“In Adversity, There’s Opportunity”: Disruption is the New Normal

This past week, I had the privilege of attending the NBWA Board of Directors meeting in Austin, Texas. As I prepare to head to Nashville for SAMCOM next week, it’s increasingly clear that the beverage industry is undergoing a period of profound transformation. Reflecting on my blog post after the NBWA convention in San Diego last fall, the message has only grown louder: we are living in a lower-growth environment, and the time for operational excellence has become an absolute necessity. At NBWA, nearly every presentation highlighted the need for everyone in the three-tier system to pursue operational efficiency and prioritize profitability alongside growth. This message has only been amplified in the months post NBWA.

The Changing Industry Landscape

Several important industry insights were released in November— analyses from Verno and DMG Financial were widely read throughout the industry and amplified these themes. They reinforced the reality that change is here, and as Verno stated, “for the next five years, one thing is certain: change is coming.” I’ve had the great privilege of learning from industry leaders like Ray Guerin, one of our Encompass board members, and recently he shared a perspective that resonates deeply: “We are living through the biggest period of disruption in the beverage industry that I have seen in my 30+ years in the business.” When someone with Ray’s experience says this, you know it’s time to take notice.

As someone still relatively new to the beverage industry but experienced in market transformations and technology’s role in disruption, I see this moment as pivotal. The disruptions we face are real, and technology is, without question, central to navigating them. At NBWA, we heard repeatedly about the need for technology investments to address portfolio diversification, SKU complexity, and the increasingly complex operational demands of inventory and routing. Across the three-tier system, modern technology is no longer a luxury; it’s a requirement to meet these challenges.

The Workforce is Changing

Another critical shift highlighted by Verno—and echoed by many of our customers—is the transformation of the workforce. While much has been said about the post-COVID world of work, this change feels different. As Verno put it, “Employees are changing how they want to work, the type of work they will do, and the amount of work they want.” This evolution presents challenges but also opportunities. Investing in technology can meet employees where they are, offering tools that align with their changing expectations and allows them to grow their own skills. In an environment marked by disruption, a modernized workforce empowered by technology becomes a powerful asset to any business.

Optimizing for Growth and Efficiency - Turning Both Dials

Historically, the beverage industry has benefited from steady growth, it has been a great gift. As I shared during the NBWA meeting, growth cures a lot of ills, in any business. But when growth slows, as it has now, the need for balance emerges. We can no longer rely solely on growth to sustain success. Instead, we must turn the second dial: efficiency that drives profitability. This shift requires disciplined execution, strategic investments, and a relentless focus. Gross profit is becoming the primary metric for wholesalers, with less emphasis purely on revenue or volume. This evolution means seeking profitable volume, managing costs effectively, and investing in technologies that drive smarter, more efficient operations. At Encompass, our customers have been leading the way in this “dual-dial” approach for years. By modernizing their operational backbones, they’re finding ways to be both agile and efficient—chasing growth where it exists while maximizing profitability across their businesses.

Modernizing the Middle Tier

Last night, as a proud Notre Dame graduate, I celebrated Notre Dame’s victory over Penn State in the national semifinals. It reminded me of one of Lou Holtz’s greatest lessons: “In adversity, there’s opportunity.” This sentiment transcends the football field and captures where we stand today in the beverage industry. Our supply chain, built on the unique and powerful three-tier system, has long been a cornerstone of the industry. But now, it’s time to modernize. Modernization isn’t about abandoning tradition—it’s about enhancing it to meet the challenges of today and tomorrow. When growth came easily, the pressure to innovate and improve efficiency was less critical. Now, it’s imperative. Technology is the lever that enables us to turn both dials—growth and profitability. A modern middle tier strengthens the entire three-tier system, benefiting wholesalers, suppliers, retailers, and consumers alike. Yes, as the technology leader, modernization is good for Encompass, but it is also good for every one of our customers, and the industry as a whole.

Planning for the Future

As Verno wisely noted, “Wholesalers need to start planning now for how they will operate in the future. Many of the changes will take more than a few years to implement”. While transitioning to a modern platform like Encompass may feel daunting, the reality is that the business disruption is less significant than you might think. Hundreds of wholesalers have made the shift, and the near-term and long-term benefits of a cloud-native SaaS platform far outweigh the initial effort. Investing in modernization is about more than meeting today’s challenges—it’s about building a foundation for the next generation. It’s about creating stronger, more resilient businesses that thrive in a new normal where growth and profitability are equally prioritized. As one of our thought-leading customers recently shared with me, “I am not afraid of these market disruptions, we take them head on, and Encompass gives us the platform to control our own destiny regardless of the market environment.”

See You at SAMCOM

As I prepare to head to Nashville, I’m energized by the conversations happening across the market. Wholesalers are embracing change, investing in technology, and planning for a future where they can turn both dials with confidence. Again, in Lou’s words, “In adversity, there’s opportunity.” Let’s not shy away from the challenges ahead. Instead, let’s lean into them, embrace them, and work together to build a stronger, more resilient beverage industry.

See you in Nashville!