Wine must change ‘or lose out to other categories,’ predicts Encirc Beverages MD

Richard Lloyd, managing director of Encirc Beverages, tells the drinks business his predictions for the UK supply chain in 2024.

Responsible for more than half of the UK’s glass filling, and with customers spanning the worlds of wine, beer and spirits, Encirc Beverages is well placed to comment on the challenges facing the drinks trade as 2024 gets underway.

Here, managing director Richard Lloyd speaks to the drinks business about what lies ahead for the UK supply chain.

db: What are some of the key challenges the drinks industry faces in 2024?

“The still wine market remains in gradual decline year-on-year, so the challenge as I see it is: how does the industry unite to reverse this trend? In recent years, individual retailers and brand owners have tried to tackle this issue in isolation, but unfortunately it’s hard to see how these entities will succeed on their own, due to the significance and scale of some of the fundamental challenges the wine industry is facing. These range from erratic global shipping supply and duty increases to the consumer perception of wine, greenwashing, demurrage charges and more.”

db: What do you think is the solution?

“As an industry, we have to find forums where solutions can be unearthed together to ensure the wine category as a whole grows. Central to the reluctance to unite, I believe, is a fear from individual brands that they will lose their uniqueness, identity and equity, which are of course the very elements that most businesses are striving to protect, given the fragmented, highly competitive wine landscape.

I think it is possible to find ways to protect brands’ unique and differentiating assets whilst addressing some fundamental elements of how wine is produced, packaged and distributed in the UK – elements which are frankly outdated.

The wine industry needs to find a way to embrace change, otherwise different drinks categories are going to continue to steal consumers.”

db: How do you see the bulk wine category changing this year?

“Bulk wine has to become the norm due to economic, sustainable and quality benefits that are now too significant to ignore. Much of the ‘New World’ has embraced the switch to bottling in the country of sale over recent years, and now we are starting to see ‘Old World’ wine brands make the move, which is exciting.

Bringing wine into the UK in a case is the past. You pay more excise duty than with bulk, and you can fit in half the amount of product.”

db: What are your predictions for alternative packaging in 2024? Or will glass continue to rule supreme?

“Glass will continue to be the leading format, given its superior characteristics with oxygen control and the fact that it is infinitely recyclable. However, glass has to evolve from a weight, colour and design perspective, coupled with furnace technology advancements, to achieve a net zero-carbon footprint.

Other formats [bag-in-box, canned wine, etc] definitely have a role to play for certain drinking occasions. However, it appears this continues to be a concept that the UK consumer is reluctant or unsure of how to embrace.”

db: Are there any key changes that UK retailers can make to help simplify the supply chain?

“Yes, but again it can’t be the retailers making changes in isolation. One significant benefit would be retailers reviewing their promotional notification lead times to reflect supply chain lead times. However, brand owners also have a role to play in terms of providing greater visibility of stock within the supply chain.

Currently, the lack of transparency by all stakeholders results in the classic bullwhip effect through the supply chain, causing excessive stock at the wrong point in the chain and incurring cost, out-of-stock issues, obsolescence and demurrage bills.”

db: Tell us about some of the key priorities for Encirc Beverages this year.

“We have a multitude of live projects that are gaining real traction, and will deliver a mixture of both incremental and transformational change in 2024. A number of partnerships with our suppliers will offer more sustainable solutions to primary, secondary and tertiary packaging. We also have some projects focused on operational and distribution optimisation.

However, the one piece of work that excites me the most is our launch of a Partnership Event, where we are inviting our suppliers, customers and retailers to all come together for a day and evening in April at The Celtic Manor in Newport. The hope with this unique event is that it will become a catalyst for some of the change we can co-create, generating benefits for everyone across the industry.”