Shortage of glass bottles puts pressure on wine and spirits companies
Glass bottles roll down a conveyor belt on the Jack Daniel’s Single Barrel Select Tennessee whiskey bottling line at the Jack Daniel’s Distillery in Lynchburg, Tennessee, the United States, Thursday, Jan. 30, 2014.
Luc Sharrett | Bloomberg | Getty Images
From whiskey distillers in the lowly hills of Kentucky to winemakers on the sunny slopes of California, demand for glass bottles has exceeded supply this year, a chain reaction triggered, in part, by the coronavirus pandemic.
The global supply chain – already long and tangled in the United States – continues to suffer the brunt of consumer demand, labor shortages and overseas manufacturing delays, resulting in increased transport costs and inflation.
David Ozgo, chief economist of the Distilled Spirits Council, said glass shortages were being felt across the industry, whether it was tequila, vodka or whiskey.
“Some of the big distillers, even though they have multi-year contracts for millions of bottles, in some cases find that they have to choose what bottle sizes they are going to get,” Ozgo said. This could eventually lead to even tighter supplies of smaller volume bottles down the line, as the focus will likely be on the more popular sizes, the 750 milliliter and the 1.75 liter.
In the short term, some consumers may need to put more effort into finding their favorite drink.
“From a consumer’s perspective, if there’s a special 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’ll say this, there are over 16,000 spirits products marketed in any given year. So this could be an opportunity to try a new drink.”
Pivot to new suppliers
The Castle & Key Distillery in Frankfort, Ky., Is one of the many distillers that have pivoted glass suppliers in the face of supply chain issues.
“The factory we were working with in the UK experienced a coronavirus outbreak and had to shut down completely, which delayed our production for at least a few months,” said Jessica Peterson, director of distillery operations.
Peterson said when operations in the UK reopened, the distillery was forced to resolve supply chain issues and therefore had to temporarily switch to air freight due to delays in sea freight.
“The preferred method would usually be ocean freight,” said Peterson, adding that ocean freight costs had tripled during the pandemic. Since then, the distillery has moved to a supplier in Guadalajara, Mexico, which delivered orders by rail.
“Since the transition, we have been able to have a constant supply of glass,” said Peterson.
“I’ve heard from other people that the demand for shipping containers has grown so high that they’ve gone up to paying almost $ 6,000, or even over $ 20,000, for the container alone. ‘it’s fair, it’s crazy, ”she said.
Shipping containers are stacked in PortMiami after being unloaded from a ship on November 4, 2021 in Miami, Florida.
Joe Raedle | Getty Images
In order to avoid future supply chain nips, the distillery no longer orders six months in advance but at least two years ahead of schedule, Peterson said. Still, the disruptions increased the cost of production for the distillery, she said.
“Right now, we haven’t passed on a price increase to consumers. But it sure could come,” she said.
Made in the USA
New York-based supplier Waterloo Containers has raised prices for imported glass for its customers. Most of Waterloo’s inventory of glass wine and spirits bottles originate in the United States, with about a tenth from outside the country. Its domestically produced glass has seen smaller price increases, in large part due to rising transportation and energy costs, according to Bill Lutz, its president and owner.
Problems with Waterloo’s imports started about six months ago, Lutz said. However, with such a small portion of its glass imported, Waterloo saw its orders double this year as supply chain issues emerged and wineries and distilleries sought new suppliers.
Waterloo is also a storage provider rather than a “just in time” model, so it always has additional inventory.
“We’ve actually shipped more bottles to the West Coast here from our company this year than in the past 20 years,” said Lutz.
Most of the glass bottles used in the United States come from outside the country. Years ago, glass manufacturers moved their production to countries where glass could be made inexpensively, primarily in Asia.
Mauricio Perez, North American regional director of Panamanian glass supplier BPS Glass, estimated that 60 to 70 percent of glass bottles used in the United States came from China, at least before the Trump administration’s trade war. Tariffs on glass imports from China have convinced some manufacturers to import glass from factories in Europe or Latin America to meet demand.
Then the pandemic struck, with waves of new cases followed by more lockdowns, causing supply chain problems around the world.
For winemakers outside of the United States, the problem is more serious. Latin American wine and spirits producers face more severe shortages as some companies switched during the trade war to use glass made in countries like Chile rather than China, according to Perez.
This is a situation that is not easily resolved. It may take a year or two to build glass furnaces or establish new production lines.
“The glass supply cannot come back to the United States because there just isn’t enough glass capacity left at the manufacturers,” Lutz said.