My can’t miss viewing this year was Beverage Digest’s Future Smarts virtual conference. One very full day featured leadership from Coke, Keurig Dr Pepper and Pepsi and analysts from Goldman Sachs and Barclays providing valuable insights on 2021 lessons and 2022 predictions. This conference, combined with my own members’ observations, gave me a better sense of what lies ahead for our industry.
Rising Cost Inputs
Our industry (and most consumer packaged goods companies) faced significant headwinds this year. Virtually all cost inputs rose for us from ingredients to transportation. Sourcing ingredients, nailing down delivery times and keeping store shelves stocked is a complex undertaking in “normal” times. And 2021 like 2020 was anything but normal. As the beverage industry struggled to keep pace with these costs, they were forced to raise prices—never an easy decision but one born of necessity this year. Yet despite price increases on beverages, consumer demand still outpaced supply for many beverages from favorite sodas to sparkling water and everything in between. Speakers predict more of the same in 2022 with rising costs and increased efforts to keep price increases in check.
Aluminum Can Shortage
Part of what drove (and is still driving) beverage shortages in the grocery channel is a shortage of aluminum cans. During 2020 when most restaurants were closed or operating on reduced hours, fountain soda sales and keg beer sales plummeted. These sales shifted to at home consumption or takeout. Given this, demand for aluminum cans skyrocketed with brewers purchasing cans instead of filling kegs and our members filling more 12 packs of soda for grocery sales. Since just in time inventory was the norm pre pandemic, can inventories dwindled and aluminum can manufacturers could not keep up. The speaker consensus at Future Smarts was that the shortages will continue into 2022 with normalization in Q4 or early 2023.
Profound Labor Shortages
For several years pre pandemic, a national CDL driver shortage (estimated at 80,000 nationwide) has loomed large for our industry and many others. We have worked with the Ohio General Assembly and Congress on solutions from CDL scholarships to pilot programs to lower interstate driver age to raising truck weights. These ideas can help but profound driver shortages persist. Our members are doubling down on driver recruitment and OhioBev will continue to work with our colleagues at Ohio Trucking Association on more solutions.
Driver shortages are not the only labor constraint the beverage industry faces. Hiring and retaining other skilled workers—from merchandisers to warehouse personnel-- is a top priority. The urgency of this will continue to drive work at local, state and national levels. Our members have raised wages and benefits from already competitive levels, but they recognize more must be done. Community outreach to connect our industry’s jobs to jobs programs operating throughout Ohio is OhioBev’s top 2022 focus.
Increasing Consumer Demands
Another theme that emerged from Future Smarts is the surge in consumer demands fueled by more time at home and more discretionary income to spend. Workers who remain at home found they spent less money on fuel, parking, work wardrobe, and other expenditures tied to commuting into an office and engaging in person meetings. This rise in discretionary income flanked a rise in spending on home improvement, and more at home meals. One speaker predicted that this “home as the hub” behavior will continue into 2022. And if the home is the hub, then consumers found that they wanted fully stocked pantries to reflect more time and meals at home.
Innovation is Way Forward
For our industry, consumers are king. One Future Smarts speaker described the beverage business as increasingly “high trial” and “lower repeat.” What this means is consumers are fickle and like to experiment with flavors and products. The great news is our members have incredible portfolios that contain hundreds of options from traditional soft drinks (and their zero sugar counterparts), energy drinks, teas, juices, sparkling water to everything in between. And along with a quest for new products, consumers continue to seek beverages with functional benefits for health, focus and immunity.
Consumers care about all aspects of the product, including sustainability. The beverage industry is baking sustainability into all aspects of our business from package design to recycling infrastructure. Our efforts on Every Bottle Back, a national commitment from Coke, Keurig Dr Pepper and Pepsi working with The Recycling Partnership, Closed Loop Partners and the World Wildlife Fund are making a difference in how we use recycled content, work to collect more of our bottles and find opportunities to reduce our plastic footprint. States like Ohio have already seen investments through the effort which provided $11.5 million to 14 communities to improve recycling. This investment, including projects in Central Ohio and Clyde, Ohio, will yield 640 million new pounds of PET over ten years. And Every Bottle Back is just getting started. 2022 will feature more projects to boost the recycling rate and generate more recycled PET plastic so our bottles can be remade into new bottles.
Ready for 2022
This incredible industry is ready for 2022. Our legacy of providing great jobs, helping our neighbors in times of need and giving back to our communities will continue. We will have challenges. And we will rise, as we always do, to meet those challenges.