How the Wine Industry Supply Chain Impacts Prices
[ad_1]
The wine industry supply chain doesn’t often have a dramatic impact on wine prices, but, after years of delays and an increased cost in supplies, this could change.
The wine industry supply chain is facing extensive delays and increased costs. Since 2020, wineries around the world have struggled to produce and ship wine at the same cost as they did in years past.
But what impact do wine industry supply chain issues have on wine collectors? Does this mean your favorite Bordeaux, Burgundy, or Champagne labels will be more expensive in the future? Not necessarily. While supply chain issues could make some wines more expensive, wineries are already working hard to ensure prices remain in line with the quality of the vintage. That said, the supply chain will likely affect prices for certain labels and styles of wine. Collectors must know how to navigate these market changes when buying the latest vintages.
Three Factors Causing Wine Industry Supply Chain Delays
To understand the impact the wine industry supply chain has on prices, it’s helpful to know which factors are giving winemakers the most trouble. Every aspect of the supply chain, from bottling to shipping logistics, has been disrupted.
Because these issues have been present for years, we’re currently experiencing a snowball effect. For example, delays in glass manufacturing cause delays in wine production which then delays the shipping process. Increased costs at every step of the supply chain add up over time, leading to a much higher overhead for winemakers.
A few of the factors impacting the wine industry supply chain include:
- Glass shortages: This was perhaps the biggest issue affecting wineries in 2022. To manufacture glass, producers use specialized furnaces that run constantly. This means they can’t adjust the furnace to compensate for changes in demand. Normally this isn’t an issue, but between 2020 and 2022, shipping delays caused a bottleneck effect.
- Costly labels: The cost of paper and ink used to make wine labels has also increased. Because the printing industry has also faced supply chain issues, printers are increasing the cost of their services. Multiple companies raised their prices between seven and 25 percent starting in late 2021. This gets passed on to wineries needing labels for their upcoming releases.
- Shipping delays: There’s also a shortage of cardboard and wooden boxes used to ship wine safely, which, in turn, leads to shipping delays. This, coupled with a shortage of drivers and limited space on trucks and container ships, has also made it more difficult for some wineries to ship their wine.
Which Wines Could Increase in Price?
Although wine industry supply chain issues have already increased overhead costs for some wineries, that doesn’t necessarily translate into considerably higher wine prices — at least not yet. Because the wine industry is relatively flexible, wineries (especially well-established producers) are able to absorb some of the increased costs.
For example, Napa Valley producer Duckhorn has assured wine collectors that it has a reliable supply of glass that covers between 36 and 48 months of their manufacturing needs. This producer has a strong working relationship with its glass vendors allowing it to circumvent some of the supply issues other wineries have faced recently.
What this means for wine collectors is that the majority of blue-chip producers are unlikely to significantly increase the price of their wine in the very near future. Price increases will be small and limited. Renowned wineries are known to go to great lengths to ensure their wine is valued fairly on the market based on the quality of the wine and the vintage itself rather than supply chain factors. As long as these producers are able to absorb most of the added costs, wine collectors and investors likely won’t face massive price hikes when they shop for wine this year.
Wines That Could Increase in Price
However, this isn’t the case for every winery or even every style of wine. For example, newly established or small-scale producers are more likely to feel the effects of the wine industry supply chain and may be less able to absorb these costs. This might mean you’ll pay slightly more for wine from small-scale estates until the supply chain regains balance.
White wine and rosé may also increase in price in the future as clear glass bottles have been in especially short supply recently. By comparison, dark bottles are easier for wineries to secure, so red wine prices should remain fairly steady. It’s also possible that wineries will switch to using green glass for their white wine and rosé.
Additionally, top-rated labels from the 2021 Bordeaux vintage may be a little higher in price. Some producers are considering increasing their ex-château prices in the near future, so it may be wise for collectors to invest in futures of the latest vintages and secure these investments as early as possible. Wine from producers like Château Margaux and Château Haut-Brion is looking especially promising in 2021 and is worth closer attention.
The Bottom Line
Whether the wine industry supply chain impacts wine prices will depend on how long these issues continue. For now, most major wineries are able to cope with these challenges. If manufacturing and shipping prices continue to increase, however, wineries may be forced to increase wine prices slightly to compensate.
Ultimately, collectors likely don’t have to worry about supply chain issues increasing the cost of their favorite wines. Still, there are a few things collectors can do to prepare for future price increases and to avoid some other common supply chain pitfalls.
How To Navigate Supply Chain Issues: Three Tips for Collectors
Even if wine industry supply chain issues don’t significantly impact wine prices in the future, they can cause other problems, like shipping delays. Here are a few important tips to protect your collection.
- Seek out established producers: Renowned producers from Bordeaux, Burgundy, California, and Champagne have been able to expertly navigate these complications over the past few years, and their prices have been fairly consistent. As an added benefit, Burgundy and Champagne are currently trending on the fine wine market in 2022.
- Buy wine futures: The benefit of futures is that the wine usually won’t ship until two or three years after it is made. Many of these supply chain issues may be resolved by this point, so you won’t have to worry about shipping delays. You can also buy wine at a lower price, on average, than the wine costs after release. If wine prices increase across the industry, then this benefit will be even more important.
- Use professional storage: Sending your wines to the nearest professional storage facility is a great way to get around shipping delays. Your wine will spend less time in transport and you can safely wait until the global shipping delays resolve.
It’s essential to work with an experienced retailer that can offer these solutions. With access to the most sought-after wines on the market, including the latest futures from blue-chip producers, the Vinfolio marketplace is an excellent resource for collectors concerned about wine industry supply chain issues.
Vinfolio also offers professional storage services to clients, including facilities based in the United States and the UK. With the right resources, collectors can expand their collections without worrying about the supply chain. You can focus on what matters: buying the rarest and most exceptional wines in the world.
Whether you are starting your high-end wine collection or adding to an established portfolio, Vinfolio is your partner in buying, selling, and professional storage. Contact us today to get access to the world’s finest wine.
[ad_2]
