Taking stock: UK beverage businesses are in midst of ‘inventory crisis’
UK beverage manufacturers are now holding more than double the amount of stock compared to pre-pandemic levels, as delays and shortages take an increasing toll on the global supply chain.
According to new research by Unleashed, an inventory software provider, stock levels for beverage businesses are up 115% on pre-pandemic levels - above other huge categories such as electronics and telecommunications.
The pile-up means many businesses within the drinks industry will become less profitable, as they struggle to convert their assets into cash.
Meanwhile, manufacturers are paying 10.24% more for their goods now compared to the start of 2022.
The data, provided by 4,500 SMEs, examined four main data points: the value of stock on hand, Gross Margin Return on Inventory (GMROI), fulfilment days and the price paid for goods purchased.
Bryony Hampton, content marketing lead at Unleashed, told Harpers: “The supply chain uncertainties brought about by first the pandemic and now Brexit and the war in Ukraine mean they can no longer be confident in when key ingredients will land. With this uncertainty, many have been producing more stock when they can and holding that stock so there’s no question that they can’t fulfill orders in a timely manner. Customers won’t wait, so they’re shouldering the responsibility. One Devonshire distillery has invested in several external rented containers next to the warehouse to house that stock."
The data relating to drinks is a mixture of alcoholic (56%) and non-alcoholic products and softs (44%), and includes the likes of Southwestern, Cotswolds and Salcombe.
Beverage manufacturers (both alcoholic and non-alcoholic) saw the fourth biggest increase in stock-on-hand levels of any sector when comparing Q3 stock levels in 2022 versus the same period in 2019 - up 115.1% on pre-pandemic levels.
When looking at GMROI (down 36.7%), it's clear that beverage manufacturers are feeling the impact of holding more stock, with the majority of firms seeing a drop in overall profitability when looking at this metric specifically.
However, when looking at fulfilment times, beverage firms have remained fairly stagnant when compared to pre-pandemic levels (+2.45%).
Overall, stock-on-hand levels for manufacturers in the UK jumped by 99.7%, from an average of £365,736 in Q3 2019 to £730,681 in Q3 2022, while GMROI dropped from 2 to 0.9 in the same period, and fulfilment times fell from 20 days to around two weeks.
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