You don’t need a crystal ball to see that there are challenges ahead for the drinks industry, but there are ways to weather the storm. Former MD of Proof Drinks and drinks alcohol consultant Jeremy Hill talks about the best way to ride out this economic cycle and why it’s not all a bad thing.
Whether you are an optimist or a pessimist about the future of the drinks industry in the UK, we can all agree on one thing: we are in the midst of a significant down-cycle.
It is the elephant in the room in every supplier meeting, distributor review and buyer negotiation. Volumes are falling, drinking occasions are declining and consumer confidence remains fragile. The combination of rising costs and shrinking disposable income is forcing every part of the value chain (brand owners, wholesalers and the on-trade) to make harder decisions than at any point in recent memory.
But I am not a pessimist.
Economic cycles do not destroy industries, instead they reshape them. They expose inefficiencies that were previously hidden by growth and reward the operators who are willing to rethink how they work. In difficult markets, success rarely comes from doing the same thing slightly better. It comes from doing something different.
Having built and developed drinks businesses through previous downturns, I believe there are two priorities brand owners must focus on.
1. Protect and grow perceived value
The instinct in a downturn is always the same: drop price to maintain volume. It is an understandable instinct – but dangerous.
Discounting rarely solves a demand problem; it simply resets the ceiling of what consumers believe your brand is worth. Once value perception is eroded, it is extraordinarily difficult to rebuild.
Consumers are spending more selectively. They will still trade up when they feel a product justifies it. The brands that survive downturns are not the cheapest ones; they are the ones that give people a reason to care.
That means sharpening proposition, improving communication and ensuring every touchpoint reinforces quality. Consumers will trade up and buy premium if the proposition is right.
2. Fix the supply chain, not just the margin
The brands that emerge strongest from this cycle will not be the ones that negotiated the hardest, they will be the ones that operated the smartest.
Our industry still runs through a complex and often antiquated route to market. Layers of manual ordering, fragmented data, inconsistent forecasting and inefficient logistics add cost at every stage. Those costs eventually surface either as higher prices to the consumer or lower margins for the operator; neither sustainable in a contracting market.
This is where technology becomes critical. Other industries have already experienced their “eureka” moment when it comes to technology fixing inefficiencies.
Uber solved availability and pricing transparency in taxis, Spotify changed consumption from ownership to access, Toast and SevenRooms transformed how restaurants manage demand and customer relationships. They did not succeed because demand was growing, they succeeded because they removed friction.
The drinks industry still carries friction everywhere: ordering, ranging, forecasting, cash flow and communication between supplier and venue. We have incredible products moving through inefficient systems.
Imagine a supply chain where operators order based on real demand, where distributors optimise logistics dynamically and both sides understand margin in real time. This is an overdue change for the drinks industry.
A collective opportunity
My challenge to anyone who cares about the long-term health of this industry is simple: build and adopt solutions that serve both brand owners and the trade.
Technology should not be about extracting value from the chain; it should be about creating it. Reduce waste, improve availability and free up creativity for retailers across on and off-trade.
Because this is a cycle.
Markets contract and expand. Consumer confidence returns. Occasions recover. But when growth comes back, it does not reward the businesses that waited: it rewards those that were prepared.
The winners will be the ones who protected their brand, improved their efficiency and positioned themselves to move quickly when demand returns.
