Glass bottle shortages puts pressure on wine and spirits companies ahead of key holiday season

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  • Glass bottles are in short supply, putting pressure on brewers and distillers ahead of the holiday season.
  • International freight delays, labor shortages and high costs have contributed to supply chain challenges for glass suppliers and their customers.
  • In the short term, consumers may struggle to find their favorite wines and spirits.

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From whiskey distillers in Kentucky’s humble hills to winemakers in California’s sunny slopes, demand for glass bottles has outpaced supply this year, a chain reaction triggered, in part, by the coronavirus pandemic.

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The world’s supply chain – already long and entangled in the United States – is bearing the brunt of rising consumer demand, labor shortages and overseas manufacturing delays, which have led to higher transportation costs and inflation.

David Ozgo, chief economist at the Distilled Spirits Council, said glass shortages are being felt across the region, be it tequila or vodka or whiskey.

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“Some of the larger distillers, even though they have multi-year contracts for millions of bottles, are finding in some instances that they have to choose which bottle size, according to the size of the bottle they are going to receive,” Ozgo said. This could eventually lead to an even tighter supply of smaller volume bottles down the line as the emphasis will likely go to the more popular sizes, 750ml and 1.75l.

In the short term, some consumers may have to put in more effort to find their favorite wine.

“From a consumer perspective, if there’s a particular bottle you want for the holiday season, you may have to go back to the store a few times before you find it,” Ozgo said. “But I will say this, there are over 16,000 spirits-based products marketed in any given year. So this could be an opportunity to try a new drink.”

Pivot for new suppliers

Castle & Key Distillery in Frankfort, Kentucky, is one of several distillers that have pivoted to glass suppliers to combat supply chain woes.

Jessica Peterson, the distillery’s director of operations, said: “The factory we were operating in the UK had an outbreak of coronavirus and had to shut down completely so that our production would be left behind for at least a few months. “

Peterson said that when operations resumed in the UK, the distillery was forced to address supply chain issues and therefore transitioning temporarily to air freight due to delays facing sea freight. fell.

“The preferred method would generally be sea freight,” Peterson said, adding that the cost of sea freight had tripled during the pandemic. Since then, the distillery has moved to a supplier in Guadalajara, Mexico, who placed orders via rail.

“Since the transition, we have been able to have a steady supply of glass,” Peterson said.

“I’ve heard from other people that the demand for shipping containers has become so high that they’ve only gone on to pay close to $6,000 for the container, upwards of $20,000. And it’s just, it’s just crazy,” she said. said.

To avoid future supply chain constraints, the distillery now orders at least two years in advance, not six months in advance, Peterson said. Still, the disruptions have driven up the distillery’s production costs, she said.

“Currently, we have not passed the price increase on to consumers. But it could certainly come,” she said.

Made in the United States

New York-based supplier Waterloo Containers is raising the prices of imported glass for its customers. Most of Waterloo’s inventory for glass wine and spirits bottles comes from the United States, with a tenth of that coming from outside the country. According to its president and owner Bill Lutz, the prices of its domestically produced glass have seen little growth, mainly due to higher freight and energy costs.

Lutz said the problem with Waterloo’s imports began about six months ago. However, with imports of such a small portion of its glass, Waterloo has seen its orders double this year as supply chain issues surfaced and wineries and distilleries hunt for new suppliers.

Waterloo is also a stocking supplier, rather than following a “just-in-time” model, so it always has spare inventory.

“We’ve actually shipped more bottles from our business to the West Coast this year than in the last 20 years,” Lutz said.

Most of the glass bottles used in America come from outside the country. Years ago, glass manufacturers moved production to countries where glass could be made more cheaply – mostly in Asia.

Mauricio Perez, the North American regional director for Panama glass supplier BPS Glass, estimated that 60% to 70% of the glass bottles used in the US came from China, at least before the Trump administration’s trade war. Tariffs on importing glass from China convinced some manufacturers to import glass from factories in Europe or Latin America instead of meeting demand.

Then the pandemic hit, with waves of new cases followed by more lockdowns, provoking supply chain problems around the world.

For winemakers outside the US, the problem is more dire. According to Perez, wine and spirits makers in Latin America are facing tough shortages as some companies during the trade war switched to using glass made in countries like Chile instead of China.

This is a situation that is not easily resolved. It may take a year or two to build glass furnaces or set up new production lines.

“Glass supplies cannot return to the United States because manufacturers no longer have sufficient glass capacity,” Lutz said.

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