The beverage business is booming, but supply chain issues caused by the pandemic are giving suppliers and retailers headaches. There is an opportunity, though, if you’re prepared. Fortunately, Next Century Spirits Chief Operating Officer Rob Mason knows how to meet the challenge of these times.
Rob has over 20 years of experience in global marketing for top consumer operations, leading some of the world’s most iconic brands, including Jim Beam, Maker’s Mark, Knob Creek, Crown Royal, and Johnnie Walker. His expertise extends to brand management, brand strategy, and innovation – all critical areas for creating success in challenging times. Rob holds a BS from Miami University in Oxford, Ohio, and an MBA from the Kellogg School of Management at Northwestern University.
Let’s Talk Supply Chain Issues
We spoke with Rob about what he does here at Next Century Spirits, how the company manages supply chain issues caused by the pandemic and more.
It’s clear now that there isn’t only one failure point in the supply chain – it’s everything from packaging to labor to raw material to transportation, and many of these issues seem to be long-term. How is Next Century Spirits helping distillers, brand owners, and retailers move forward?
NCS’s business model is unique in that we have three primary business pillars.
- Processing and selling bulk liquid
- Creating and producing brands as a contract manufacturer for independent brand owners
- Producing and building our own branded portfolio of spirits
Our team represents a mixture of individuals who have significant experience in the spirits industry (from Diageo, Pernod Ricard, Beam Suntory, and Sazerac) or a substantial startup background.
This combination of experience enables NCS to provide consultative services to our customers and retailers about successfully navigating both the spirits and startup landscape, both pre and post-pandemic.
Do private labels or small-batch and craft brands have an advantage in managing supply chain issues?
All types of companies, from large multinationals to small batch and craft brands, have been negatively impacted by the broader supply chain crises. Freight issues have been particularly acute due to shortages in shipping containers, shipping & transport delays, and driver shortages. Having said that, private label and craft manufacturers often have greater flexibility to source their materials from a wider variety of suppliers because their production process tends to be more manual in nature.
Due to this less automated footprint, craft manufacturers can often pivot much faster than larger companies and brands. For example, suppose a standard label supplier cannot provide labels on the timeline we need. In that case, we can pivot to a different supplier whose standard label die-line might be slightly different and still apply that label using our equipment. Large-scale manufacturing wouldn’t be able to handle something like that.
Should supply chain issues keep a new brand from entering the market or an established brand from introducing a new product?
One of the single most important components of launching a new brand is building distribution and maintaining consistent supply on the shelf. If your supply chain issues disrupt your ability to produce this distribution or keep a constant supply on the shelf, you might want to consider waiting to launch your product.
It’s hard to get the shelf space, to begin with, and if you can’t consistently supply your product, you run the risk of retailers giving up your shelf space (and it is really hard to get that space back once you lose it). OR, worse yet, you have a consumer who tries your brand and wants to buy it again and can’t. They could then choose a competitive brand and may never come back to yours.
Established brands wanting to introduce a new product are less affected by these challenges. They can use the rest of their brand portfolio to fill open shelf space. If the new product is out of stock (or if someone is trying to re-buy the new product), you hope that the consumer chooses something else from within your brand portfolio over a competitor.
What lessons did Next Century Spirits learn over the last 18 months that will help them stay on top of future supply chain challenges?
There are a ton of lessons learned over the last 18 months to help us stay in front of future supply chain challenges. Some of these will seem quite obvious. But the supply chain pre-pandemic was operating very smoothly, which made some manufacturers more complacent than they should have been in preparing for a world that suddenly faced a supply chain crisis.
From an NCS perspective, key lessons learned have included:
- Identifying a greater number of suppliers who can provide the same ingredients/dry goods
- Raising our ongoing inventory levels of both raw materials and finished goods
- Increasing our minimum on-hand inventory
- Sourcing domestically where possible (we source some of our bottles from China and faced a two-month outage this year as we waited for our bottles to navigate through shipping challenges)
- Identifying as much duplication in raw materials across our products as possible (i.e., use as few raw materials as possible to drive greater purchasing and sourcing efficiency while relying on a fewer number of suppliers)
Last, but not least, what’s your favorite new drink?
I was, fortunately, able to recently visit the Pinehurst Resort here in North Carolina and was introduced to “The Woodpecker,” which is a combination of Vodka, Sprite Zero, and Grenadine. It’s very refreshing and easy to drink and is a nice change of pace from my usual bourbon on the rocks.
A Partner for Success
Partnering with Next Century Spirits means having experts like Rob working to help your business succeed through challenging times and times of opportunity. How can we support you?