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Spirits And Wine Industry Weighs Impact Of Supply Chain Disruptions

November 9, 2021

Port pileups, shipping delays, and supply chain disruptions continue to hamper industries across all sectors of the economy—including beverage alcohol. For wine and spirits in particular, glass supplies and shipping snags are two of the biggest problems. Sales remain strong, but businesses of all sizes—including producers, importers, and retailers—are scrambling to stock the most sought-after releases moving into the holidays.

“Supply constraints are always popping up—but never to the extent and scope that we’re seeing now,” says Nima Ansari, spirits buyer at Astor Wines & Spirits in Manhattan. Preparing for the holiday crunch requires “a full court press of checking in daily on ETAs, quantities, and anticipating needs—and with the assumption that further delays will continue at least for the foreseeable future,” Ansari adds. “We’re prioritizing key SKUs and considering alternatives.”

At Julio’s Liquors in Westborough, Massachusetts, owner Ryan Maloney’s strategic thinking has gone into overdrive. “We’re buying brands in different quantities than we might normally carry, just to keep them in stock as long as we can,” Maloney says. “It’s a fine line—you want to prepare, but you also don’t want to compound the problem by making a pig of yourself.”

On the Scotch whisky front, port backlogs are forcing some producers to adapt their shipping strategies. “We’ve expanded our network of ports to try and mitigate the issues with port congestion and the challenges raised from limited availability of vessels,” says Elif Yontucu, head of operations at Scotch maker Compass Box Whisky. While the voyage from Scotland to New York used to take about 10 days port-to-port, it now takes around a month because of extended lead times, Yontucu notes. “Due to those new conditions, we’re constantly re-evaluating our processes,” she adds. “We’re in contact with our partners on both sides of the Atlantic to ensure we’re working as efficiently as possible.”

Scotland’s largest port, Grangemouth, has ramped up activity to keep feeder vessels carrying Scotch and other exports on schedule as they depart for deep-sea shipping ports in England, the Netherlands, and Belgium. Still, backlogged deep-sea ports like Felixstowe (Britain’s largest container port) are further complicating passage to the U.S. Once shipments arrive stateside, they face delays at U.S. ports, especially on the West Coast. The jam continues further down the supply chain as well, exacerbated by a nationwide truck driver shortage.

But the supply chain issue hasn’t caught everyone off-guard. “We began to face this last March,” says Sandra LeDrew, chief operating officer of Terlato Wine Group. “Demand really started to shoot up in April and May, so we began to order out farther with our suppliers, and we took on more inventory than we normally carry.” Terlato also worked with its distributors to prioritize specific markets, calibrating those priorities according to supply levels, and in some cases transferring inventory by airfreight.

Sam Filmus, president of California-based importer ImpEx Beverages, says glass and other dry goods shortages have delayed special releases from several of the company’s suppliers, as well as the second edition of its own independent bottler brand, the ImpEx Collection. Filmus has turned to airfreight to ensure certain products are available during the holidays, in some cases splitting the costs with suppliers. But even airfreighting has become more difficult—and more costly. It took a month to book the flight for the company’s last airfreight shipment—whereas it used to take a day, Filmus says. Meanwhile, costs more than doubled to $50 a case of six bottles. “We’re absorbing these added costs because we feel it is right to not pass them onto the consumer,” Filmus adds.

American whiskey makers are also grappling with supply constraints, trucking shortages and other logistical issues testing their ability to keep pace with rising demand. “We have taken extensive measures to reinforce material supply, increase production capacity and prioritize production of our top-selling products,” says Brown-Forman Corp. director of investor relations Sue Perram.

Producers, importers, and retailers all say the bottlenecks, backlogs, and other supply chain disruptions could last well into 2022. “Will some brands be out of stock in stores? Yes,” LeDrew says. “I think the tougher categories right now are New Zealand and Australia, because they’re coming through the LA and Long Beach ports, so it’s taking longer.” In the meantime, a little flexibility on the part of drinkers goes a long way. “As long as you’re not fixated on one specific thing, you’ll have plenty of quality options to choose from, despite the circumstances,” Ansari says.—Zak Kostro

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