13 minute read
caught in a bottleneck
CAUGHT IN THE BOTTLENECK
There are plenty of challenges facing the global wine trade so perhaps one more won’t matter. But a shortage of glass bottles creates a pretty fundamental problem, and it’s one that’s beginning to bite.
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All UK importers seem to be affected to some degree. Most of the problems are centred on Europe, but South American orders have also been disrupted. Soaring energy prices and supply-chain logjams have been blamed.
Whatever the root cause, the bottle shortage is creating unwelcome delays and additional costs for a worldwide industry that’s still trying to re-assemble itself after two chaotic years of Covid.
“Many producers are struggling to obtain glass – we have had three shipments of core lines held up for this reason,” says Doug Wregg of Les Caves de Pyrene.
Nicholas Moschi, director of buying at Liberty Wines, adds: “Clear glass and bottles with non-standard shapes, sizes and attributes [including traditional Provence bottles] have been hard to obtain. In the last few weeks even more standard bottles have been hard to find.
“Europe is most affected. Within Europe, we have seen that Italy has been severely affected. Orders have been delayed while waiting for the bottles to arrive.”
Flint Wines director Jason Haynes reports similar problems. “When we were in Burgundy three weeks ago, quite a few growers told us how they had placed their orders for bottles months ago, had received confirmation that their orders had been received – but had been told that there was no guarantee they would actually get them.”
Enotria&Coe is finding it’s a struggle to obtain glass “at every level of supply volume”, according to managing director Sam Thackeray. “Some producers have been forced to discontinue alternative bottle formats, such as half-bottles, or to withdraw them from certain markets,” he says.
“Supply is being disrupted, and it’s ongoing. Delays are inevitable in both manufacture and production.”
Marcato Direct is an Italian specialist. “Sourcing glass bottles has become a big problem which has meant us ordering our bottles months and months in advance so that we can secure the stock,” says
CAUGHT IN THE BOTTLENECK
director Rebecca Skeels. “Even when we have requested the stock in advance we have found that the stock is not there for us when we need it.
“Booking your bottling slot in advance, and then discovering you have no bottles, incurs costs and causes disruption with our supply.”
Condor Wines is a South American wine specialist and can confirm that the problems go beyond Europe. “There has been a shortage of clear glass,” says owner Lee Evans.
“It’s meant we’ve had to bottle some white wines in green glass temporarily and we’ve not been able to ship some rosado wines, which don’t work in green glass, and we decided to wait for supply to be available again.” A shortage of glass, and the price rises that this has sparked, are creating huge problems for wineries and their customers. But as Graham Holter reports, the issues aren’t just about bottles
Sharing the cost burden
It’s a basic law of economics that shortages create price increases. So how severe has it been with the cost of wine bottles?
Berkmann buyer Simon Zuckerman says: “We are certainly seeing issues with the availability of glass from South American suppliers, which I believe is largely due to local issues with furnaces in both Argentina and Chile.
“This is affecting production lead times, which have increased significantly and led to several situations where our suppliers have had to temporarily switch from their normal bottles to an alternative colour or shape.
“This hasn’t translated into price increases yet, as brands look to maintain continuity of pricing during the year. But if the situation continues into next year, then it is very likely that these costs will be factored into any price increases.”
Such increases are already apparent in Europe. According to an email seen by The Wine Merchant, sent by a German producer to its UK importer, the cost of a 75cl glass bottle has risen from 32 cents before the pandemic to 40 cents now, a 25% increase.
Simon Thackeray at Enotria&Coe says: “We are doing what we can to absorb the impact for our customers, as we feel that stable supply and consistent pricing is important for the trade to succeed in these uncertain times.
“However, in specific circumstances we will be compelled to push through price increases. For example, it is very likely that in response to the Consorzio Tutela Prosecco, we will have to put through an increase in Prosecco pricing.”
Glass isn’t the only problem
Although the rising cost of glass is arguably creating most of the chatter, importers are keen to point out that it’s just part of a wider pricing issue with dry goods generally.
Producers are facing – and passing on, where they can – a suite of additional costs. The German producer, quoted earlier, is being hit by even bigger price increases than it’s noticing with glass.
Its cardboard 12-bottle cartons are now 45% more expensive than they were two years ago. Corks are up 34%, and screwcaps 100%. Labels cost 41% more. That’s before you factor in some essentials such as fuel (up 52%), salaries (up 26%) and toll surcharges on deliveries (up 204%). It’s no wonder that exporters expect a bit of sympathy and support from their partners.
“Yes, costs are being passed to us,” says Doug Wregg at Les Caves, “I think mainly because the totality of increases across all the raw materials, combined with very small vintages, combined with wage inflation, combined with high fuel prices, Adam Clarke (left) with John Winchester has put huge upward pressure on prices.
“Normally, producers will wait until a
new vintage is released before passing on the costs, but in certain cases they do it mid-vintage.
“We have been trying to manage our prices as best as possible. It has become increasingly difficult because shipping, warehouse and delivery costs have gone up around 10%. With Covid, the war in Ukraine and climate crisis, we’re in for a rocky ride.”
Nicholas Moschi at Liberty Wines is equally upfront. “Prices had been rising steadily with increases passed to producers in December 2021 and January 2022,” he says. “The war in Ukraine has made things significantly worse with less availability and energy cost increases.
“Pricing for Europe has mostly been agreed so producers have been absorbing most of the costs. Some of these have been significant so we had to help producers. If difficulties remain, unfortunately more increases will be necessary.”
All in it together
Sadly for retailers, spiralling price inflation looks certain to be a fact of life for the foreseeable future.
“I think the important thing is for customers to understand that most wine merchants, I suspect, will do everything in their power to minimise price rises,” says Doug Wregg. “But there are additional costs that you have to pass on sooner rather than later, because the longer one postpones, the bigger the eventual jump.
“The other hidden cost out there, not related to glass, is the complexity of shipping and the financial calculations that need to be reset each time. We have had to employ more people in shipping than ever – so, higher costs there too – to communicate with transport companies, growers, check forms, arrange consolidations, and chase the bonded warehouse.
“Shipments take weeks longer to arrive than they used to. It is probably slower now than 300 years ago.”
Screwcap bottles are in short supply too
What’s the alternative? Boxes and kegs won’t solve the problem
Might the problems with glass persuade producers and importers to investigate other forms of packaging for their wines?
“We’re open to ideas other than glass,” says Doug Wregg at Les Caves. “We have a decent number of wines in KeyKeg, but the wine shortage in Europe has meant less and less wine available for this purpose, and the increasing length of shipping times means that there is less time to sell the stock when it eventually arrives in the UK.”
Wregg points out that, as things stand, even a 20-litre KeyKeg only represents a marginal saving on the same wine in a glass bottle.
Sam Thackeray at Enotria&Coe says that alternative packaging hasn’t really come to the fore since the glass crisis began.
“The knock-on impact of changing labelling, and the problems with dry goods and other elements that make up the product, mean that additional complexity just brings more delays,” he says.
“And prices of cardboard and aluminium – the key components of the most popular packaging alternatives, bag-in-box and cans – have also risen astronomically owing to energy surcharges.”
Many importers are even experiencing problems with screwcaps. “There is a worldwide issue with availability of screwcaps, which in turn means we are having to look to different bottles to try to bottle under cork,” says an Alliance Wine spokesman.
Lee Evans at Condor adds: “At times we’ve had to wait for availability of screwcap bottles. When the glass manufacturers have problems or have higher demand, they focus on core bottle products – and in South American that’s mainly cork closure.
“I think the most has been weeks rather than months, but it has caused some disruption and not been welcome when we have also had delays in shipping.”
GRAHAM HOLTER
Editorial Wine merchants beware: the drinks trade is far from united on duty reform
argument. Its members have taken a look at the Sunak blueprint and responded: bring it on.
The BBPA’s position is based on naked protectionism. Its members are spooked by rising wine sales and a decline in beer drinking, trends that accelerated during Covid restrictions. In 2020, it reports, beer accounted for 33% of alcohol consumption, down from 37% in 2019. Wine’s share rose from 31% to 33%. Who’s benefiting from higher wine consumption? Not the pubs.
Ihave a friend called Sam who is nowhere near as worried as I am about climate change. I don’t think he disputes that it’s a problem. He may even agree that it’s a huge problem. But his feeling is that eventually someone will deal with it and make it go away. Cheerfully, he jumps on long-haul flights, turns on the patio heater, and zips up and down the motorway to enjoy the comforts of his second home.
What would Sam be doing if he ran a wine business right now? No doubt he would be alarmed by the government’s duty review which, if implemented, would see 70% of all wines taxed at a higher rate than currently, in a fiendishly complicated sliding-scale system so time-consuming and costly that it’s likely to deter some producers from bothering with the UK at all.
But maybe, he would conclude, that’s for others to worry about, people with more clout and more time on their hands. A solution will doubtless come along, just as it did with VI-1 forms, and meanwhile we can all keep concentrating on buying and selling lovely wines.
We don’t yet know whether Liz Truss will be our next prime minister, or Rishi Sunak, the proud architect of the duty reform proposals. We do know that the government has paused a final decision on their implementation, at least until the autumn. Maybe the plans will be quietly shelved, especially if the Wine & Spirit Trade Association continues to make a convincing case, with the help of indies like Hal Wilson of Cambridge Wine Merchants, and Matt Hennings of Hennings in West Sussex, whose excellent recent social media video on the subject is worth watching and sharing.
But the WSTA is not the only drinks industry body lobbying the government. The British Beer & Pub Association has also been banging drums and, rather unhelpfully, it’s on the other side of the
Many who represent publicans have a slightly creepy tendency to talk about licensees as guardians of public morality. Their assertion is that people need supervision if they choose to drink alcohol – supervision that only the nation’s noble landlords can provide. Off-trade sales have always been demonised by sections of the beery end of the on-trade, and if their arguments were confined to white cider-fuelled mayhem it would be easier to sympathise. But the BBPA is also gunning for the wine trade.
Chief executive Emma McClarkin said – presumably with a straight face: “When people visit the pub they primarily drink beer, which on average is 4.2% abv, the lowest strength alcohol category, and so ideal for moderate consumption. It is great to see the Chancellor recognise this and promote lower strength alcohol drinks with his changes to the UK alcohol duty regime.”
So, inconveniently for all those involved in wine importing and retailing who can see that Sunak’s idea is a catastrophic error, increasing business costs, adding new levels of bureaucracy and reducing consumer choice, it’s not possible to claim that everybody in the UK drinks industry is opposed to the plan. Far from it.
We can sit back and wait for common sense to prevail, or for the WSTA to persuade Treasury grandees that duty reform, in its current incarnation, will badly damage a section of the economy that has been a success story for several decades. Maybe something will turn up. But maybe it won’t. It’s time to email our MPs, again.
NOT YOU AGAIN! customers we could do without 37. Sid Ferbert
Where d’you say you’re off to? Italy? Or was it Spain? Oh, France. Work thing is it? What, drinking wine? Don’t sound much like work to me! Sounds more like an ’olidee! Going round vineyards and getting stewed? All right for some! Tell you what, let me know next time one of them trips comes up, I’ll do it for ya. No money – pay me in wine! So, what they do then, just expect you to drink wine all day … is that it? What is it you say to ’em – oh, my goodness, this one has an exquisite bouquet … simply divine … I’ll buy three crates! Reckon I could do a job like that, no trouble at all, you just call me next time you need an ’elper! Yeah? Mind you, I’m not sure I’d particularly fancy some of that plonk if I see all them feet squashing the grapes … puts you right off, I would imagine … then again that’s what they say gives it the flavour … but the last thing you wanna see is a toenail or a grotty old plaster floating in yer glass … I won’t drink no French wine anyway, not with them playing silly buggers with all this EU red tape what’s causing all this aggravation at Dover … what the hell they playing at? Plus they won’t let you in without about six injections … no thank you …
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01323 728338 • sales@eastprint.co.uk • www.eastprint.co.uk Congratulations to the five Wine Merchant reader survey respondents whose names were drawn at random and who each win a Coravin, courtesy of ANAGRAM TIME our partner Hatch Mansfield. Can you unscramble these trendy grape varieties? If so, you win a I ♥ Bâtonage bum bag. Peter Fawcett, Field & Fawcett, York Anthony Borges, 1. Soya Skirt The Wine Centre, 2. Sarnie Great Horkesley, Essex3. I Am Ron Vox Zoran Ristanovic, City Wine Collection, 4. Alec’s Melon Sealer London5. Actual Olive Indulger
