It’s happened again – one minute consumers are buying in a predictable way, at the usual times, and in the usual patterns. Then, boom! Everything changes.
But this time, instead of earlier toilet paper shortages, the product causing big problems is ketchup! Especially those small packets that are loved by fast-food customers everywhere.
The culprit, once again, causing this supply chain saga is Covid-19. Yes, the pandemic appears to have influenced every facet of consumer behavior. The main shift was caused by closed restaurants that drove consumers to the fast-food drive-in restaurants and home cooking, rather than dine-in restaurant options. It also turned many former dine-in restaurants into takeout places, making ketchup a commodity included in more food orders.
Ketchup packet prices have risen 13% since last January and the market share of packets (sachets) has eclipsed that of tabletop bottles. Ketchup is the most consumed sauce at U.S. restaurants, and even more is eaten at home. The pandemic has increased overall retail ketchup sales in the U.S. by 15% to more than $1 billion. Kraft Heinz leads the market with nearly 70% of the total U.S. market.
Kraft is responding to the shortage and plans to open two new manufacturing lines and increase production by about 25%. It has also innovated a no-touch ketchup dispenser to use at restaurants to help meet safety concerns caused by Covid.
Pass the ketchup please.
Group Activities and Discussion Questions:
- Discuss the elements in the supply chain and marketing channel.
- Diagram the supply chain and marketing channel for toilet paper.
- Show a news video about the shortage: https://youtu.be/4A7ObtFfYrE
- Where are the stress points in the supply chain and marketing channel?
- What can be done to better produce and manage products?
- Poll students: What are their predictions for the next shortage?
Source: New York Times; Reuters News; Wall Street Journal; other news sources