Executive Summary from the JBA 1998 Beverage Industry Survey - Just Drinks
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Executive Summary from the JBA 1998 Beverage Industry Survey

05 Dec 1998

"Nothing endures but change" . .................Heracleitus500 B.C. Never before has industry faced suchcompetition at a regional and global level. Never before have the opportunities been sogreat. Two views of the same situation, or has this always been the name of the game?

“Nothing endures but change” .……………..Heracleitus500 B.C.

Never before has industry faced suchcompetition at a regional and global level. Never before have the opportunities been sogreat. Two views of the same situation, or has this always been the name of the game?

“Other people see things and say’Why?’; but I dream things that never were, and say ‘Why not?”…….George Bernard Shaw.

From grain to glass, blend to brand, theBeverage industry is subject to high portfolio marketing costs against a background whereunderstanding demographics and geographic spread is a make or break decision. Managementskills and information blend with strengthened financial planning and controls to help youeither innovate or stagnate.

Producers have to be one hundred percentmarketers, and be able to focus on all the drivers, influencers and opportunities withinan industry facing some of the biggest changes in its history.

Certain dynamics are understood. Forexample, in the case of logistics services, the focus over time has been on price,quality, service, flexibility and innovation. The benchmarks have followed; price,quality, customer service, cycle-time and virtual integration. A common view is thatcompanies no longer compete. Rather it is supply chains that compete.

However, countries are at different stagesin this evolution. Some do not have the correct processes or metrics in place. Differentcompanies may be trying to achieve the same ends through various mechanisms. Many do notunderstand consumer psychology or even the opportunities available. Some forecasterspredict that if home shopping captures 15% of the retail trade, 40% of retail outlets willdisappear.

Depending on your product and route tomarket, and leaving aside the impacts of legislation, five issues are key:-

Retailers and Market
Customer Account Profitability (CAP)
Innovation
Technology
Integration

Although umbrella terms like EfficientConsumer Response (ECR) are prevalent, individual projects and different foci have to beaddressed. The results of this survey show considerable differences between country andsize of company and where you sit in the supply chain.

This comes as no surprise as the reportconfirms. For example, perhaps larger companies have the resources to initiate projectsinto Activity Based Costing (ABC) or category management, particularly with the retailers.Smaller companies may have to keep their eye on price and cost at the product level.Whether companies can track the true cost of new product innovation and track product lifecycle remains to be seen, although this is shown to be important, particularly with thesuppliers to major outlets.

From a country perspective, despite athree-tiered structure in the US, there is still the desire for much closer integrationbetween customers and suppliers. Not a surprise is the higher than average result forgrowth by mergers and acquisition. The emphasis is perhaps being shifted from productinnovation. Some estimates suggest that if ECR takes off, 50% of companies will vanish.The ECR issues show that for the US, the focus is to ensure that new products areintroduced better, rather than promoted.

Forecasting was the highest priority forthe supply side in the US, perhaps an effort to reduce the long and stock heavy supplyroute through the three tiers.

The above illustrates some of thehypotheses that can be confirmed and some of the surprises. The graphs provided are at acountry level for comparison. However, the raw data tables are provided to allow you tocheck whatever you feel is an untapped differentiator for your company.