Paused product launches, stock limits and cost increases are all on the cards for the industry right now, as distributors and retailers grapple with the Omicron variant.
Independent retailers and groups are planning for the impacts of ongoing supply chain issues, while distributors are warning of delays and reduced capacity.
“We have had cost increases and extended lead times in all facets of our supply chain,” says Dean Terranova, Managing Director of Iconic Beverages.
Such cost increases put Iconic Beverages in a difficult situation, as Terranova explained: “Due to the nature of our fixed cost liquor market, we are not in a position to increase our prices in line with our cost increases… This puts tremendous strain on small business.”
Iconic Beverages isn’t the only company struggling with the supply squeeze, as Cameron Crowley, Managing Director of Swift + Moore explained.
“Supply chain issues are being felt across all aspects of the industry, with reduced supply chain staffing due to illness and greater complexity as businesses try to do the right thing and limit exposure,” Crowley said.
“It’s taking longer, and becoming more expensive, to move product from A to B.”
“Thankfully our primary wholesale partner Gateway, due to some good management and a commitment to support their customers, were able to continue working right through the holiday season.”
Paul Esposito, CEO of Independent Liquor Group (ILG), was keen to stress that this is an issue affecting nearly every industry in Australia, and beyond.
“Like everyone else in the industry not to mention, other industries, it has been quite a challenge [for ILG] with supply and deliveries,” he said.
And of course, what has an impact on distribution, also has an impact on retail, as the General Manager of Liquor Barons, Chris O’Brien, explained.
“I don’t think Liquor Barons is any different to any retailer in Western Australia or Australia – the supply of certain items is delayed or restricted,” he said.
With so much production concentrated on the east coast, Liquor Barons faces an additional layer of difficulty, particularly at a time when the WA state border has been so tightly controlled.
“It’s a credit to the liquor supply community to date that the disruption, whilst it has been there, has been minimal,” O’Brien continued.
He is thankful that there is also understanding amongst customers now, and said: “When our consumer turns up to request a specific item, and by chance that item is not available, there’s an understanding that is probably not due to an error, but due to one of these complications trigged by COVID.”
Likewise, Crowley also states that “customers across the board have been very understanding as they deal with similar challenges in the face of Omicron.”
Adjustments and next steps
So what changes are businesses making in light of these challenges to the supply chain?
O’Brien said: “Stock limits are not a position we’ve arrived at. That said, Western Australia is still enjoying freedoms that their friends on the east coast can’t enjoy – and that very well might change come February 5, [the day that strict border restrictions in WA are set to lift].
“Our plan to deal with reopening is multifaceted, and takes a significant amount of advice from government and from working closely with the Liquor Stores Association.”
For Swift + Moore, it’s about liaising with suppliers and customers, and anticipating demand before it arrives.
“We are working closely with our partners to understand their capabilities and limits at this time and then we try to share this information with our customers to help manage expectation and avoid disappointment,” Crowley said.
Distributors are having to take some unavoidable steps in the face of delivery postponements and increased costs, a worrying notion for Terranova.
“We have had to delay new product launches and adapt strategic behaviours to accommodate our customer needs,” he said.
“Cost increases in supply chain are presently affecting distribution businesses but will eventually flow through to consumers if there isn’t a correction soon… We are hoping that relief comes by way of efficiencies and cost reductions.”
The industry is united in the belief that clear and open dialogue is one of the best tools it has to navigate this difficult period.
Esposito stated: “The key here is to keep our members abreast with the issues we are faced with to minimise the frustration things like this result in.”
And O’Brien offered what could become the mantra for the liquor industry in the face of the ongoing pandemic: “Communicate early, communicate loudly, as mitigate as many of the issues as we can.”
National Liquor News and The Shout will continue to report on supply chain issues as the situation develops.
How is your business navigating the ongoing challenges of the pandemic? Get in touch with National Liquor News editor Brydie Allen to tell your story: firstname.lastname@example.org