Bacardi Brexit stockpiling: The right solution?

Following the recent announcement that Bacardi has been stockpiling goods, one logistics expert suggested all drinks brands should review its supply chains.

Yesterday, February 11, Bacardi revealed that it has been holding back its products ahead of Brexit next month to prevent supply issues for the company.

John Perry, managing director at SCALA, provider of management services for the supply chain and logistics sector, said: “The announcement from Bacardi came as little surprise to us, as our survey of Grocery and FMCG decision-makers at the end of 2018 found that 61% were already stockpiling raw materials and/or finished goods. Others were reviewing their levels and sourcing, with plans to build stocks ahead of the 19 March deadline.

“The Wine & Spirit Trade Association has advised its members to carry around 20% more stock than usual as a starting point in preparation for a no-deal Brexit. However, contingency stockpiling is not a decision that can be taken lightly, particularly for the drinks industry.

“The value is higher for alcohol than most other FMCG products, so stockpiling results in drinks businesses having a large amount of money tied up in inventory, which can cause significant cashflow problems. Alcohol’s high value also means that the cost of buying storage is greater than usual, because additional security arrangements are required, and there are costs associated with HMRC requirements and bonded regulations to consider too.  

“While stockpiling is potentially one way to alleviate the short-term effects of a no-deal situation, it is hugely costly, and a lot of SME’s simply don’t have the capacity to do so. It’s therefore interesting to note that despite the fact that Bacardi is in the fortunate position to be able to afford to stockpile, its UK and Ireland managing director Amanda Almond suggested that stockpiling is just one of the ‘responsible and sensible precautions’ being taken by the company to prevent supply issues.

“She revealed that Bacardi has also been looking at the possible impact of Brexit on its supply chain, which will be crucial when it comes to mitigating more long-term disruption. We would recommend that all drinks businesses follow suit and review their supply chains to ensure they are as healthy as possible and start implementing risk-reduction strategies now.”