Glass bottles move down a conveyor belt on the Jack Daniel’s Single Barrel Select Tennessee whiskey bottling line at Jack Daniel’s Distillery in Lynchburg, Tennessee, United States, on Thursday, Jan. 30, 2014.
Luke Sharrett | Bloomberg | Getty Images
From whiskey distillers in the humble hills of Kentucky to winemakers on the sunny slopes of California, the demand for glass bottles has exceeded supply this year, a chain reaction partly sparked by the coronavirus pandemic.
The global supply chain – already long and tangled in the United States – continues to bear the brunt of rising consumer demand, labor shortages and overseas production delays, leading to higher transportation costs and inflation.
David Ozgo, chief economist for the Distilled Spirits Council, said glass shortages are being felt across the industry, be it tequila, vodka or whiskey.
“While some of the big distilleries have multi-year contracts for millions of bottles, in some cases they find that they have to choose the bottle sizes they will get,” said Ozgo. This could eventually lead to an even narrower range of bottles with smaller volumes, as the focus will likely be on the more common sizes of 750 milliliters and 1.75 liters.
In the short term, some consumers may have to put more effort into finding their favorite alcohol.
“From a consumer perspective, if you want a special bottle for the holiday season, you may have to go back to the store a few times before you find her,” said Ozgo. “But I put it this way, over 16,000 spirits products are launched every year, so this could be an opportunity to try a new drink.”
Castle & Key Distillery in Frankfort, Kentucky, is one of many distillers who have switched glass suppliers given supply chain problems.
“The factory we worked with in the UK had a coronavirus outbreak and had to shut down completely, leaving our production at least a few months behind schedule,” said Jessica Peterson, operations manager at the distillery.
Peterson said that when it reopened in the UK, the distillery was forced to address supply chain issues and had to temporarily switch to air freight due to delays in sea freight.
“The preferred method would normally be ocean freight,” Peterson said, adding that ocean freight costs tripled during the pandemic. Since then, the distillery has moved to a supplier in Guadalajara, Mexico who delivers orders by rail.
“Since the transition, we’ve had a steady supply of glass,” said Peterson.
“I’ve heard from other people that the demand for shipping containers has grown so much that they are paying almost $ 6,000 or more than $ 20,000 for the container alone. And that’s just crazy, “she said.
Shipping containers are stacked in PortMiami after being unloaded from a boat on November 4, 2021 in Miami, Florida.
Joe Raedle | Getty Images
To avoid future supply chain bottlenecks, the distillery is no longer ordering six months in advance but at least two years ahead of schedule, Peterson said. Still, the disruptions have increased the distillery’s production costs, she said.
“Currently we have not passed a price increase on to consumers. But that could definitely come,” she said.
New York-based supplier Waterloo Containers has increased its prices on imported glass for its customers. Most of Waterloo’s inventory for glass wine and liquor bottles comes from the United States, with about a tenth from abroad. Domestically produced glass has seen lower price increases, mainly due to higher freight 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 being imported, Waterloo doubled its orders this year as supply chain issues arose and wineries and distilleries looked for new suppliers.
Waterloo is also a warehouse supplier rather than just-in-time, so it always has extra inventory on hand.
“We actually delivered more bottles from our store to the west coast this year than in the last 20 years,” said Lutz.
Most of the glass bottles used in the United States come from abroad. Years ago, glass manufacturers relocated their production to countries where glass could be made more cheaply – mainly in Asia.
Mauricio Perez, North American regional director of Panamanian glass supplier BPS Glass, estimated that 60 to 70% of the glass bottles used in the US were from China, at least before the Trump administration’s trade war. Tariffs on glass imports from China convinced some manufacturers to instead import glass from factories in Europe or Latin America to meet demand.
Then the pandemic struck, with waves of new cases followed by further lockdowns creating supply chain problems around the world.
For winemakers outside of the United States, the problem is even worse. According to Perez, wine and liquor makers in Latin America are facing tougher bottlenecks as some companies switched to glass made in places like Chile rather than China during the trade war.
It is a situation that is not easy to resolve. Building glass furnaces or setting up new production lines can take a year or two.
“The glass supply cannot return to the USA because the manufacturers’ glass capacities are simply no longer sufficient,” said Lutz.