Drinks industry lags behind FMCGs

Weak supply chain partnerships are holding back the drinks trade from responding to demand for new and more varied products, argues one industry expert.

“The drinks industry is starting to catch up with the FMCG sector when it comes to product innovation,” commented Crispin Mair, director at supply chain consultancy Crimson & Co, whose clients include the likes of Tesco, Diageo and Carlsberg.

“Traditionally, drinks companies have tended to offer one set product with the only variance being the size of the bottle you purchase – today, the market is evolving,” he reported.

In particular, Mair highlighted the rise of flavoured and pre-mixed drinks as having a “dramatic impact” on companies’ product portfolios. Describing this development as “impacting all levels of the supply chain, from ingredients to packaging,” he emphasised: “It’s vitally important to have your suppliers on board to support this.”

Among the key considerations of meeting demand for such diversity, Mair pointed out the additional expense involved. “For example,” he noted, “changing your portfolio will often result in the need to store more materials, which fundamentally alters a company’s cost base.”

With the added pressure this issue can create, Mair observed: “As an industry, we need to see greater collaboration whereby suppliers and drinks companies work closely to ensure that the necessary changes don’t prove to be ridiculously expensive. The two parties must work together to ease the cost burden.”

In conclusion, he summed up: “Ultimately, the drinks industry needs to understand that it will not be able to optimise costs without working with suppliers. It needs to treat suppliers as a business asset with a huge amount of knowledge.”

These issues raised by Mair will be examined in more detail at a Drinks Industry Forum hosted by Crimson & Co in London on Thursday 22 January.

Guest speakers from both within the drinks industry and outside will use the event to discuss their own experiences of supplier collaboration projects, with a particular focus on what can be done to drive down supplier costs. For more information visit www.crimsonandco.com.