SUPPLY CHAIN ISSUES HIT TEXAS WINERIES
Approximately 35% of wine bottles used in American wineries comes from China with some coming from Mexico and the rest made in the USA. The mega-wineries have quietly purchased much of the existing inventory of glassware and are purchasing “futures” in the domestic production of those wine bottles. Wineries across the country are expanding in numbers of wineries and in size of production, causing further demands for glass bottles. To complicate the wine bottle market, ships containing shipping containers of wine bottles from China are waiting to be unloaded at the Los Angeles Port complex. Imported bottles from China have also an import tariff increasing the cost of such bottles. These tariffs began in 2018 during President Trump’s Administration and continue thru today, escalating to 25%. This 25% tarrif is motivating domestic glass producer to increase their production.
In reality, there are millions of gallons of wine aging in oak barrels and stainless steel tanks that will be needing more bottles. “Getting bottles right no is a very, very big challenge, said Charles Lybecker at Cairdeas Winery in Washington State. “We know it’s a real problem, mostly for those people who are relying on imported glass,” said Scott DeFife, president of the Glass Packaging Institute. Scott added, “Shipping costs for foreign glass have gone from $2-3,000 per shipping container to $20-30,000 per container.” That ten-fold increase in shipping cost is creating an artificial demand of “must have now wine bottles” in order to have a secured supply for many wineries. Since wineries are seeing such a shortage of wine bottles, the domestic suppliers are now seeing orders rise to the point where their production is reserved for existing orders for at least six month! Lybecker and his fellow winemakers were paying $9.75 for a case of empty bottles. “These are going to be like $22,” said Lybecker. That amounted to 81 cents per bottle in the past with current per bottle costs at $1.83. Consumers will be paying this cost in the future as bottle of this more expensive glass come into the supply chain. For those wineries producing less than 50,000 cases of wine, especially those in Texas will be feeling this price increase. In some cases, Texas wineries are literally running out of bottled wine with wine to be bottled in oak barrels and stainless steel tanks. Obviously this hurts cash flow for those smaller wineries.
With the shortage on bottles, the cork industry is satisfying current cork demands. These corks are coming from Portugal, being shipped either by ocean cargo ships or in some cases by air. Obviously, corks are much lighter than bottles and take up less room in shipping. The Stelvan screw cap is also being used by many wineries for their white wines to keep the wine’s crispness and fruit vitale and intact as the wine continues to age in the bottle.
Box wines are also showing up in wine shops in greater numbers. One major California winery produced a box of premium red wine for around $95 per box. The outside is a box with a wine bladders containing the wine within that box. Many wineries have avoided the box wine since it is not as romantic as a bottle of wine along with the stigma that box wine is cheap, inferior wine. What is your opinion? Please let me know your thoughts via email at [email protected].