For months now, supply chain woes have wreaked havoc across the US and global economies. The effects of which can be seen everywhere from empty grocery store shelves to some US farms and even the factories that make Apple’s all-important iPhones.
This week, Nikkei reported that Apple has been forced to temporarily pause its iPhone production for the first time in more than a decade because of supply chain constraints. In fact, we’ve previously noted that supply chain-related issues and shortages could impact iPhone 13 production into early 2022. The Biden administration has been pressed to get a handle on the issue, which has a complex web of forces behind it including a logjam at ports and labor shortages. For the time being, it’s a crisis with all sorts of unexpected consequences that continue to manifest themselves. This includes the potential for a wine and spirits shortage, right in the middle of the holiday season.
Supply chain issues and wine shortage
Here’s what’s going on. One of the many products caught up in the global supply chain snarls — exacerbated by everything from manufacturing delays to a surge in consumer demand — is glass bottles. David Ozgo, chief economist for the Distilled Spirits Council, says this has been true across the industry sector. And is affecting everything from tequila to vodka and whiskey.
“Some of the large distillers, even though they have multiyear contracts for millions of bottles, they’re finding in some instances that they have to pick and choose as to which bottle sizes they’re going to get,” Ozgo told CNBC. As one consequence, this could end up leading to “tighter supplies” of small-volume bottles. Since the shortage means a likely emphasis or preference going to more popular sizes, like 1.75-liter bottles.
For an example of what the supply chain issues along these lines look like in the real world, Frankfort, Kentucky’s Castle & Key distillery recently switched its glass suppliers because of all this. A coronavirus outbreak at the factory in the UK the distillery had previously worked with forced a shutdown there. Which put the distillery’s production months behind schedule.
A “can-demic” that’s hitting the brewery industry
Distillers and restaurants around Pa. say it's been hard to source everything from glass bottles to labels to botanicals for booze.
Those supply chain issues are part of the reason Wine & Spirits stores put buying limits on some products.https://t.co/8mZyqYkWJr
— Laura Benshoff (@LEBenshoff) December 8, 2021
The industry is also suffering right now from what’s been termed a “can-demic.” An explosion in demand, driven in large part by the pandemic, has meant an aluminum can shortage, among other things.
Bart Watson, chief economist for the national Brewers Association, told Fox Business that the issue here also goes beyond cans. “Almost everything brewers use in the brewhouse right now is either challenging to find or going up in price,” Watson said.
Part of the problem is that people’s alcohol consumption surged during the pandemic. Researchers at Columbia University found that alcohol sales were up 20% from March through September 2020. Meantime, while people were buying all that extra alcohol? They were also drinking less in bars and restaurants. Which, of course, were subject to restrictions and capacity limits for long stretches in 2020.
Indeed, data from the RAND Corporation found that people were drinking 14% more now than they were pre-pandemic. There are all sorts of industry dislocations and lopsided new trends having emerged during and in the wake of the COVID-19 crisis. And the resulting supply chain issues don’t seem to be going away anytime soon.