Managing Commercial, Public, Utility and Telecom Fleets
5/3/2012 3:00:00 PM

Beer Distributors Battle Downturn


SABMiller via Bloomberg

A sluggish economy, rising fuel prices and new regulatory mandates have combined to put serious pressure on the beer distribution industry in recent years, especially as the key demographic of males 21 to 35 years old is disproportionately affected by high unemployment.

But distributors are not simply absorbing the blow. Industry sources say they are aggressively pursuing alternative fuel technologies and smarter routing schemes as ways to counter the economic challenges they face.

One challenge that distributors face is declining volume as a result of the recession. Since peaking at 142 million in 2007, shipments of beer in glass bottles, for example, have declined 20%, to 113 million units, by 2010, according to the Beer Institute, a Washington lobbying group.

The same group reports that shipments of all malt beverages, as measured in 31-gallon barrels, declined from a peak of 213 million in 2008 to 205 million in 2010.

Kathleen Joyce, a spokeswoman for the National Beer Wholesalers Association, said the decline in volume reflects the economy’s disproportionate effect on the industry’s top target market.

“The country’s unemployment levels and underemployment, especially impacting the 21- to 35-year-old male consumer, is a concern,” Joyce said.

Rising fuel costs only exacerbate the effect of the shrinking volume. Joyce said the combination has prompted many distributors to explore alternative fuel technology — particularly natural gas.

Jose Rivera, vice president of administration in Fort Myers, Fla., for J.J. Taylor Companies, said the lower volume increases the risk of more idle time, and his company is trying to use software more efficiently to change routing schemes to minimize that effect.

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