Kraft Heinz and Pepsi Closed Chinese Plants On Coronavirus

(Bloomberg) -- Kraft Heinz Co. Chief Executive Officer Miguel Patricio said the ketchup maker has closed some of its China plants following the outbreak of coronavirus. PepsiCo Inc. has done the same, closing one of its six manufacturing facilities recently.

The maker of Jell-O and Planters peanuts only gets 2% of its sales from China, but buys products from suppliers that import raw materials from the country, Patricio said in an interview. He recommended companies look for alternative supplies of raw materials due to disruptions there.

“The whole world depends on China,” he said. The company has inventory for the next three months, but “it is prudent for everyone to find possible alternative suppliers.”

Of the Kraft Heinz’s eight manufacturing facilities in the country, some are open and others are closed, depending on the municipality, Patricio said.

Pepsi kept one of its six plants closed after Chinese New Year, which began Jan. 25, Chief Financial Officer Hugh F. Johnston said in an interview. The plant is in Wuhan, and is expected to start up again “shortly.”

Though disrupted, sales in China are a small piece of Pepsi’s overall business, Johnston said.

“Distribution is a little bit more challenging in the country right now, particularly when you’re crossing province lines,” he said. “But in total, just for context, China as a business represents less than 2% of sales for PepsiCo, so while it’s obviously going to have a bit of an impact on the China business, based on everything right now that we know, we don’t expect it to have a significant impact.”

Complications from the viral outbreak, which has killed more than 1,000 and disrupted daily life for millions in China, are rippling across the business world. Companies are watching developments closely, but many say it’s too early to calculate losses as shoppers avoid public spaces and workplaces remain shuttered.

One employee from Kraft Heinz’s small team in Wuhan has been diagnosed with the virus, but he is in stable condition, Patricio said. The company is closely following his status.

©2020 Bloomberg L.P.

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