Supply Chain Difficulties in the Drinks Industry
With the right approach to innovation, embracing end-to-end sustainability, investment and education, producers and consumers can look to the future.
At present, in the drinks industry, end-to-end supply chains are really taking a battering. The issues are many, and complex, but there is a real, constructive approach we can take, which is about getting as much information as possible about the issues, getting clear about the realities of those issues and, from that point, forming a plan, because it’s time to start coming up with solutions.
Times got hard
The main problem is, for the last 40 years, we’ve all got used to having everything we want, whenever we want it, at incredibly low prices. Now there's shortages, delays and prices are going up. It’s not what we’re used to!
Too-sensitive supply chains
Since the sixties, we've developed sophisticated ‘just-in-time’ supply chains and whilst these do, and have, worked extremely well, they're sensitive to pressure. That means that everything is now affected, because these supply chains are not resilient enough.
Everything from harvesting and extraction of raw components to factory production to transport and administration, as well as agricultural inputs, energy and cost of labour – it’s all affected.
Heavy reliance on glass
Take glass alone. It’s very problematic. Glass is seen as cheap, easily available and recyclable. We’ve become highly reliant on single-use. But the truth is, glass is resource and energy intensive, heavy and bulky and the raw materials are now under serious pressure.
Brands finding solutions to glass alternatives know this and are wisely looking at the long game. For example, Avallen have developed a cardboard bottle, and some brands are encouraging customers to refill their own vessels.
Helping consumers understand the product
Brands that help consumers understand what goes into a product are helping to combat the ‘whatever, whenever’ consumer expectation. Fostering deeper appreciation manages consumer expectation, highlighting the effort producers make, and that the product is worth paying for.
A need to develop closed-loop supply chains
The just-in-time supply chains we’ve had since the sixties are not serving us. Holding stock and resource is not cost-effective. Hence, we’re seeing producers develop closed-loop supply chains instead, for example where branded, high-integrity liquids are supplied in bulk with no single-use glass. This is a more agile model, able to withstand multiple pressures.
Pressure can bring innovation
When things get sticky, we see innovation. And that’s key now to dealing with the challenges we face. We’ve all got to be more innovative and come up with the multi-factor solutions we need, which create the valued, brand-new experiences for the consumer.
Normalising innovation
Innovation has to be the way forward and the education of people to use innovation, so that innovation becomes normal for consumers and businesses alike. And the government who we need to invest in the infrastructure supporting innovation.
The factors driving the current crisis, whether it’s COVID, the war in Ukraine, the transition of economies in the Far East, are real, and there will always be these kinds of factors. It’s time now to think smarter so we can sustain the lower impact businesses that will help us all live better lives.
The sustainability soap-box has gone
Sustainability isn’t about greenwashing now, it’s about utilisation of resources in a sensible and cost-effective way that’s good for all of us. It’s how we can maintain more jobs and better growth in the economy.
Invest, invest, invest
The factors driving the supply chain crisis are unavoidable and the lack of sustainable infrastructure is really coming home to roost now. We need to invest in those closed-loop supply chains that are more resilient, training and smart technology that maintain and sustain what we want as a society. It’s these things that will make the contributions to offsetting the issues we all face now.
New appreciation for plan B
In a way, we’ve contrived to have all our eggs in too small a number of baskets for too long. For example, the huge ports around the world and the part they play in global supply chains is scary. The investment and development have been enormous, and we’ve not appreciated enough the need for a plan B.
To get to that plan B, we may have to make sacrifices. We’ve committed to net zero, so we need to deal with that, and the finite nature of resources, such as certain energies. Everything is linked, from transport, to energy, to production, there’s no getting away from the realities we face and the short and long-term factors we all need to think about.
We may just have had it too easy for the last 40 years, making us unprepared for this current challenging landscape. But with the right approach to innovation, embracing end-to-end sustainability, investment and education, producers and consumers can look to the future.