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Protecting Your Business During Supply Chain Disruptions From Natural Disasters

Natural disasters have impact on a local, regional, and often national level. Some impacts may be international in scope. The alcohol industry is often susceptible to impacts on all of these levels with a major natural disaster such as the hurricanes we’ve seen so far this year.

We’ve seen what happens when disasters like Hurricane Harvey occur and how industry members like Anheiser Busch step in to help. But the other side of the coin is the impact that hurricanes, and other disasters, have on the industry as a whole.

The alcohol industry is very much dependent on supply chain movements. From production to retail, there are many links in that chain and breaking any one of them spells a loss of the chain and disruptions down the line from the breaking point. Alcohol has six major links in any given supply chain:

Raw Materials
Suppliers
Manufacturers/Producers
Wholesale/Distributors
Logistics
Retail Customers/Consumers

The raw materials can be affected by natural disasters. When storms hit, drought comes, or other things affect the growing of the feed stocks used to make alcohol, things get more expensive as supply becomes restricted. Suppliers can lose stock when disasters hit if grains or other stores are affected by natural disasters. Manufacturers and producers lose their link when supplies cannot be delivered or product cannot be made due to damages from storms. Wholesalers thus don’t receive their product or have product destroyed in natural disasters. Logistics break down at any point in the chain, preventing goods from moving from their raw state all the way through to consumers. Consumers being disrupted by storms often cut back on purchases or demand because priorities change.

All of these things can be links that break in the chain. Some or all of them are affected by natural disasters at any given time. These chains can link communities, regions, states, nations, and even many nations on a local or global scale.

To prevent losses during a natural disaster, those in the alcohol industry have several options, depending on their place in the chain. Producers of raw materials can mitigate with insurance, crop planning, and storage options. Suppliers can change storage and utilize insurance coverages.

Manufactures and producers can “lock down” during disasters to both keep employees safe and to safeguard product already in production as well as materials stored on-site for use – the latter by pausing supply when a natural disaster is known to be coming. Wholesale distributors can move product or utilize best practices in storage to keep that product from harm. Logistics suppliers can pause, reroute, or issue emergency call-backs for product en route when a disaster strikes. Finally, making sound financial decisions for the longer-term can mitigate the losses that come post-disaster when consumer demand may be lower for a time.

No matter your position in the alcohol industry’s chain, you can work to solidify your link in the chain against disaster and save both your business and the industry serious calamity.

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The Author

Marbet Lewis

Marbet Lewis

Marbet Lewis has focused her practice on the laws governing the alcohol industry and the manufacture, importation, and sale of alcohol beverage products since 2004. She represents clients in all aspects of alcohol and business licensing in Florida including alcohol licensee mergers and acquisitions, negotiation of asset purchase agreements and required alcohol use provisions, license transfers and licensing due diligence, trade practices, alcohol product advertising and review of marketing agreements, importation agreements, label approvals, and regulatory compliance guidance. Her experience also includes enforcement action defense and administrative litigation, zoning and land use due diligence and approval processes, and state and local government regulatory compliance. She works with domestic and foreign suppliers, wholesalers and a broad range of retailers, including nightclubs, bars, movie theater operators, hotels, restaurants, supermarkets, bars, nightclubs, and pharmacy chains.

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