders. Retail ketchup sales were up 15 percent in 2020. But Heinz was not able to meet the demand. According to the report of The Wall Street Journal, Kraft Heinz, which makes most of the ketchup sold at retail in the U.S. Restaurants in the US were giving single-serve ketchup packets. When the customers were back to the dining they had to use packets. Bottles were taken off as a prevention measure.
Quantity inversely proportional to the price
High demand, low supply will increase the price. A similar situation is occurring with Ketchup. According to the Wall Street Journal, all of the fast-food chains are not out of stock. Long John Silver’s is an American chain of fast-food restaurants having specialty in fast food facing the problem. As a result, it needs to change the backward integration. The company is switching suppliers to get the stock. It needs to spend $500,000 more on ketchup due to high demand.
The market is unpredictable. It’s changing very fast. The same situation will not be there every time. Due to high demand, the price has increased. Suppliers are taking advantage of the situation and trying to make a monopolistic market.
Heinz increasing the production
Heinz is planning to boost their production capacity by 25%. The company’s total annual output will be more than 12 billion packets. But it’s not like Heinz is discovering an increased appetite for such single-serve packets for the first time. CNN announced nine months ago that is in the last year 2020 that the market for single-serve condiments was on the rise.
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