Beverage Reusable Packaging and Pallets Respond to SKU Proliferation and Other Trends

How Beverage Industry Changes Are Influencing Reusable Packaging and Pallet Selection

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When it comes to the enduring success of reusable packaging and pallet systems, few industries have enjoyed  more success over the decades than beverage. The soft drinks and beer sectors in large remains characterized by regionalized, high volume applications that are ideally suited for durable reusable packaging and pallet systems.

In fact, conversions to highly durable solutions are still commonplace. For example, Drankenpallet, the Dutch cooperative beverage industry pool, converted to a plastic pallet in 2012, while last year, Heineken converted its pallet system for its six plants in Mexico.

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Heineken Mexico is converting durable plastic pallets from PTM for its 6 plants.

For beverage as well as elsewhere in consumer products distribution, however, it is a time of flux. Pallet and reusable packaging selection in beverage continues to evolve in response to changing industry drivers. Flash points such as SKU proliferation, shrinking retail footprints, hours of service requirements, point of sale emphasis, channel proliferation, food safety, ergonomics, cost reduction demands and more are posing challenges in the beverage distribution landscape.

Vendors stress that rather than developing products that address specific challenges, they are looking to take more systematic, solution-based approaches that best address the range of issues facing the beverage sector, from capital requirements and supply chain performance through to right sizing and loss reduction. Others talk about taking a more holistic approach to reusables at the retail level in general. Let’s take a closer look.

1. SKU Proliferation Stresses the Beverage Supply Chain

Excusing the bad pun, overall beverage industry growth in the U.S. is flat, hovering around 30 billion gallons for 2013, according to Beverage Marketing Corporation. Not surprisingly, growth is fastest in some of the non-traditional niches such as ready-to-drink coffee, sports drinks and bottled water. Carbonated soft drinks were down 3.2 percent in 2013 versus 2012. More products, with more sizes and shapes continue to spring to life in the retail merchandising ecosystem as brands clamor for shopper attention. (See related tables.) Brian Lindell, Vice President Beverage for Rehrig Pacific comments that it is now typical to see between 15 to 30 SKUs on a beverage delivery pallet.

The situation is similar for beer, with the craft brewing sector growing much more rapidly than the leading brands, albeit in a flat overall growth environment.

SKU profilferation translates into headaches all along the supply chain, creating more changeovers on the bottling line, more SKUs to try to slot and manage at the warehouse, and a bigger challenge for order selectors to pick efficiently and build into stable pallet loads for retail delivery. With respect to reusables, New niche SKUs seem to typically embrace the use of plastic overwrapped cardboard trays versus existing beverage reusable packaging solutions, although new reusables are emerging that are designed for use with multiple sizes of carbonated beverages, such as beverage crates introduced by CHEP and Loscam in Australia.

Overall, however, Pat Huesing, VP Sales RSC Food & Beverage for ORBIS Corporation notes that the growing segment of niche SKUs is still a small proportion of the business, and that the industry has not yet reached a tipping point for reusables in terms of volume. Often, he notes, such specialty items may only be manufactured at a few points in the U.S., and such “long loops” at low volumes may not yet be obvious candidates for reusable packaging systems. While the tipping point may not have yet been reached, however, ORBIS and other vendors are working with beverage customers to help optimize the current transition.

Continue to Page 2 to find out how trends such as point of sale, small pallet footprints and automation are changing the value proposition for reusables.