Page 64 - IAADFS Summit 2023 Special Edition

INSIDER

Shirakawa 1958,” he adds. “We are also
making a strong push with Gosling’s
Ginger Beer and Asahi Super Dry onboard
the cruise ships.”
Finally, Brown-Forman VP managing
director David Rodiek stresses the
proactive steps the company has taken
to tackle some of the key issues. These
measures include collaborating with
customers prioritizing the available
inventory to strategic locations; exploring
alternative bottle sizes when standard
1-litre sizes were not available; moving
products to bonded warehouses closer
to customers and restructuring orders to
isolate constrained lines, so that available
products could be shipped faster. Carnival Sunshine
“Overall, we had to be agile and
creative in proposing mitigation plans 750ml or even 700ml, basically, whatever concerns because we can’t ever run out of
to support our customers,” says Rodiek. we could find in the world. It really was the fast-moving ones because they are the
“Today, Brown-Forman’s supply situation quite chaotic.” cash cows, the ones that make us the most
has improved significantly, especially as of There was also shipping challenges, money.”
late 2022.” Sulkes remembers. “If I needed some wines
from Europe for my program because they Scotch whisky and transatlantic freight
How Carnival Cruise Line coped with had all gone bad because they’d just sat problems
the crisis there in port storage during the pandemic Much of the focus on supply shortages
COVID-19 devastated the cruise and got warm. Say, I needed ten pallets of facing duty free retailers in the Americas
industry but guest numbers have rebounded Italian wine; those pallets would normally has focused on the high costs, delays and
quickly since it was brought to a screeching take one to two months to ship. Now, they disruptions affecting sea freight crossing
halt in March 2020, reaching over 50% of were taking anywhere from four to six. the Atlantic from Europe. Barbara Scott,
pre-pandemic levels to total 13.9 million The ships started off without a lot of the operations director of Edinburgh-based
passengers in 2021 and forecast to grow products they were supposed to have.” Scotch whisky bottler and distribution
by 12% over pre-COVID 2019 next year, Sulkes says beer and spirits companies specialist Youngs Spirits, is an expert in
according to leading global cruise industry were quick to ramp up supplies, fearful that the Scotch whisky industry supply chain
trade group Cruise Lines International if Carnival had had to switch to another and well placed to comment on the current
Association (CLIA). suppliers to fill a hole in its drinks program, challenges facing cross-Atlantic trade
Cruise ship logistics supply chains it might not switch back. “If all of sudden which she notes are now slowly easing.
have always been uniquely complex I am going to switch my white rum from “As congestion across U.S. ports has
and highly specialized. Cruise ships Bacardi to Flor de Caña, I am probably continued to fall so to have transatlantic
are effectively floating resorts which never going to go back. Once I find a sea freight rates – some 7-8% in the last
need to be resupplied during short port partner that’s working for me, I am not month and over 10% for the same period
stops– suppliers and service providers going to switch back. Suppliers understood in 2022 but prices are still significantly
have to align with these short turnaround that, especially on the beer and spirits side, higher than 2019 (as much as 200%),”
times. According to Zachary Sulkes, more so than wine where shipping delays she explains. “There is an expectation that
senior director of beverage operations at were taking ages.” rates will continue to drop but this is not
Carnival Cruise Lines, the sudden restart The supply problems have eased a given. Concerns still remain in terms
of the cruise sector caught many drinks but trying to avoid any future issues of congestion in southeast U.S. ports and
companies by surprise. Many suppliers is challenging, according to Sulkes, as Houston while uncertainty remains due
were struggling to meet booming lockdown cruise ships typically only have space to to unresolved labor disputes between
domestic markets and found it hard to stock two weeks’ worth of product for the operators and port workers unions on
switch to restocking the travel sector. bars and onboard shops. “We can’t really the West coast. We have seen a shift in
“Domestic markets were booming,” he change what we do. As the product gets preference to ship to East coast and it will
recalls. “Bacardi had its best year ever right used, we order more. be interesting to see how long this will
in the middle of the pandemic because the “The one thing I have done from a continue through 2023.”
U.S. domestic market was doing so well. pouring perspective is told the ships to Scott notes that the travel retail
So, not a lot of people had safety stock carry more stock of the fast-moving items,” industry’s reliance on exclusives has
for duty free… At the beginning, there he adds. “So, raise the level of whatever left it particularly vulnerable to supply
was a lot of out-of-stocks, a lot of needing are our top five fastest moving items. shortages. “Whisky distillers often market
to switch bottle sizes. Typically, in duty Make sure you have extra inventory of travel retail exclusives, which when travel
free we use the liter size for the beverage those. I’m okay if that means I have less was restricted, saw a marked decrease
pouring business, but we had to switch to of the slow-moving lines because of space in production and sourcing of materials

Summit of the Americas April 2023 64