Shortage of glass bottles puts pressure on wine and spirits companies

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On Thursday, January 30, 2014, at the Jack Daniels Distillery in Lynchburg, Tennessee, the glass bottles move down the conveyor belt along the bottling line of Jack Daniels single-cask selection of Tennessee whisky.

Luke Charrett | Bloomberg | Getty Images

From whisky distilleries on the humble hills of Kentucky to distilleries on the sunny hillsides of California, demand for glass bottles exceeded supply this year, partly because the coronavirus pandemic triggered a chain reaction.

The world’s supply chain-already long and tangled in the United States-continues to bear the brunt of the surge in consumer demand, labor shortages and overseas manufacturing delays, which lead to rising transportation costs and inflation.

David Ozgo, chief economist of the Distilled Spirits Council, said that the entire industry is experiencing a shortage of glass, whether it’s tequila, vodka or whiskey.

“Some large brewers, even if they signed multi-year contracts for millions of bottles, they found that in some cases, they had to pick and choose the bottle size they were going to get,” Ozgo said. This may eventually lead to tighter supply of smaller bottles, as the focus may be on the more popular sizes, 750 ml and 1.75 liters.

In the short term, some consumers may need to work harder to find their favorite wine.

Ozgo said: “From a consumer’s point of view, if you want to buy a special bottle during the holiday season, you may need to go back to the store a few times to find it.” More than 16,000 spirits-based products are on the market. So this may be an opportunity to try new beverages.”

Switch to a new supplier

The Castle & Key brewery in Frankfurt, Kentucky is one of many breweries that have turned to glass suppliers when faced with supply chain difficulties.

“The factory we worked with in the UK had the coronavirus outbreak and had to shut down completely, which made our production at least a few months later than planned,” said Jessica Peterson, director of operations at the brewery.

Peterson said that when the British business reopened, the brewery was forced to resolve supply chain issues, and therefore had to temporarily transition to air freight due to delays in sea freight.

“The preferred method is usually by sea,” Peterson said, adding that shipping costs have tripled during the pandemic. Since then, the winery has moved to a supplier in Guadalajara, Mexico, which delivers orders by rail.

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

“I heard from other people that the demand for containers is so high that they have paid nearly US$6,000 for containers, or even more than US$20,000. This is crazy,” she said.

After being unloaded from the ship in Miami, Florida on November 4, 2021, the containers are stacked in PortMiami.

Joe Riddle | Getty Images

Peterson said that in order to avoid a tight supply chain in the future, the winery will no longer order six months in advance, but at least two years in advance. She said that despite this, the interruption increased the production cost of the winery.

“At present, we have not passed on the price increase to consumers. But it will definitely come,” she said.

made in America

Waterloo Containers, a New York-based supplier, has been increasing the price of imported glass for its customers. Most of Waterloo’s stock of glass wine and spirits bottles comes from the United States, and about one-tenth comes from abroad. According to its president and owner Bill Lutz (Bill Lutz), the price increase of its domestic glass has been small, mainly due to rising freight and energy costs.

Lutz said that Waterloo’s import problems began to appear about six months ago. However, due to a small portion of imported glass, Waterloo’s orders have doubled this year, and because of supply chain issues, wineries and wineries are looking for new suppliers.

Waterloo is also an inventory supplier, rather than following a “just-in-time” model, so there is always additional inventory on hand.

“In fact, we shipped more bottles from here to the west coast this year than in the past 20 years,” Lutz said.

Most of the glass bottles used in the United States come from abroad. Years ago, glass manufacturers moved production to countries where glass manufacturing costs were lower—mainly Asia.

Mauricio Perez, the North American regional director of Panamanian glass supplier BPS Glass, estimates that at least before the Trump administration’s trade war, 60% to 70% of the glass bottles used in the United States came from China. Tariffs on glass imports from China persuade some manufacturers to import glass from factories in Europe or Latin America to meet demand.

Then the pandemic hit, wave after wave of new cases, and then more lockdowns, causing supply chain problems around the world.

For brewers outside the United States, the problem is even more serious. Perez said that wine and spirits manufacturers in Latin America are facing a more serious shortage because some companies switched to using glass produced in countries such as Chile instead of China during the trade war.

This is a situation that is not easy to solve. It may take a year or two to build a glass melting furnace or establish a new production line.

“Glass supply cannot return to the United States because the manufacturer’s glass production capacity is no longer sufficient,” Lutz said.

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