“Companies need to improve the integration of the supply and demand sides of their businesses.” Steve Wills,
Global Beverage Leader, EY
As beverage companies seek to succeed in an increasingly complex climate, adaptability and responsiveness to challenging market conditions are prerequisites for success.
Getting the right operating model to boost competitiveness
Optimizing the operating model is critical and this means striking the right balance between local autonomy and global scale and efficiency.
Strong, empowered local leadership to help ensure a relevant and rapid response to evolving market needs, while a globally consistent strategic direction gives the ability to draw on capabilities and resources from anywhere in the world.
The opportunities to improve competitiveness are multifaceted, including:
- Clarifying which functions should be in-country and which should sit above market
- Driving global business services
- Creating the right level of understanding of customers and consumers — ensuring the model understands who they are and what is needed to serve them
- Creating a tax-efficient supply chain
- Buying and selling the right assets
Enhancing the supply chain
As companies look to reduce the volatility caused by demand uncertainty and cost increases, they are seeking to exert greater control over the supply chain to help deliver organizational agility and enhance speed to market.
In addition, by focusing on building an organization that is sufficiently flexible and adaptable to succeed in today’s economy, companies are also keeping a watchful eye on the bigger picture.
Matching innovation to the pace of change in consumer demand
As beverage companies seek to drive volume growth and seize market share, innovation is a key decision point — in terms of product, packaging and promotion. Changing consumer needs and tastes, rising costs, changing technology, shortening product lifecycles and heavier domestic and overseas competition all increase the pressure to innovate.
Businesses need to renew their offerings and business models constantly — and get innovations to people quickly — to protect existing markets and develop new ones.
New products, packaging and usage occasions
In spirits, companies are tapping into the consumer trend for exclusivity, experience, quality and provenance. For example, Diageo has positioned a number of vodka brands at different premium price points.
In US brewing there has been an upsurge in the production of craft beers while health and wellness remains a focus for certain soft drinks companies. A focus on health is also a factor driving innovation in packaging.
In the US, where soft drinks have for the last two decades been served in increasingly large servings, the trend is starting to reverse.
Promotion innovation through new technology
Technology adoption is accelerating. Businesses now face a far faster business cycle where they have to react rapidly ‘in real time.’ Companies need to experiment quickly and cheaply, and focus on relevant contact with the consumer, as well as content.
By 2013, it is estimated that two billion users will make purchases using mobile devices such as smart phones.
It is not only the scale of the opportunity that is compelling; low effectiveness of traditional media is pushing companies to embrace social networks. Only 18% of traditional media campaigns generate positive recommendations, while messages sent from a brand via a social network can have a much greater impact.
How we can help
We have a proven record of helping beverage businesses to stay fit and adaptable.
Issues we can help with include:
- Redefining organizational structures and business models
- Introducing common regional and global processes
- Supply chain transformation
- Tax-efficient supply chain management (TESCM)
- Identifying and executing on new strategic relationships
- Improving the effectiveness of R&D program management in emerging markets new products
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