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American global manufacturer of consumer and professional products Clorox has produced 40 million more wipes, disinfectants, and other items in the first quarter this year than it did the same period in 2019, reports TV program NBC News.
The company said that it saw a 500% increase in the demand of its disinfectants since March and sold more in a week that it often does in a month before the Covid-19 outbreak. Clorox CEO Benno Dorer said they are completely in “uncharted territory” and are now in catch-up mode. Their factories have been going into overdrive to meet the consumers’ demand.
Pandemic transformed Clorox’s operations
The pandemic has changed Clorox’s century-old operations; its five factories now operate 24 hours a day. They have also produced a new product, which is 55 gallons of bleach drums enough to clean 14,000 hospital rooms. A total of 263 new employees have also been added to the workforce of 8,800 to catch up with demand. Toilet paper is already back in the shelves and hand sanitizers are not that difficult to find, but disinfectant wipes remain elusive, according to Nielsen. Clorox wipes are sold after just 30 to 45 minutes on the shelves.
Clorox has increased the boost pay of their workers and provided $1,000 bonuses to the lower-level employees. Dorer said that they are doing their best to ramp up the production in the safest way possible for their workers too. For instance, social distancing is observed by factory workers and they also stagger breaks and meals. All of them wear face coverings and gloves and their temperatures are regularly checked at work. The CEO said that he looks at the employees as front-line workers helping in the fight against coronavirus.
From 9-to-5 job to a mission
Carleton Mitchell, Clorox’s department crew leader in the Atlanta factory and who has been in the company for 22 years, said he now views his job differently. Pre-pandemic, he looked at it as a normal 9-to-5 job. Now, he considers it a mission. “I don’t just see it as products anymore. I see it as a line of defense against this fight against the virus itself,” Mitchell added.
Jessica Matthews, another worker at the Atlanta factory, shares that she would normally see trucks move the materials in and the finished products out but during the pandemic, the movement is far quicker. “Everything is moving faster,” she said, adding that everything is done safely.
Boosting ad spending
In an interview with business news provider CNBC, Dorer also shared that Clorox will be boosting its marketing spending by $50 million as the disinfectant demand soared amid the pandemic.
He said that although some companies are now investing less in their brands, they will do the opposite in their advertising sales because they believe that it is the time to serve as many people as possible. They will advertise not just because people need disinfectants this pandemic but because people grill more while at home. The Clorox Company has disposable Kitchen Pads and ScrubSingles cleaning tools to clean charcoal grills.
Those in the advertising industry know that business can dry up if marketing budgets are cut. When a company experiences a financial downturn, marketing spend is often among the expenses that companies draw back on and the same thing happens during the health crisis, which has almost stopped global commerce.
In the US alone, consumers have spent more time at home and are choosing to purchase groceries, including cleaning supplies. They understand that wet wipes and bleach are some of the products that help slow the spread of the coronavirus. This is why Clorox sees a demand surge in some of their cleaning products.
In its fiscal 2020 Q3, Clorox also reported $1.89 per share profits on $1.78 billion in total revenue. This profit smashed the estimates of the financial and investment community Wall Street. Analysts from Wall Street previously projected a 9% increase to Clorox’s total sales in the current quarter.
The shares of Clorox also rose 3.4% to $192.71 in its earning report. Its stock reached more than 25% this year. Dorer said this is why the company is investing in future capacities so that it will remain better equipped to meet the consumers’ demand in the future surges. With few improvements this summer, Clorox is expected to be in a “much better shape,” he went on to say.
Sales growth of cleaning products due to Covid-19
Database company Statista conducted a survey in the US in the week ending March 7. They found that cleaning product sales increased in the first week of March. Sales of aerosol disinfectants grew by 385.3%, bath and shower wipes 180%, multipurpose cleaners 148.2%, toilet paper 60%, and paper towels 40.8%.
Clorox's annual net sales amounted to $5.655 billion in 2015, $5.761 billion in 2016, $5.973 billion in 2017, $6.124 billion in 2018, and $6.2 billion in 2019. In its FY 2019 report, Clorox sold 19% homecare products, 9% laundry, 6% professional products, 13% bags, wraps, and containers, 8% charcoal briquette, 7% cat litter, 2% digestive health, 9% food products, 5% natural personal care, 3% water filtration, and 3% dietary supplements.
Comment from supply chain experts
Although Clorox is ramping up its production, supply chain experts believe that both Clorox and Lysol won’t be fully back in stock on the shelves until July or August.
Some states have already started to ease up their stay-at-home orders and policymakers are planning to reopen the economy but customers are still wondering why online retailers and stores are still out of stock of hand sanitizer, Clorox wipes, and Lysol.
Syracuse University’s supply-chain-management professor Patrick Penfield told Business Insider that some chemicals used in the products are shipped by manufacturers from China and this process alone usually takes four weeks. Aside from that, many plants in China were closed for the early part of 2020, creating another disruption in the supply chain that took time to resolve. Another issue is the capacity to produce more products.
Consumer behavior will be a significant factor to ensure that everyone can access these cleaning products. Shoppers should purchase only what is needed instead of stockpiling.