Amy Prosenjak was at a leadership seminar in 2018 when someone asked her to write down the No. 1 problem she faced as CEO of A to Z Wineworks in Newberg, Ore.
Her answer: getting enough glass bottles.
That answer turned out to be prophetic. Although procuring enough bottles has long posed a challenge, it’s become a critical problem since the beginning of the COVID-19 pandemic — one that is flowing into consumers’ glasses in the form of wine shortages and price bumps.
The scarcity of glass bottles is a result of a perfect storm of supply chain challenges, Prosenjak said. Although there are glass plants in the Pacific Northwest, most are aging, with outdated technology. As a result, many wineries began buying glass from Asia. Then those bottles were ensnared by Trump Administration tariffs, resulting in big price increases.
When exports dipped sharply at the beginning of the pandemic, many shipping companies sold off their excess containers, said Barb Robertson, Pacific Northwest account manager for Saxco International, which provides rigid containers for the food and beverage industry. When demand for goods began ramping back up, there weren’t enough containers to hold products. There also weren’t enough ocean freighters to carry items overseas.
This winter, economist/author Mike Veseth noted the astounding spike in costs surrounding the transportation of overseas containers during his annual presentation to the Idaho wine industry.
“Coming across the Pacific in 2019, it would have cost about $1,200 to ship about $50,000 worth of goods. That’s expensive, but not very expensive,” said the retired University of Puget Sound professor, citing a recent report by The Economist magazine. “By 2021, it went from $12,000 to $15,000 to $20,000.
“Now, $20,000 to ship $50,000 of product value here? That’s prohibitive. That’s crazy,” Veseth continued. “That’s a whole lot of cost to try to absorb and creates a tremendous squeeze all along the chain.”
Veseth predicted the bottlenecks in shipping will continue “for quite a long period of time.”
Suppliers, trucking industry faces long road
The deepening truck driver shortage made it exceedingly difficult to move containers once they arrived on U.S. soil. The American Trucking Associations recently estimated its industry has 81,000 fewer drivers than it needs. That figure stood at 51,000 before the pandemic began, and the driver pool deficit is projected to surpass 160,000 by 2030 because of the increasing demand for freight.
This backup became so grave that some manufacturers shut down with no way to move their product, Robertson said.
Glass plants have also faced a string of other problems, including labor shortages, shutdowns because of COVID-19 outbreaks, a lack of raw materials and increased costs because of environmental regulations.
The glass shortage is wreaking havoc on wineries.
“Most wineries can only hold one vintage at a time in their facility. Maybe two,” Prosenjak said. “If you have harvest, and then it’s time to bottle wine and then it’s harvest again and you haven’t bottled the wine, you’re out of space.”
An uneven supply means stopping and starting during bottling, which disrupts the normal workflow and leaves employees scrambling to find storage for labels, corks and other necessities.
Business owners are spending much more time and money sourcing bottles.
“We used to use one Northwest company to source glass,” said Caitlin Holesinsky, co-owner of Holesinsky Vineyard and Winery in Buhl, Idaho. “Now, we’re having to use four different ones.”
And when wineries can find bottles, “glass costs four times what it used to,” she added.
This year, Holesinsky is planning ahead, snapping up glass whenever it’s available and stockpiling it at her winery near the southern end of the Snake River Valley. Not every winery has the luxury of space or cash flow to do that, she said.
Prosenjak sees little relief in sight.
“Not only can people not get glass now, it’s on backorder,” she said. “I expect it’s going to take at least a few years for this situation to resolve itself.”
There’s a trickle-down effect for consumers, who are beginning to see the cost of their favorite wines go up. Prosenjak points out that the price of everything — including labor, grapes and other supplies such as boxes — is rising, so the bottle shortage isn’t entirely to blame.
But it certainly isn’t helping.
“We’re taking a piece of (those increased expenses) by reducing our profit margins, but we have to pass some of it along,” she said.
When wineries can’t bottle, they also can’t get their products on shelves, leading to outages in stores.
“That’s really distressing to the companies involved,” Robertson noted. “They spend a lot of time getting on a retail shelf, and a grocery store isn’t going to want to keep a hole on that shelf forever. If you’re out (of wine) for a period of time, you’re going to get moved.”
If consumers can’t find a wine, they’re likely to move on to another brand. There’s no guarantee they’ll come back.
Consumers may also notice that the bottles they buy look a little different. Because wineries sometimes must take whatever they can get. They’re pouring Bordeaux-style wines into Burgundy bottles. Green glass may be swapped for clear. Bells Up Winery, an ultra-boutique producer in Newberg, Ore., recently bottled its 2021 rosé in Bordeaux-style magnums because it was unable to get enough clear glass in Burgundy-style bottles.
It’s possible the glass shortage will eventually provide another incentive for wineries to move away from bottles and consider alternative formats, such as pouched, boxed, canned or keg wine. At Holesinsky, they have been putting wine in pouches for about 10 years because customers love to take them on outdoor trips. And in addition to the convenience, the format doesn’t pose the same safety hazard as glass, and they are more eco-friendly.
Switching to alternative packaging isn’t an easy pivot, though. It takes different machinery to pouch or can wine, which means hiring a variety of bottlers or purchasing new equipment. The cost for pouching machinery has doubled since Holesinsky made its original investment. (There’s also a can shortage, which doesn’t help.)
Although there is growing acceptance of alternative packaging, many consumers remain skeptical, especially for higher-priced wine. Wineries also must rethink their distribution and marketing strategy with alternative formats, Robertson pointed out.
Because cans and pouches go in different spots on store shelves — or in refrigerator cases — vintners need to make sure there are spaces for these new products before they can count on selling them.
While the packaging conundrum plays out, Robertson encourages wine lovers to keep supporting their favorite wineries and seeking out their products, even if they disappear for a little while.
“This is a very stressful time for people in the industry,” Robertson said. “People need to be patient.”