Within each segment, the spread of C2C performance among companies is much greater for brewing than for other CP segments.

WC performance varies widely across consumer product segments.

This reflects partly the industry characteristics and dynamics and partly the country and customer sales mix and manufacturing and distribution strategies deployed by the companies in each segment.

Of the three CP segments, brewing commands by far the lowest level of WC, with a negative C2C of 1.5 days. This is due to a superior performance in each WC area, and in payables in particular. The DSO-DPO differential is significantly negative (-27 days), indicating that brewers are able to collect from customers much faster than they pay their suppliers.

HPC carries lower levels of WC (C2C of 27 days) than F&B (38 days), helped by a stronger performance in payables and receivables, partly offset by weaker results in inventory. The DSO-DPO differential is negative for HPC (-7 days) and positive for F&B (6 days), which may suggest a lack of focus on cash conversion cycle by the latter segment.

Within each segment, the spread of C2C performance among companies is much greater for brewing than for other CP segments.

This may be partly explained by variations in the way brewers manage their production and distribution models. For example, some brewers are bound by a three-tier distribution system, while others may operate with or without in-house bottling operations. It is worth noting that one of the four brewers analyzed exhibits a negative C2C of as much as 30 days, with most of the countries where the company is selling in negative territory.

WC metrics by CP segment, 2011

Source: Ernst & Young analysis, based on publicly available annual financial statements