The already large global bottled beverage market is expected to continue growing over the next decade. Just the bottled water market alone was valued at US$268.2 billion in 2022 with an estimated growth to US$551.2 billion by 2033.
Categories outside of water are also growing, with new products like healthy alternatives to soda, canned cocktails, and a boom in new energy drink brands. Each beverage category has its own requirements when it comes to the logistics supply chain that gets the drinks from the place of manufacturing through to consumers’ hands (and stomachs.)
When it comes to last-mile delivery, the final hurdle is not only timeliness but also reducing the risk of spoilage and breakage right before it reaches its destination.
Optimized routes minimize transportation time, enhance efficiency, and ensure optimal road conditions, not only delivering on time but also delivering a positive customer experience.
Meanwhile, carbonated cans face the risk of exploding, while glass bottles are prone to breakage. Choosing the right truck, and proper placement and temperature control during transit are pivotal factors in mitigating these risks.
Barriers to optimized last-mile delivery in the bottled beverage industry
Compared to other product categories, the variations between bottled beverages can be huge. Depending on the shape, volume, and container material of the beverage, the requirements for delivery spans:
- Refrigeration
- Maximum weight limits for stacking
- Risk of explosion
- Light sensitivity
- Time sensitivity
With these factors in mind, getting the beverages to their final destinations, whether they be restaurants, supermarket shelves, convenience stores, vending machines, or even direct to consumer, needs to be an optimized process.
Here are the challenges in this area, and the technologies being used to solve them.
Challenge 1: Temperature Sensitivity
Using the example of wine or milk, beverages transported without temperature control can be spoiled upon arrival. Even when these two beverages are stored at the same temperature, they may have additional needs that prevent them from being put into the same truck.
Trucks with separate temperature zones and divider bulkheads are available, and make transporting multiple beverages with different temperature requirements (or one refrigerated product and one not) in one route possible. This will potentially maximize the efficiency of the asset through better space utilization, however it has trade offs on fuel or energy efficiency.
Refrigerated trucks need to maintain temperatures, even when they’re stopped or have frequent opening and closing, which can drain batteries. Optimizing your delivery routes to reduce stops is one way to reduce the impact of this power drain. Clustering your last-mile delivery stops to optimize for reduced parking and opening and closing can help.
Moreover, efficient fleet and vehicle planning is vital in cold chain delivery, requiring careful consideration for different goods needing cold storage. Decisions must be made regarding whether each type of beverage is stored in separate vehicles, ensuring that each product's unique temperature requirements are met. For instance, a company delivering both dairy products and bottled water might face the challenge of ensuring that the refrigeration is optimized for the milk, and not unnecessarily using energy to refrigerate the bottled water which doesn't need it.
Challenge 2: Transportation Risks – Fragility
Aside from temperature needs, the containers of beverages also come with their own requirements. Soft plastic bottles can split open if dropped, glass can shatter, and carbonated drinks can explode (or overflow when a customer opens it.)
Due to this, clients might have requests like weight restrictions that prevent stacking on top of wine bottles, reducing the efficiency and optimization of the fleet vehicle.
Understanding how you can optimize the deliveries taking all of these restrictions into account requires a bit of creativity, and a bit of data.
Challenge 3: Environmental Sustainability
Environmental sustainability has become an increasingly pressing concern across many industries, not only for bottling. An impactful development in this regard occurred in early 2024 in Australia, when the Australian government released draft legislation on mandatory climate-related financial reporting.
This requires a detailed analysis of operational, energy, and supply-chain-related emissions for companies over a certain size. Using sustainable packaging is just one facet of having an ESG strategy. Reducing emissions across the supply chain, including last-mile delivery, and the operational chain are two areas where lots of improvements can be made.
This could look like investing in more fuel-efficient transportation methods, adopting renewable energy sources, and optimizing routes to reduce emissions during end-to-end delivery.
For smaller organizations who are falling into the Scope 3 category for large clients, tracking your emissions data is soon going to become a priority. Tracking emissions can be beyond what a small team’s capabilities are, which is where technology adoption to do this for you comes in – measuring not only emissions, but progress against ESG goals, and providing insights.
Additionally, the shift towards sustainability is prompting the adoption of electric and low-emission vehicles for last-mile delivery. These vehicles produce fewer emissions, contributing to cleaner energy and reduced environmental impact, but their battery capacity limits their usage. For example, freight logistics and refrigeration using EVs are challenges that haven’t yet been solved.
Challenge 4: Driver Experience
On top of driving being a physically demanding job in itself, beverages are often heavy and bulky, posing even more physicality for drivers in loading and unloading. Route planners and drivers need to be considerate of avoiding unnecessary stops and starts that place more strain on the driver.
Challenge 5: Time Sensitivity
For some certain bottled products, like dairy or fruit juice products, there are short time windows before the product expires. If the shipping process takes longer than the expected time, the quality of the product will be affected and even lead to food safety issues.
This could become more complex where warehouses contain multiple products with different expiry dates. Knowing the schedule of all of these products and which batch to deliver by what date increases the complexity.
Chapter 2: Why does the bottling supply chain need better last mile technology?
The challenges described above create complexity in the bottling industry, but they aren’t impossible to overcome. Until now, the navigation of these challenges have been manually solved, taking countless hours and headaches to reach a solution.
With less resources, more scrutiny, and an increased emphasis on efficiency becoming common across all industries and regions, these manual processes are no longer considered acceptable. This is where new technologies are being developed and adopted by the industry, to speed up repetitive tasks, increase the productivity of owned assets, and give teams more bandwidth to tackle large, strategic challenges rather than spend their time planning the day-to-day.
Simply by adopting technology, organizations are compelled to clean, organize, and leverage their data sources, leading to improved visibility, transparency, and operational insights. Once you have this, you’re able to leverage historical data and insights to run predictive simulations for even more efficiencies.
Whether you’re optimizing your routes daily based on demand, or you have stable routes you review on a set basis, there’s always room for improvement.
Use technology to set rules, create zones, and customize routes to your needs
Every business (and driver) has unique quirks that require customization. For example, knowing that a certain road looks good on paper, but for some reason in real life is never a good idea to include on a route.
Last mile delivery platforms include the ability to set zones and contain routes to specific areas, excluding streets or areas you don’t want to cross into. You can base your zones on geographic landmarks, total area, volume, or another metric that’s specific to you.
Real-time data improves day-to-day operations
According to a 2023 industry report, BCI Supply Chain Resilience Report, in the previous year, the main causes of supply chain disruptions included transport network (44.4%), weather issues (42.9%), loss of skills (46.8%) and human illness (46%). All of these can be turned into data sources that a system takes into account when determining a route, especially for a daily route that changes dynamically.
Real-time information on the status and location of goods, traffic, and available resources like staff and vehicles all work together to improve processes and efficiency, giving you more room for business growth.
Rather than relying on staff with the learned knowledge of which vehicle is appropriate for which products, set parameters within your route planning software to assign product types to vehicles automatically.
Parameters include weight limits, temperature, shelf life, and delivery windows. This pre-planning streamlines the route planning, vehicle assignment, and loading of the vehicle – ultimately getting the product moving, faster.
Better control and manage the delivery experience for organizations, customers, and drivers
The real-time flow of data available through technology gives a level of analysis that identifies:
- When a delivery has been delayed, with an updated time of arrival
- Pattern recognition of inefficiencies
- Simulation capabilities that identify the best possible solution to a problem
- Reduced occurrence of spills, breakage, and damaged deliveries
- Reduced physical strain on drivers
- Minimized fuel and energy consumption
Chapter 3: Key trends for the future of last mile delivery
Rapid Adoption of AI and machine learning
When it comes to the specific application of AI in terms of delivering bottled beverages, where it really shines is in simulation. Which warehouse, which depot, and which route to put a product on for optimized speed, fuel efficiency, or maximum efficiency of the vehicle, are all things that can be simulated.
Inputting your parameters and letting the AI run is much simpler than working out the list of possible scenarios and which of them are the best options yourself.
Simulate business growth, including which vehicles to buy, which routes to add, or how to deliver more with the same fleet as you have now. This removes the risk of overspending on a new vehicle you don’t actually need yet, or changing a route for the worse. In low margin businesses, both of these things can be business-ending events.
Demand for faster moving and replenishment
If there’s one thing that differentiates the food and beverage industry from others is the average delivery time. In other industries, having faster delivery is counted as a premium to improve customer satisfaction and business profit. When related to food and beverage, it’s a must. Tight shipping schedules are one of the few norms of the beverage industry.
B2B customers need deliveries made within a certain time to meet their own cut-off times for next-day trading. The reasons for such short delivery deadlines are many. Some of the most common across the globe include:
- Perishable nature of food products
- Shorter shelf life of processed products
- Demand for faster shipping from end consumers
According to research on the beverage preferences and habits of young generation consumers, there is a significant rise in market segmentation, particularly within the rapidly expanding category of non-alcoholic drinks. Young people nowadays prefer more types, flavors, and brands of beverage than previous generations. This demographic is increasingly drawn to a diverse array of flavors and healthier choices in ready-to-drink products.
Furthermore, the increased availability of ready-to-drink beverages through various distribution channels—including supermarkets, convenience stores, online retailers, and vending machines—has played a vital role in driving market growth.
Sustainability
Not limited to just the bottled beverage industry, all large organizations are adopting ESG practices to cope with changing market conditions. In Australia, mandatory climate reporting is being introduced, and with the scope of the logistics and supply chain industry, many delivery based companies and teams will need to start collecting and reporting ESG data.
Once data is used to set a benchmark, organizations will be expected to reduce their emissions. This encompasses a shift towards electric delivery vehicles, the adoption of eco-friendly logistics practices, and the optimization of routes to minimize environmental impact. According to one EY survey, 80% of companies are emphasizing ESG and sustainability initiatives, however, organizations struggle to embark on a sustainability journey due to lack of visibility and ROI-backed portfolio of initiatives.
Organizations and logistics teams will need to upskill in data capabilities and adopt tools to measure their emissions for the reporting.
Warehouse automation and storage technologies
The integration of warehouse automation technology represents a significant advancement in warehouse management, particularly for handling bulky and heavy bottled products.
Warehouse automation, which includes the use of automated guided vehicles, robotic arms, drones, and more enhances various tasks like picking, packing, sorting, and moving goods within the facility by minimizing manual work, decreasing human errors, and optimizing operational costs.
The time-sensitive nature of certain bottled products highlights the significance of automated monitoring and tracking systems which enhance the accuracy and efficiency of inventory management by automatically monitoring crucial information like product type, serial number, expiry date, and storage conditions.
That’s a wrap
The overlap between bottling and last mile delivery is a unique one that faces its own challenges. Logistics teams should approach bottled products as distinct, rather than lumping them into a one size fits all delivery strategy.
Technology, like warehouse management, AI, and route planning software, will bring efficiencies and optimizations to the industry. Additionally, markets are becoming more highly regulated when it comes to emissions contributions.
These factors combined mean that teams need to upskill for technology adoption.
About Adiona
Adiona is a last mile route optimization and fleet simulation tool. Whether it’s periodic route optimizations, or dynamic daily route planning, our optimization algorithms factor in your product, driver, and efficiency preferences to deliver the perfect route to you.
Fleet Simulator takes your data to the next level, running scenarios on everything from fleet purchasing decisions, modeling a transition to an EV fleet, or depot and warehouse planning.
