Get ready for odd-shaped wine bottles, higher prices — and maybe more reusable bottles, like Sones Cellars has pioneered in Santa Cruz. The culprit: Yes, it’s the supply chain, choked up around glass manufacturing and distribution.
The stresses of the world might have pushed more of us to turn to the solace of a glass of wine at the end of the day — but now, international upheaval could make that small pleasure more expensive.
A glass shortage that began in the early days of COVID continues to fracture business for local wineries, which are struggling to find wine bottles and frustrated by delayed orders and bottle prices that have doubled or tripled since the pandemic began.
“I’m ready to throw my hands in the air,” winemaker Megan Bell, owner of Santa Cruz Mountains-based Margins Wine, says after two years of searching for affordable wine bottles for her small winery. Two years ago, the price for the flint, or clear, wine bottles she uses came in at about $6 for a case of 12 bottles; now, it’s $15 to $16 a case. The case price for dark green Burgundy-style bottles, typically used for red wines, has risen from $7 to $19.
The glass shortage affects any business that packages in glass, and spelled the end of Kitchen Witch Bone Broth — the Santa Cruz-based company announced last week that it will cease production next month due to ongoing issues with glass. But is being felt acutely in the wine industry because there are few alternatives to wine bottles. It’s just the latest challenge heaped on the industry as it attempts to bear the weight of inflated prices for just about everything it uses to make its product. Further, small wineries, like almost all of those in the area, find themselves disproportionately affected because they are less able to predict how many bottles they need in advance and typically have less financial wiggle room.
Solutions are few, but local winemakers are getting creative by making do with nontraditional bottle shapes, bottling in screw-cap or reusable bottles, or moving away from costly wholesale accounts. Soon, though, many will be forced to pass the cost on to consumers by raising their prices by as much as 20% — and fear losing those customers in the process.
For Bell, it’s not just how much she has to pay for wine bottles, it’s when. Glass is in such short supply that now wineries must pay cash up front when they place their orders. In pre-COVID days, she says she could order bottles a few months ahead of time and pay when they arrived.
“It really messes with your cash flow,” says Bell.
Supply is so low, she says, that the inventory for a single glass vendor can change from week to week. This instability pressures wineries to buy what they can when they can because the next week, it might be gone.
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This year for the first time, Bell will bottle Margins Wine in screw-cap bottles because they are the most affordable option. “Luckily I’m in the natural wine sector, and our market is a little bit more experimental and forgiving regarding aesthetics,” she says.
It’s not just the price of glass that’s gone up. Bell estimates that her total expenses rose about 30% in the past year, due to labor shortages, wage increases, higher prices for raw materials and increased freight costs. As a result, she increased the price of her wines by 10%, fearing that a larger increase would jeopardize sales. But now she won’t be able to hire a much-needed full-time employee as planned.
Bell thinks she can continue to subsidize her increased costs for another year without passing them on to the consumer before she’ll have to again raise the price of her wine, which runs around $30 per bottle. “People need to either be ready for a bunch of their favorite small wineries to go out of business,” she says, “or get ready to pay $3 more a bottle and $4 or $5 more for a wine glass at a restaurant, because that’s the true price.”
Where’s the glass?
There is no single cause of the glass shortage that’s affecting wineries locally and nationally. The biggest culprit: COVID-driven supply chain disruption worldwide, exacerbated by the movement of several domestic glass factories overseas. Others shut down their furnaces for scheduled rebuilds, which can take months.
Some of the largest glass manufacturers are located in China. When the region closed down due to the pandemic, that further decreased the supply of glass in an already tight market. “All of that glass that was being produced 24 hours a day is no longer being produced, so production shifted to domestic plants, which can’t keep up with the sudden unplanned influx. They have to short somebody somewhere,” says Bobbi Stebbins, marketing director for Waterloo Container, a glass-distribution company based on the East Coast.
The same supply chain issues that plagued other markets, including a national shortage of truck drivers and clogged ports, affect the glass industry. Over the past two years, prices have risen by 6% to 20% on glass products and by more than 22% for freight. Packaging materials like cardboard are also difficult to find. “It’s a perfect storm,” says Stebbins.
Larger wineries might be less affected by the shortage because they are used to “forecasting” how many bottles they will need for a year and will order them well in advance, which gives them more cushion to weather delays, Stebbins explains. Glass production also requires forecasting, meaning wineries that are able to work with suppliers to plan ahead will ultimately have a more reliable supply. Smaller wineries — the majority of Santa Cruz Mountains wineries fall under this category — are less able to predict how many bottles they will need, and so can be disproportionately affected by a market in flux.
Waterloo Containers predicts that the market will eventually stabilize, but not for another five years. “If they lift the COVID restrictions tomorrow,” Stebbins says, “the glass supply issue is not fixed.”
Wineries typically bottle wine twice a year — in the late summer and early fall in order to free up tanks and barrels for the incoming harvest, then again in the spring, when the young wines are released on the market. “Wine is a living thing,” explains Barry Jackson, winemaker at Equinox winery in Santa Cruz. “There’s a point where it’s not going to improve, so there’s an urgency to put wine in the bottle when you feel it’s the correct time.”
Jackson had to scramble to find enough wine bottles to bottle his 2021 fiano, an Italian white varietal, and eventually cobbled together enough by combining three different styles of bottles from what he had in storage — a solution he admits is less than ideal: “I don’t have a marketing department so there’s no one’s head to explode.”
He points out that with a smaller winery, the economies of scale go away: “If you have one tank, and you have wine coming in, that tank has to be empty.”
Nathan Kandler, winemaker at Thomas Fogarty Winery, says he’s never seen anything like the glass shortage in his 20 years in the wine industry. Lead times used to be two to three months for an order; now, it can take a year.
Wineries located high in the Santa Cruz Mountains have the additional disadvantage of being difficult for delivery companies to reach. Trucking companies have flat-out refused to deliver to Thomas Fogarty, which lies off Skyline Boulevard, or will charge prices five times the normal rate, says Kandler.
While Kandler was able to find bottles in “more or less the size and shape I wanted” for the summer bottling, this winter he was compelled to use a bottle that wasn’t quite the right size for the label. Meanwhile, he has received dozens of emails from glass companies telling him that the price has gone up another 6%, another 10%, or that the price of pallets has gone up. He doubts that Thomas Fogarty’s wine club members would be receptive to such price increases.
One way the company has been battling the surge in costs is to focus more on direct-to-consumer sales rather than wholesale and international sales. “Focusing on our wine club members and on having people come to the winery hopefully develops an appreciation for what we do here,” Kandler says, “and it makes sense for us financially.”
With all the issues surrounding glass wine bottles, some wineries might look for alternatives. At Sones Cellars, Michael Sones has had success with using refillable glass bottles to sell his Hedgehog label wines. The reusable bottles are printed with his label and government health warning, and feature a flip-top closure rather than a cork or screw top. Customers buy the bottle for $5 and refill it for $14 with a blended red, white or rosé wine, which is stored in a large cask in the tasting room. The bottles are topped off with nitrogen gas to preserve freshness and must be drunk within six weeks. Sones launched the program more than 10 years ago, and it now accounts for 50% of his sales through his Ingalls Street tasting room on Santa Cruz’s Westside.
Sones also sells wines in traditional glass bottles, but like everyone else, he’s using what’s available rather than what’s ideal. He sees the rigid customs around how wine is traditionally packaged and sold dissolving rapidly. Traditional bottle shapes for certain wines are going out the window, he says, because of desperation and scarcity. Like many wineries, his has also stopped using tin caps because of the increased cost. He predicts customers will start to see more canned wine on the market, and wine sold in kegs to restaurants to serve on draft.
More wine on draft? In this unpredictable post-COVID world, look for local winemakers to find creative solutions beyond their proven skills.