New Costs, New Packaging: Part 3 – Location, Location, Location

In Part 3 of our five-part series on the impacts of rising costs on beverage companies, we consider how the location of company’s operations – centralized or decentralized – can influence costs and packaging decisions.

• Beverage companies have traditionally faced a tradeoff between centralized operations – with high logistics and low production costs – or production close to the consumer.

• As the costs of logistics skyrocket due to container imbalances and fuel prices, decentralized production is gaining popularity.

• Separating manufacturing and bottling could create a third possible business model.

• The bottling location will also impact decisions about packaging formats. Companies would hardly consider reusable packaging if the return journey is long. But for beverages bottled near the consumer, reusable packaging becomes an option if the price of bottles increases.

• The reuse of bottles requires infrastructure, a deposit amount that is acceptable to both the consumer and distributor, and a decision about a standardized or unique bottle format.