Shipping delays impacting wineries’ and breweries’ ability to make and package their products

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Canadians may soon be paying more for some of their favorite alcoholic beverages.

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Shipping delays and backlogs at ports around the world are creating challenges for craft breweries and wineries, which are struggling to get everything from packaging materials, such as cardboard and bottles, to malts and other materials, for their products. Huh.

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Supply chain issues, initially hinted at and then exacerbated by the COVID-19 pandemic, have resulted in increased costs of the goods and services that go into making their products, and some businesses say they have to deliver to customers. have to pass.

“Supply chains around the world are a mess, and beer and winery supply chains are not exempt from this,” said Fraser Johnson, a supply chain specialist at the Richard Ivy Business School at Western University in London, Ont.

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For example, Johnson said, the so-called spot price that freight companies charge to move loads from China to the western US has risen from as high as $2,000 US to $20,000 before the pandemic. According to Fretos data, it is currently hovering around $15,000.

Johnson is anticipating that, over time, As a result the prices of beer, wine and spirits will rise and there are suspicions that consumers may see shortages of some products.

I guess you can expect that some of your favorite products are not easily available all the time.– Fraser Johnson

“That doesn’t mean that … we’re going to run out of beer and wine. But I think you can expect that some of your favorite products may not be readily available all the time,” Johnson said .

unreliable delivery

Matthew Atkins is the owner and head brewer at Endeavor Brewery just outside Edmonton.

The brewery uses certain grains that may come from Britain, Belgium or Germany, but Atkins said those deliveries are not reliable.

“We had to find a different supplier of a similar style and replace that,” he said.

Atkins also struggled to find cans to package its craft beer because there was so much demand, and when they finally found a supplier, prices had gone from 18 cents per can to over 23 cents.

This has a significant impact for us in terms of the cost of our production.-Matthew Atkins

“This is a significant impact for us in terms of the cost of our production,” he said.

Head Brewer said the business has been able to absorb the increase so far, but it will need to raise prices in the coming weeks.

At the taproom, Atkins said, prices are likely to rise by 50 cents to a dollar, while a four-pack of beer can be an additional 25 to 50 cents.

“We definitely need to make sure we stay competitive, that we can pay our bills, but the profit we get from paying our bills is getting smaller and smaller,” he said.

plan ahead

On the other side of the Rocky Mountains, Quail Gate Winery in Kelowna, BC, said it is seeing challenges with the timing of its orders for glass bottles it receives from overseas.

“We are seeing delays [of] for six to eight weeks. And generally, it’s related to shipping time,” said owner Tony Stewart.

With that in mind, Stewart said, the winery is planning ahead.

“Basically, in anticipation that there may be delays, we have attempted to fast-track our orders for 2022 to ensure that the glass we need is in reserve and shipped as soon as they become available. So that when we need a bottle it’s on site,” he said.

Stewart predicts that prices for the winery’s products will increase over the next two years. So that the business can offset the additional costs brought by supply chain issues.

need to think differently

These issues should prompt businesses to think differently and innovate, said Gal Reese, an associate dean of research at the Richard Ivey Business School.

“Maybe we need to make sure we actually have enough inventory,” Raz said.

“We have a problem with packaging. Well, what are the alternatives? … I have raw materials. What can I produce from those raw materials?”

Raz said it would be important to continue to think outside the box, as disruption is unlikely to go away.

“I don’t see that we’re necessarily going back to normal,” he said.

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