News

Glass shortages poses problems for holiday beverages

Continued delays in shipping, as well as labor shortages, have led to a shortfall in the glass bottles that winemakers and distillers use to bottle up cheer during the holiday season. Due to this scarcity in packaging, CNBC reported that consumers may not be able to purchase their preferred wine and spirits for the holidays.

This shortage is coming at one of the largest retail seasons for alcohol manufacturers. Both Christmas Eve and New Year’s Eve are two of the biggest days of the year for alcohol sales.

China produces a large proportion of the glass bottles used by alcohol manufacturers worldwide. However, trade wars, tariffs and pandemic-relate supply chain issues have forced countries from the U.S. to Chile to look either regionally or domestically for other glass bottle manufacturers. Not only is it difficult to simply source new bottles, but shipment delays and limited access to materials have resulted in higher costs for manufacturers.

Other areas of the CPG space have also seen squeezed supply chains resulting in higher prices for materials. The result is that companies from Kraft Heinz to Nestlé have had to pass these inflated costs along to consumers. While CNBC did not report that a similar trend was on the horizon for alcohol manufacturers, the news outlet did note that these bottle shortages have altered or shortened productions schedules, which may make it more difficult for consumers to find their desired alcohol choice in stores.

CNBC reported that ocean shipping container costs, which many companies use to obtain a steady supply of glass, have risen dramatically, in some cases tripling to cost upwards of $20,000. The scramble for glass containers has become so tight that companies like Constellation Brands, which sells Pacifico Mexican pilsner and Modelo Negra in glass bottles, have foregone growth opportunities because they simply cannot provide sufficient product to meet the demand that already exists.

At the same time that the glass packaging for libations is in short supply, consumers have increased their desire for alcoholic beverages. In the U.S., sales of spirits rose 7.7%, according to the Distilled Spirits Council of the United States. Wine sales in the U.S. spiked 60% in March of 2020 and experienced continued growth in subsequent months.

As manufacturers search for alternative solutions to meet the volume demands for customers, the U.S. is ramping up domestic production of glass bottles. In the first 9 months of 2021 spirit bottle production increased by 3% while imports of 750-milliliter bottles jumped 14%, according to the Financial Times.

The world supply chain continues to have difficulties in supporting surging consumer demand for a wide variety of products. Alcohol is no exception, and consumers may have to put forth additional effort to purchase their favorite libations if they are not willing to experiment with alternative brands.