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Ones to watch: industry stories to keep track of
The industry is ever evolving and with a variety of socio-economic factors shaking up the global market, it can be hard to keep up with everything of note. We take a quick look at some of the stories worth keeping an eye on.
Image Courtesy of Stephanie Frey/Shutterstock.com
It seems that the news is throwing industries into turmoil every other day, whether it be Trump and trade wars or Brexit and the vagaries of the potential agreement. Amidst the chaos, it can be easy for stories to slip by unnoticed or smaller changes to be overlooked. Yet, in ways both big and small, the beverage industry continues to evolve and adapt from day to day.
To help navigate these changes, we’ve summed up some of the stories you’ve likely heard about and others that you may have missed. Some of them are already impacting businesses in the sector, while others may not have an impact for weeks or even months - but all are worth keeping track of.
REGULATION: INDUSTRY MEETS POLICY
US Government shutdown endangers food and drink safety
As the US Government shutdown heads towards becoming the longest in history, thousands of federal workers have been furloughed and multiple agencies are either running with only “essential” staff or essentially not running at all. Unfortunately, amongst those workers deemed “non-essential” are the Food & Drug Administration’s (FDA) inspectors.
As reported by the Washington Post, all routine inspections of domestic processing facilities have been suspended. This means that products such as low-acid canned goods, soft cheeses, unpasteurised juices, prepared salads, infant formula, and the facilities they are produced in are going without inspection. Although foreign imports, outbreaks, and routine United States Department of Agriculture inspections are continuing, FDA commissioner Scott Gottlieb revealed that the situation would see more than 50 “high-risk” inspections, out of the agency’s weekly average of 160 routine inspections, unattended to.
The Alcohol and Tobacco Tax and Trade Bureau has also been affected by the shutdown, leaving alcohol producers unable to launch new products or new locations. While safety does not present the same threat as in the food sector, and those non-alcoholic drinks covered by the FDA, the administrative stalling is likely to have a distinctly negative impact on the industry’s business.
US supreme court case could change wine retail
Despite the increasing connectivity provided by the internet and e-commerce, there are still regulatory hurdles that prevent the promise of buying anything, anytime, anywhere.
In the US, 36 states do not allow wine retailers to ship their products across state lines. However, a case due to be presented to the US Supreme Court, Tennessee Wine and Spirits Retailers Association v. Blair, on 16 January, may be set to change that.
By the time you read this, oral arguments will have been presented to the Supreme Court (the decision date is set as 21 February). The case itself is not directly related to the interstate sale of wine but a provision in Tennessee law that requires retail owners to be residents of the state (a group of local retailers are attempting to block national chain Total Wine & More opening an outlet in the state).
However, it is believed that the somewhat tangled web of issues that are usually present in US Supreme Court cases will lead to the court also having to untangle the issue of interstate wine sales. If the court sides against the Tennessee Association, wine retail in the US may be set for rapid change.
Industry giants have shaped decades of Chinese health policy
New research from The British Medical Journal and the Journal of Public Health Policy has revealed that Chinese health officials, and subsequent science and public policy, have been cultivated and shaped for years by a group called the International Life Sciences Institute (ILSI). The group promotes itself as a bridge between scientists, government officials and multinational food companies, but just so happens to be funded by some of the biggest names in snack food (including Pepsi, Coca-Cola, and McDonalds).
ILSI operates 17 different branches, but it seems to have found its greatest success in China, with its operations run from the government’s own Centre for Disease Control and Prevention in Beijing. Running obesity conferences in the country since the late 1990s and having helped create national health campaigns, the group seems to have embedded itself deeply into Chinese anti-obesity and health policy.
Notably missing from all this seemingly public-spirited work? Mention of how important it is to cut back on the kind of calorie-laden products ILSI’s funders manufacture.
BREXIT: NO-DEAL DREAD
Drinks industry fears looming spectre of no-deal
Brexit has been one of the main talking points across industries for months, with increasing uncertainty as to what kind of deal will be arranged or whether there will be a deal at all. Yet with the recent turmoil over the preliminary agreement proposed by Prime Minister Theresa May and the EU, the prospect of a no-deal Brexit seems more concrete. Understandably, despite the arguments of Brexiteers, such as JD Wetherspoons founder Tim Martin, many in the drinks industry are worried about the effect this could have on their business.
Wine sector take a strong stance on Brexit prospects
The UK may be in for a serious change in approach from the wine industry in the wake of Brexit. The Wine and Spirit Trade Association has warned the UK Parliament that the lack of clarity over Brexit, and the threat of a no-deal exit, could cause wine businesses to move their bottling plants out of the UK. Furthermore, the association has made a call for a suspension of tariffs on wines imported into the UK in the event of a no-deal Brexit, having estimated that such tariffs would cost UK importers over £100m a year.
Preparations have already been put in place as a result of concern over the uncertainty of Brexit proceedings, with wine businesses stockpiling product to allay fears. It was reported in November that Majestic planned to stockpile £5m-£8m of additional wine in case of Brexit shortages, and Direct Wines has increased the amount of bottles its bringing in by 40%. Not only is the behaviour a worrying indicator of the businesses’ view on proceedings, but they may be headed for further struggle, as such stockpiling (both within the drinks sector and in other industries) has caused warehousing costs to accelerate.