Market News

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Overview of the Beverage Industry – What are the Major Composites of the Sector?

The beverage industry consists of two major categories and eight sub-groups. The non-alcoholic category is comprised of soft drink syrup manufacture; soft drink and water bottling and canning; fruit juices bottling, canning and boxing; the coffee industry and the tea industry. Alcoholic beverage categories include distilled spirits, wine and brewing.

Beverage Industry

Evolution of the industry

Although many of these beverages, including beer, wine, tea, and coffee have been around for thousands of years, the industry has developed only over the past few centuries. The beverage products industry, viewed as an aggregate group, is highly fragmented. This is evident by the number of manufacturers, methods of packaging, production processes and final products. The soft drink industry is the exception to the rule, as it is quite concentrated. Although the beverage industry is fragmented, ongoing consolidation since the 1970s is changing that.

Since the early 1900s beverage companies have evolved from regional firms that mainly produced goods for local markets, to today’s corporate giants that make products for international markets. This shift began when companies in this manufacturing sector adopted mass production techniques that let them expand. Also during this time period there were advances in product packaging and processes that greatly increased product shelf life. Air-tight containers for tea prevented absorption of moisture, which is the principle cause of loss of flavor. In addition, the advent of refrigeration equipment enabled lager beers to be brewed during the summer months.

Economic Importance

The FMGC industry employs several million people worldwide, and each type of beverage grosses billions of dollars in revenue each year. Indeed, in several small, developing countries, the production of coffee is the major support of the entire economy.

Characteristics of The Workforce

Though the ingredients and production of beverages vary, generally the characteristics of those employed in this industry have many commonalties. The process of harvesting raw materials, whether they be coffee beans, barley, hops or grapes, employs low-income, unskilled individuals or families. In addition to being their main source of income, the harvest determines a large part of their culture and lifestyle.

In contrast, the processing of the product involves automated and mechanized operations, usually employing a semi-skilled, blue-collar workforce. In the production facility and warehouse areas, some of the common jobs include packaging and filling machine operator, fork-lift operator, mechanic and manual laborer. The training for these positions is completed onsite with extensive on-the-job instruction. As technology and automation evolve, the workforce diminishes in number and technical training becomes more important. This semi-skilled manufacturing workforce is usually supported by a highly skilled technical group consisting of industrial engineers, manufacturing managers, cost accountants and quality assurance/food safety technicians.

The beverage industry for the most part distributes its products to wholesalers using common carriers. However, soft drink manufacturers usually employ drivers to deliver their products directly to individual retailers. These drivers-sales workers account for about one-seventh of the workers in the soft drink industry.

The more health-conscious market in Europe and North America in the 1990s has led to a flat market in the alcoholic beverage industry, with demand shifting to non-alcoholic beverages. Both alcoholic and non-alcoholic beverages, however, are expanding considerably in developing nations in Asia, South America and to some extent Africa. Because of this expansion, numerous local jobs are being created to meet production and distribution needs.

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