The State of the Beverage Industry

TL;DR

• The beverage industry is evolving with increased demand, driving innovation in packaging and product offerings.
• Bottlers and distributors face rising costs, SKU complexity, and logistical hurdles, necessitating agile and efficient supply chain strategies.
• Ryder offers tailored solutions, including real-time visibility, sustainable fleets, and optimized logistics, to help beverage companies overcome industry challenges.
• By partnering with Ryder, beverage companies can enhance agility, efficiency, and visibility, ensuring a competitive edge in a rapidly changing market.

The beverage industry is a dynamic and expansive sector within the U.S. economy, encompassing everything from soft drinks and bottled water to alcoholic beverages and functional drinks. As consumer preferences evolve and market demands shift, beverage bottlers and beverage distributors find themselves at a pivotal juncture.

These entities are crucial links in the supply chain, responsible for ensuring that products are efficiently packaged and delivered to distributors, retailers, and consumers alike. However, they face numerous challenges that necessitate a reevaluation of logistics and supply chain strategies.

The entire food and beverage industry faces the rising costs of operations, raw materials, and transportation, sustainability pressures, stricter regulations, and the complexity of SKU proliferation, along with the flexibility to quickly move from concept to production of new products.

This article delves into the macroeconomic trends and operational hurdles impacting the industry and explores how companies like Ryder can help optimize supply chains for future success.

What Macro Trends Shaping the Beverage Industry?

The beverage industry is undergoing significant transformations driven by consumer preferences, technological advancements, and competitive pressures. Understanding these macro trends is essential for bottlers and distributors aiming to stay ahead.

Consumer-driven shifts

Today's consumers are more health-conscious and environmentally aware than ever before. This shift is evident in the growing demand for functional beverages that offer health benefits, low-sugar options, and non-alcoholic alternatives. According to NutraIngredients, 89% of global consumers seek functional benefits from their beverages, and even prefer them over supplements to support their health.

Packaging and product innovation

The proliferation of SKUs is a direct response to the diverse demands of retail and direct-to-consumer markets. MetaBrand says that beverage companies are investing heavily in customized, sustainable, and convenient packaging formats to differentiate their products and meet consumer expectations.

Brands are taking a minimalist approach, using recycled and recyclable materials, as well as exploring optimized options for packaging design that make transportation more efficient.

This trend not only enhances brand appeal but also poses logistical challenges in terms of inventory management and fulfillment.

Direct-to-consumer and omnichannel acceleration

The rise of e-commerce and delivery services has transformed the way beverages are sold and distributed. Nielsen NIQ reports that the online beverage market grew 18.2% in the past year to reach $11.9 billion in online sales.

This shift necessitates a robust omnichannel strategy that seamlessly integrates traditional retail with digital platforms, ensuring a consistent and efficient customer experience.

E-commerce platforms now offer a wide array of convenient beverage solutions. There are grab-and-go formats as well as customizable subscription models where consumers can access their favorites easily with just a few clicks.

Streamlined delivery options, such as same-day or scheduled delivery, make things even more convenient. Consumer demand for convenience will continue to grow and drive online beverage sales. To succeed, brands must be agile and responsive, continuously refining not only their offerings but also their delivery methods to meet consumers’ evolving needs.

Consolidation and competition

The beverage industry is witnessing a wave of mergers and acquisitions among distributors seeking broader market coverage. At the same time, new entrants and micro-brands are challenging legacy players with agile business models and niche offerings. This competitive landscape requires established companies to innovate continuously and optimize their operations to maintain market share.

What are the Supply Chain Management and Distribution Challenges for Beverage Bottlers and Distributors?

Beverage bottlers and beverage distributors face a range of operational challenges that impact their efficiency and profitability. Understanding these issues is crucial for developing effective solutions.

Shared challenges

Both bottlers and distributors grapple with high operating costs and thin margins, exacerbated by labor shortages in warehousing and trucking. Transportation bottlenecks and freight volatility further complicate logistics, while demand surges and seasonality require agile management strategies. Additionally, SKU complexity can strain inventory and fulfillment processes, necessitating sophisticated supply chain management solutions.

What are the Challenges for Beverage Bottlers?

Bottlers face unique challenges, including:

• The high cost of bottling equipment and automation investments.
• Stricter compliance requirements related to food safety, labeling, and traceability
• Rapid turnaround needs for new product launches
• Raw material and labor shortages
• The necessity for co-manufacturing and co-packaging partners

Affordable working capital is an issue amid growing compliance: The United States Financial Accounting Standards Board now requires companies to report on the terms and size of their supply chain financing

What are the Challenges for Beverage Distributors?

Distributors must navigate compliance issues, particularly in alcohol shipping, which involves state-by-state regulations. Ensuring cold chain logistics integrity for perishables is critical, as is optimizing route density and delivery windows. Balancing direct-to-consumer fulfillment with traditional retail distribution requires a flexible and efficient logistics strategy.

Additional challenges include:

• Demand forecast accuracy in a time of changing consumer tastes and demands
• Seasonal demand variability
• Real-time visibility
• Green and sustainable practices

How Ryder Helps Beverage Bottlers & Distributors Win in a Competitive Market

Ryder offers comprehensive port-to-door solutions tailored to the unique needs of beverage bottlers and distributors, helping you overcome challenges and optimize your supply chains. We provide real value by combining expertise, capability, and technology.

Integrated solutions include inbound supply management, raw materials sequencing, bottling lines, finished goods warehousing, secondary packaging, and outbound consolidation and distribution, among myriad other benefits:

• Risk mitigation
• Surge support
• Flexibility
• Specialized equipment, including Refrigerated trucks and trailers, storage trailers, and dry trailers.
• Automated near-bottling site outsourced distribution centers to effectively meter the flow of raw materials supporting production and finished goods from plants.
• Real-time visibility that enables critical tracking
• Transportation optimization for distributors and retail receivers.
• Secondary packaging capabilities leveraging flexible resources.

End-to-end beverage supply chain expertise

Ryder provides:

• Inbound supply management for raw materials
• On-site or near-site warehousing for just-in-time replenishment
• Sequenced bottling lines to reduce downtime and waste.
• Expertise in secondary packaging and outbound logistics to ensure efficient and reliable distribution.

Specialized equipment and infrastructure

Ryder's fleet includes refrigerated trucks, dry trailers, and mobile storage solutions, available for lease, rental, or dedicated use to flex with demand.

Real-time visibility and technology integration

Ryder's technology solutions, such as RyderShare™, provide real-time visibility into every shipment, enabling companies to optimize routes and reduce dwell time. It provides a single, connected experience that unifies data and management systems for everyone in your supply chain to work together better and more efficiently.

• Dock scheduling and carrier performance tools enhance operational efficiency
• Business intelligence and analytics offer proactive performance and cost metrics.
• Supplier fulfillment portals and automated order flows streamline processes and improve accuracy.

It’s the ultimate digital platform for real-time visibility on all goods moving across the supply chain.

Flexibility and surge support

Ryder's scalable labor and transportation logistics solutions help beverage companies manage seasonal spikes or promotional surges effectively. We provide trained drivers who understand the specific standards of beverage delivery, ensuring quality and compliance.

Ryder's co-pack and co-manufacturing capabilities mitigate risk and improve speed-to-market for new product launches.

Cost optimization

Ryder's route optimization strategies reduce mileage and fuel costs, while strategic consolidation programs minimize less-than-truckload (LTL) shipments. Their carrier procurement and performance management services ensure cost-effective and reliable transportation solutions.

Ryder Solutions At-A-Glance

Ryder offers a comprehensive range of services tailored to the beverage industry, including:

• Flexible leasing options with maintenance support.
• Efficient warehouse management and distribution solutions.
• Comprehensive logistics services for seamless operations.
• Versatile truck rental options to meet diverse needs.
• Support for product launches and packaging needs.
• Cost-effective vehicle solutions for fleet expansion.

Beverage Industry Success Stories

Ryder's expertise has been proven through successful partnerships with leading beverage companies:

Turkey Hill

Turkey Hill is a leading ice cream and refrigerated beverage maker. By providing a full-service lease solution and modifying their aging fleet, Ryder not only saves them more than 36,000 gallons of fuel annually, it also gives their drivers peace of mind that they can make on-time deliveries.

“We looked at a number of providers,” says Christine Bense, Turkey Hill’s chief operating officer. “Ultimately, we did choose Ryder because of its demonstrated capability, its cost competitiveness, and its collaborative, people-first approach. For us, it was an easy choice, and one of the reasons we are looking for additional ways to expand our relationship with Ryder.”

Pabst Brewing

Pabst Brewing was faced with the challenges of an evolving beverage landscape, including the integration of new breweries and a burgeoning portfolio of over 50 beverage brands. They recognized the need to optimize their transportation network and enhance visibility across their supply chain.

“Ryder has become an extension of Pabst,” says Tony Stefanek, SVP of Pabst’s supply chain. “We have stretched the Ryder team many times, and they hit the mark every time. Ryder is always looking ahead at how we can get better than we are today. That is what we want to see. With Ryder, we continue to get better and stabilize our business.”

Ryder’s transportation management solution gave Pabst Brewing real-time visibility, a four-fold increase in distribution productivity, 100% data accuracy, and a whopping $442,000 in procurement savings in the first year after implementing Ryder’s solution.

Southern Glazer’s Wine and Spirits

Southern Glazer’s is a multi-generational family-owned company, representing more than 1,700 wine and spirits suppliers. They distribute more than 7,000 brands across 45 U.S. markets, Canada, as well as brokerage operations through its WEBB Banks division in the Caribbean, Central, and South America.

As the company sought to deliver products to an ever-growing global market, Southern Glazer’s encountered several challenges with its supply chain. This included limitations related to tracking and monitoring the movement of goods from production facilities to distribution centers and ultimately to retailers and consumers.

“By having the granularity through RyderShare, we can address and prevent detention and demurrage fees, and identify network optimization opportunities. I’m also not asked where my PO is anymore,” says Andrew Vermilion, Vice President of Supply Chain at Southern Glazer’s. “We used to have seven people chasing POs. Now with RyderShare, we can do more value-added activities. We are managing the freight; the freight isn’t managing us.”

The results? A 50% increase in productivity, 100% visibility, and a two-fold saving in labor efficiency and decreased turnover.

Future-Proof Your Beverage Supply Chains with Ryder

In an industry characterized by rapid change and increasing complexity, agility, efficiency, and visibility are paramount. Ryder stands out as a trusted, innovative partner, offering tailored solutions that address the unique challenges faced by beverage bottlers and distributors. By leveraging Ryder's expertise and comprehensive service offerings, beverage companies can future-proof their supply chains and maintain a competitive edge in the market.

To learn more about how Ryder can help optimize your beverage supply chain, connect with a Ryder expert or explore our related resources today.