Bacardi stockpiling alcohol ahead of Brexit

February 20th, 2019 | Posted in: News,Spirits

Bacardi has revealed it is stockpiling alcohol ahead of Brexit. Amanda Almond, Bacardi’s managing director for the UK and Ireland, said the group is taking “responsible and sensible precautions” to ward off supply issues to and from Europe. However she dismissed the challenges of the UK’s impending EU divorce as “not even a blip on the horizon” in the firm’s 157-year history.

Speaking to Press Association, she said, “We will take appropriate action to make sure we can secure supply, no matter what the conditions are.”She declined to give details of its stockpiling, but said the group had looked at the possible impact on its supply chain and risks of Brexit.

She also said it would keep its British distilleries regardless of whether the UK agrees a deal with the European Union. “On a scale of what the family has weathered over the last 157 years, Brexit isn’t even a blip on the horizon,” she said. It makes its namesake rum Bacardi in Puerto Rico, but many of its other drinks are made across Europe and the UK. Nearly 800 people are employed across its UK offices and manufacturing sites.

It has regional headquarters in Winchester, the Bombay Sapphire distillery in Laverstoke, Hampshire and whisky distilleries such as Royal Brackla and Craigellachie. Ms Almond said, “It’s hard to make a London gin not in the UK and you can’t make Scotch malt whisky anywhere but Scotland.” Among its other products, Martini is made in Italy, while super premium Grey Goose Vodka is distilled in France.

Following the announcement, John Perry, managing director of supply chain and logistics consultancy SCALA, examining whether stockpiling is really the answer. commented,“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 19th 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.”

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