European brewers in danger
Europe’s brewing sector is experiencing radical change, according to statistics released in 2015 by industry trade body, The Brewers of Europe. There are over 6500 breweries in operation across Europe, a thousand of which started up in 2014. This represents a 16% increase on 2013 and a doubling since 2008.
However, this growth in the number of breweries does not reflect any real increase in the volume of beer being consumed. Instead, it depicts a shift in drinking habits towards speciality beers and a growing market demand for a more diverse offering of craft products.
The UK leads the way, being home to over a quarter of Europe’s breweries. This significant shift in the market is driving new behaviours in big brand producers. Many are acquiring niche brands or adding their own versions of high-end premium beers to their product portfolios, but in so doing supply chain complexity has risen significantly, with increased SKUs and only a minimal shift in the volume of beer being managed. Added to this, seasonal variations between big-volume power brands, popular in summer months, and low-volume niche beers, popular at festive periods, bring further complexity.
There is another major trend impacting the sector. In the past, the on-trade was king and most beer consumption was in bars and restaurants. But now, with the wide introduction of smoking bans for public places, consumers are choosing to drink at home and are shifting towards buying beer through the big supermarket chains. In turn, this change in buying behaviour introduces major issues to the supply chain – challenging traditional behaviours, management techniques and customer relationships.
In particular, retailers are looking to reduce their warehouse costs by putting pressure on manufacturers to provide smaller, more frequent deliveries – with all the incumbent logistical challenges falling on the manufacturer.
What’s more, retailers have driven a considerable increase in the number of product pack types being managed across the industry. Ten years ago, many breweries and beer distribution operations would handle as few as 25 SKUs. Now, the expectation is that they handle a minimum of 125 SKUs. For the sector’s logisticians, this has added considerably to the burden of complexity.
Significant operational benefits, cost reductions, service improvements and increased value can be achieved in the brewing sector by creating supply chains that are attuned to these changing market dynamics. However, it is only through the application of close analysis, intelligent thinking and practical know-how that the full potential can be realised and a competitive edge gained.