A case study on downstream supply chain of an Indian alcoholic beverage manufacturer
Authors: Narayanamurthy Gopalakrishnan , Gurumurthy Anand 
Published: June 2015

Purpose

– This study aims to understand the structure of downstream network from a supply chain (SC) perspective using a case of an Indian alcoholic beverage manufacturing company. In the SC literature, many researchers and practitioners have studied the design of upstream supplier network. Very few studies have documented the design of downstream network comprising distributors, warehouses, retailers, etc. and current study attempts to contribute to this limited literature. In addition, this study also tries to understand the influence of downstream SC, if any, on top management strategies. Finally, it assesses the SC quality using the standard set of factors and provides insights for its improvement.

Design/methodology/approach

– Single case study approach has been utilized to understand the configuration of downstream SC. A distillery in southern part of India which distributes a variety of liquor products across the market has been chosen for this study. Different data collection approaches have been adopted to understand the distribution channels prevailing in the market. In addition to the internal documents, semi-structured interviews were conducted with salesmen employed by the distillery for different group of outlets, top management of the distillery, outlet owners and counter sales person.

Findings

– Different distribution channels constituting the downstream SC network of the industry in the market studied have been identified to be retails and bars, institutions, clubs, modern trade, maximum retail price and Mysore Sales International Limited. Each of the distribution channels has clearly defined their boundaries for reaching different segment of consumers. Significant influence of the existing distribution channels on strategic decisions such as new product development and pricing were noticed. Interesting inferences were obtained on the relationships existing between the distilleries and different distribution channels. Insights were also gathered on the regulatory role played by the government between the manufacturers and distributors. Few marketing and promotional strategies adopted by companies to strengthen their downstream relationships with distribution channels and, in turn, with consumers have also been discussed. The quality of alcoholic beverage SC has been assessed and was found to perform on par with the set standards of quality in robustness factors and enabling factors. Training factor needs to be further improved by providing salesmen with exposure to best practices. Effort also needs to be taken to improve in the complicating factors, i.e. the testability and time.

Research limitations/implications

– This study is limited to the experience of a single alcoholic beverage manufacturer in the Karnataka state in India. SC of alcoholic beverage industry in India varies across states and depends on State Government regulations. Hence, the obtained results and inferences cannot be generalized across the industries and geographies. Future studies can be carried out in different locations across the country to understand the structure and dynamics of downstream SC in this industry. Scope also exists to study how the deficiencies identified in the SC can be improved and how alcoholic beverage firms entering India adapt to the prevailing SC structure. Comparative study of downstream SC of different industries can also be conducted.

Practical implications

– Academicians and practitioners can consider this paper as a source to understand the configuration of downstream SC of alcoholic beverage industry. More than that, this study provides a counter-intuitive inference for researchers and practitioners that choice of distribution channels have influence on the strategic decisions such as pricing and product development. Therefore, it becomes necessary to factor in the target distribution channel at the product design phase itself. This study may also help in performing a comparative study of downstream SC – especially the distribution network of different industries and identify best practices that can be adopted across the industries. Application of the standard set of factors from the food SC quality assessment literature have been demonstrated in this study to assess the downstream SC of the alcoholic beverage industry studied. In addition, this study provides several insights by detailing the structure of the SC for other alcoholic beverage manufacturers who are planning to enter Indian market.

Originality/value

– According to author’s knowledge, it is believed that this is the first study to report the configuration of downstream SC of the alcoholic beverage industry specifically from India apart from describing their influence on strategic decisions of the company.