Brewing the bargaining power - Tackling Consolidation

A detailed analysis on US glass packaging industry reveals that the consolidation nature of the supply market is fostering a business bottleneck especially for the small and medium sized breweries and wineries for packaging of their alcoholic beverages. Being at the end phase of the growing era of industry life cycle and entering the maturity phase, the structure of the alcoholic beverage glass packaging industry is progressing towards high consolidation. The situation could lead the industry to a business roadblock in terms of dealing for the beverage manufacturers in US. The bargaining power of small and medium sized beverage manufacturers is dropping drastically with respect to glass bottle manufacturers in the value chain. Some measures have already been implemented by them, including sourcing glass from China, light weighing the glass bottle, increase recycling rate etc. However, these measures will not be enough to provide equal negotiation power to beverage manufacturers in the value chain. Sourcing strategy analysis indicates the way forward to the alternate methods which might be helpful to counter the mentioned problem in US alcoholic beverage glass packaging industry. Adopting Integration and standardization strategies will reduce the effect of consolidation and could bring back the bargaining power to small and medium sized breweries and wineries in US. The evaluating strategies are: SKU standardization Supplier standardization through distributor Hole in Wall adoption Captive Manufacturing Risk-Opportunity analysis will demonstrate the best possible method to adopt in the current situation for beverage manufacturers.