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Supply chain disruption has brought ‘massive change’ to beer market: CEO

·3 min read

Computer chips, Nike shoes, even cream cheese — all are products snarled by supply chain disruptions as holiday shopping takes hold.

A cold beer might ease the worry about delayed gifts but supply shortages have also upended that industry, says Anheuser-Busch InBev (BUD) CEO Michel Doukeris, who leads the world's largest brewer.

The sudden shift to at-home drinking during the pandemic brought about a spike in demand for aluminum cans, which caused prices to soar and delivery times to lag, Doukeris told Yahoo Finance in a new interview.

In turn, as some countries have reopened, the return to drinking at restaurants and bars has forced a reintroduction of glass bottles and draft beer that imposed additional delays, he noted.

"The main disruption," he says, "is supply chain."

"Commodity prices went up [and] aluminum disappeared because overnight people stopped going to bars," he adds. "Everybody was buying the package in convenience stores and groceries."

"So just imagine resetting your entire footprint to sell more cans than bottles or draft beer," he adds. "So this is a massive change."

Draft beer's share of total U.S. volume fell from 10% in 2019 to about 6% in 2020, according to a report from the National Beer Wholesalers Association. During the same time period, beer sold in can packages rose from 60% in 2019 to 67% in 2020, the report found.

On a third quarter earnings call, in September, Doukeris highlighted supply chain constraints as a key cause of higher costs for the company, saying that he expects the disruption to stretch into next year.

"When you have the reopening, it's all over again in the other direction," he tells Yahoo Finance. "So now we have cans and you don't have bottles, then people are struggling with draft beer."

The company has responded with price hikes in Brazil, Mexico, Colombia, China, and Nigeria, among other countries, he told investors in September.

Despite persistent delays, some indicators suggest the supply chain disruption has begun to ease. The backlog of orders index at the Institute for Supply Chain Management dropped to 61.9 in November, which puts it well below a record 70.6 in May.

On Wednesday, the Ports of Los Angeles and Long Beach featured 30 freight ships waiting offshore to unload their goods, well below the some 80 ships anchored in the waters during the worst of the shortages.

Speaking to Yahoo Finance, Doukeris stressed the role of real-time data in helping the company respond to the fluctuations in the supply chain.

Bottles of non-alcoholic Leffe beer are seen on the bottling line at Anheuser-Busch InBev brewery in Leuven, Belgium November 25, 2019. Picture taken November 25, 2019.  REUTERS/Francois Lenoir
Bottles of non-alcoholic Leffe beer are seen on the bottling line at Anheuser-Busch InBev brewery in Leuven, Belgium November 25, 2019. Picture taken November 25, 2019. REUTERS/Francois Lenoir

"We've been using a lot of data and analytics throughout the entire pandemic to very quickly shift from one side to the other, anticipate a little bit the movements, and have a good service level to the customers," he adds

Even as beer drinkers have shifted drinking habits from bars into the home and back again, the drink has remained a consistent beverage for many people during the pandemic, Doukeris said.

"Beer is this kind of sense of normalcy," he says. "So people cannot go out, cannot go to the theater, could not travel, but they could all go to a grocery store, buy some beer, and have some good time at home cooking, or on the barbecue or just unwinding."

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