Overview of the Alcoholic Beverages Industry

The global alcoholic beverages industry largely includes products such as beer, spirits, and wine. Among various types of liquor available in the market, the consumption of cider, beer, and lager is the highest – accounting for approximately over 85% of the total alcoholic beverages consumption across the globe. Young adults with family incomes, ease of access, and high social media influence on alcoholic beverages are some of the primary factors for the growth of this market. Additionally, growing number in the urban population coupled with increasing incomes in emerging economies are compelling individuals to discover new forms of entertainment.

However, there are a few critical factors that are expected to influence the growth prospects of the alcoholic beverages industry in the coming years. These factors include:

• The growth of the e-commerce industry: Over the past few years, the e-commerce industry is rapidly evolving across the globe. As a result, consumer buying behavior and experience are expected to have a significant impact on the alcoholic beverages. Furthermore, according to a recent research report, brands who are making use of the digital channels to the fullest can interact better with their consumers.
• Traditionalism and authenticity: The future of the alcoholic beverages industry is more unpredictable than ever owing to the recent political and geopolitical events, such as Brexit and constant changes in technology. Additionally, today, consumers are looking for authenticity and traditions across the industry.

These factors are compelling alcoholic beverages industry players to leverage the use of robust supplier evaluation solutions. Supplier evaluation solutions help companies make the supplier selection most effective by assisting them to develop detailed supplier evaluation criteria and pricing worksheets. These solutions also help firms identified relevant price drivers and assess TCO, including the impact of rationalizing SKUs.

The Business Challenge and Journey

The client, a leading manufacturer of alcoholic beverages with business operations spread across the globe wanted to reduce the cost of goods associated with alcoholic beverages supplies. The client also wanted to standardize and reduce SKUs for select items and incorporate category best practices across their business units.

To help the client overcome their business challenges, SpendEdge carried out an extensive research methodology. The research methodology included primary research coupled with qualitative and quantitative data collection and interviews and discussions with leading procurement experts within the alcoholic beverages space.

During the course of this supplier evaluation engagement, the client developed a detailed supplier evaluation criteria and pricing worksheets to make their supplier selection most effective. Additionally, all suppliers, including incumbents, were ranked based on criteria and assigned weights to create the auction shortlist. The final supplier selection recommendation was made based on geographic coverage, qualitative assessment scores, quality audit results, previous experience with the vendor, approved samples, and product development costs.

Fundamental questions answered in this supplier evaluation engagement

The Results

The supplier evaluation engagement helped the client identify savings of 35%, compared to their previous spend; material cost indexing and steady conversion costs were negotiated. Additionally, the client was able to validate the recommended suppliers’ compliance with delivery requirements and SLAs.

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