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In its report “Thirsting for Growth,” Rarobank’s Food & Agribusiness Research and Advisory team says a major concern for all beverage companies in 2013 is the outlook for key commodities. Exerting greater control over procurement, including achieving increased transparency with upstream suppliers, will be a critically important initiative for many beverage companies in 2013.
According to the bank, beverage manufacturers used to be more concerned with buying their inputs at the lowest price, but in today’s world of tightening supply and price volatility, security of supply has emerged as a key concern for many manufacturers. Increasing complexity within the supply chain requires greater dependency and alignment between key stakeholders. As a result, supply chain management and strategic development experts have initiated “strategic sourcing” of agricommodities.
Ross Colbert, global beverage strategist for Rabobank and lead author of the report, said, "Strategic sourcing requires beverage companies to re-evaluate their procurement processes through the lens of global supply and demand, to better understand the impact of price volatility, security of supply and related risks. This approach has led global brand owners to develop dedicated supply chains, where suppliers, processors, distributors and even retailers are more aligned and operate in a more integrated system."
Below are Rarobank’s forecasts for three primary beverage sectors – soft drinks, coffee and tea, and alcoholic beverages.
Soft drinks
-The global soft drinks industry will continue to straddle two different worlds: the mature developed markets where growth has stagnated and developing markets where previously high growth rates have slowed, but still offer the greatest upside
-Bottled water will continue to lead in volume with a projected growth rate of 5.4% in the coming year.
-Ready-to-drink tea and Asian specialty drinks will be the fastest growing soft drink segments with projected growth rates in 2013 of 9% and 14%, respectively.
-Coca-Cola and PepsiCo are set to undergo a new wave of refranchising as they look to shift bottling assets to strong franchise partners, allowing each giant to focus their efforts on brand building and marketing.