This is part of Six Months In, a Slate series reflecting on half a year of coronavirus lockdown in America.
For half a year, the grocery aisle has doubled as a barometer of how well we’re handling life in a pandemic. Empty shelves revealed which commodities consumers really prized for safety, comfort, and entertainment. They also illustrated how well our gargantuan and complex supply chains had met a moment of crisis.
I’ve been covering retail shortages since the economic shutdowns began this spring, examining supply chains of the most-sought-after pandemic purchases. And I’ve noticed one recurring culprit when a coveted product disappears from stores: packaging.
Supply chain managers have struggled throughout this crisis to find the things they need to store the products they sell. There aren’t enough cardboard boxes for pasta. There aren’t enough paper satchels for dried yeast. And there aren’t enough plastic canisters for disinfectant wipes. This isn’t the only reason you can’t find what you’re looking for at the store, but it’s often a major factor. So why can’t the packaging industry, worth $900 billion worldwide, manage to keep up?
To be fair, it’s difficult to sharply ramp up the manufacturing of any product to meet a surge in demand. But it turns out that packaging presents some unique challenges. This isn’t primarily because of the materials, like aluminum or paper. Instead, it’s about factories’ limited capacity to turn those materials into the specific kinds of containers consumers require. As a report from McKinsey spells out, closures of public venues like restaurants and stadiums severely depressed demand for the bulk packaging of food, toilet paper, and other products. But consumers were simultaneously seeking out the same products for use at home, and in larger quantities than usual. That meant there was greater need for smaller packaging formats. Manufacturers had to either switch over production lines meant for bulk-size packaging or run preexisting ones devoted to smaller packaging at much higher speeds.
“That’s not easy to do in a short period of time,” said Matthew Daum, director of Michigan State University’s School of Packaging. “All that machinery is finely tuned and takes up a certain amount of space and is built around a certain package format.” For example, to convert a factory that typically turns out 5-gallon bags for instant rice into one that makes 12-ounce pouches, you’d either have to buy brand-new equipment or retrofit older units at a high cost. Hence: Maybe instant rice is a hot commodity for a few weeks.
Beer is another good example. Since Americans have been forced to do more of their drinking at home rather than at bars, demand for kegs has plummeted while demand for retail containers has skyrocketed. In the spring, that translated into a shortage of aluminum cans, which saw a nearly 30 percent rise in demand from March to early May. (Just a 5 percent swing can be significant enough to disrupt the beer industry’s supply chains.) Even now, some aluminum suppliers are reporting the lowest inventory levels they’ve ever had, with increased consumer demand for soft drinks, hard seltzers, and canned foods also exacerbating the shortage. Molson Coors, which owns Miller Lite, has actually lost market share because it’s had to cease production of some canned beers. In the soda sector, Coca-Cola Co. is also reporting shortages of Cherry Coke and Pibb Xtra, which it attributes to can scarcity.
“It was a perfect storm,” said John Rost, vice president of global sustainability and regulatory affairs for Pennsylvania-based packaging supplier Crown Holdings. While the industry had already seen a trend in consumer preference for cans over the past five to six years because of their recyclability, it wasn’t ready for this shock. “We’re doing everything we can, but the market is basically sold out. Every manufacturing facility in the country is running 24/7.”
Even after adding more shifts and retrofitting machines, can factories still aren’t meeting the demand. Opening more facilities seems to be the only plausible next step, Rost said. Crown is constructing a new plant in Kentucky and adding more lines to its facilities in New York and Washington, but it’s a slow process: Building a whole plant from the ground up takes around a year, while installing a new line takes six to eight months. Based on Crown’s projections, it’ll take around six months to a year for manufacturers to start catching up to can demand. The Can Manufacturers Institute, a trade group, expects the industry to add the capacity to produce 12 billion more cans by the end of 2021.
Another sector that’s experiencing issues with packaging is the cleaning products industry. When millions of Americans decided all at once to keep all their hands and surfaces cleaner, disinfectants became a prized purchase. That led to wild spikes in demand for plastic canisters, sprayers, bottles, and pumps. Though certain sanitizing chemicals had been harder to source, partly due to COVID-related production shutdowns in China and India, maintaining ramped-up packaging volumes is still a tricky puzzle to solve. “Manufacturers are scrambling to acquire some of those key packaging materials, so you’re seeing more encouragement for using refills,” Brian Sansoni, senior vice president of communication for the American Cleaning Institute, told me this summer. Some suppliers are seeing five to six times the demand for certain packaging units this year compared with previous years. Lead times for fulfilling orders for disc top caps—you know, those soap tops you press open with your thumb—have extended as far out as early 2023.
There aren’t a lot of quick adjustments cleaning product manufacturers can make to significantly increase volume. Suppliers and distributors have been trying to push different packaging formats, like using bags instead of cannisters for disinfectant wipes, and are focusing less on dyeing plastics a certain color in the interest of efficiency. (Who cares if the bottle is blue during a pandemic?) Factories are also restarting some decommissioned lines and supplementing automated processes with more manual labor for products like sprayers.
As with so many aspects of life, the packaging industry will likely be permanently altered by the pandemic—but it’s still too early to say how, exactly, it should prepare. Katherine Storer, senior supply chain director for the Illinois-based company Berlin Packaging, said that manufacturers are having to make tough decisions around adding lines and factories given how variable demand projections can be. Storer said, “Depending on the equipment, it has such long lead times that by the time you get it commissioned, if you haven’t projected right about where the market’s going to go, then obviously you’ll end up mothballing it.” Adding infrastructure requires not only buying equipment but also finding enough staff to operate it. What if a can maker doubles capacity, but demand for kegs suddenly goes up again?
Another issue is that packaging is only useful if you have every component. For example, a plant that makes the plastic containers for hand sanitizer often doesn’t produce the pump that goes with it because they’re made of different substrates. The supply chain can only rev up if both the container maker and the pump maker do so in tandem. Court Carruthers, CEO of the Missouri-based packaging distributor TricorBraun, said: “There’s pressure across the entire packaging supply chain. Everyone is investing to get those things balanced.” But getting it right can take time—and leave consumers resigned to making home-brew hand sanitizer for a few weeks.
All this amounts to a landscape in which even a shortage of bottle caps or equipment like cuppers—the things that form sheets of aluminum into cylinders—can greatly distort what’s available on grocery shelves. No one could have predicted how consumers would behave during a once-in-a-century pandemic, certainly one that may be with us for a while yet. It turned out we wanted a lot of beer, and cans from which to sip it.
